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Study on Estimating the Cost of Civil Litigation Provides Insight into Court Access

Brittany Kauffman Posted in Featured, Informed Opinions, Rule One

The National Center for State Courts (NCSC) has developed a new model for estimating civil litigation costs, known as the Civil Litigation Cost Model (CLCM). The model is based on the amount of time lawyers expend on various litigation tasks and their billing rates, which together provide a snapshot of “typical” costs, by task, for a number of case categories (see the appendices for further detail on costs by case type). This task-based approach provides information on how costs are incurred over the course of the litigation in state courts nationwide. Across all case type categories, the highest litigation costs are incurred during discovery and trial. As an example, while a simple automobile case may resolve quickly after case initiation and incur less than $10,000 in fees, the total costs of such a case can also exceed $100,000 per side if the case goes to trial. By reflecting how costs are incurred throughout the litigation process, and the variability of costs from case to case, the model provides insight into the effect of such costs on a litigant’s access to the civil justice system.

The estimated costs in the CLCM are particularly relevant when considered in light of recent attorney survey data on litigation costs overall. One theme to emerge from the studies is that a majority of attorneys surveyed believe that potential litigation costs can inhibit the filing of cases or force cases to settle that should not settle based on the merits. For example, in our survey with the ACTL Task Force on Discovery and Civil Justice of the ACTL Fellows in 2008, respondents noted they regularly turn away cases when it is not cost-effective to litigate them, with $100,000 being the median amount in controversy cited as a threshold. This figure is particularly relevant in comparison to the median costs reported in the CLCM, which range from $43,000 to $122,000 for the case types analyzed. Moreover, parties face the risk of even higher costs, as reflected by the 75th percentile costs reported in the CLCM. Although ACTL survey respondents practice in both state and federal courts, as the NCSC study points out, “[b]ased on these estimates, it becomes easy to see how litigation costs might affect a litigant’s access to the civil justice system. Few litigants would be willing to risk incurring such costs unless the expected return—damages awarded for plaintiffs or damages avoided for defendants—greatly exceed those costs.” In light of these figures, it is not surprising that civil trials are declining to the point of extinction. The system ought to contain the costs associated with discovery so litigants have the means to try cases through trial if and when desired. Survey respondents have agreed that there are cost inefficiencies in the discovery process, which means this is an area where there is room for improvement.

Estimating the costs of litigation is a complex and challenging task. The NCSC study points out some of the challenges, including the many factors that influence the attorney time, and money, that is spent in each case and the difficulty of determining these costs with precision. The CLCM provides a useful new approach, with insight beyond the raw numbers to issues of excess and access.