But the total value of medical malpractice claims is around $5 billion per year in the US
You shouldn't compare things to the current cost of medical malpractice claims, you should compare it to the counterfactual cost where people did less to avoid lawsuits.
Also relevant. If you are a doctor then the costs of your "defensive medicine" fall on the hospital/insurance companies (here in the UK the NHS). While the costs of being sued fall a lot more on you personally, even if the actual fine/monetary costs are paid by your organisation you still get a kick to the reputation, plus costs in stress and time. Spending $9 of someone else's money to save yourself $1 is rational in a self-serving way.
The person suing will have to give up a lot. Instead of playing games or taking a vacation or putting in extra hours at work, they will have to do legal research and give testimony.
Only true for a poor person. A rich person merely throws some money at their lawyer, tells them to make the target's life a hell within this budget's constraints, and returns to playing games at the vacation.
People are so irrationally intimidated by lawyers that some legal firms make all their money by sending out thousands of scary form letters demanding payment for bullshit transgressions. My company was threatened with thousands of frivolous lawsuits but only actually sued once.
Threats are cheap.
I think this raises a lot of good points, that the thesis is overall quite possible, but the post underestimates the costs of being sued.
I don't know what the magnitude of risk is, and plausibly it's small enough that we should still update downward. But I think the worst case scenario is quite a bit worse than you describe here.
And don't forget: all this article + discussion, seems to only apply to civil law. In criminal law, you go to jail, which does pose lots of risks.
I think many people should be less afraid of lawsuits, though I'm not sure I'd say "almost everyone."
I wouldn't draw much from the infrequency of lawsuits being filed. Many disputes are resolved in the shadow of the legal system, without an actual court being involved. For example, I read a number of cases in law school where one person sued another after a car accident. Yet when I actually got into a car accident myself, no lawsuit was ever filed. I talked to my insurance company, the other driver presumably talked to their insurance company, the two companies talked to each other, money flowed around, things were paid for. Much more efficient than bringing everybody into a courtroom, empaneling a jury, and paying lawyers in fancy suits to make arguments. The insurance companies knew what the law was, knew who would have to pay money to who, and so they were able to skip over the whole courtroom battle step, and go directly to the payment step. This is what usually happens when an area of law is mature - the potential parties, sometimes with good advice from their attorneys, reach similar conclusions about the likely outcome of a potential lawsuit, and this allows them to reach an agreement outside of court. Lawsuits are much more likely to happen when the law is more ambiguous, and therefor the parties can have significantly different estimations of the outcome of the suit. So the frequency of lawsuits is often a measure of how much disagreement there is about an area of law. Other times it reflects a requirement to actually go to court to do something (like debt collection or mortgage foreclosure). But I don't think it is a good measure of the likelihood of having to pay out money for some arguable violation of the law.
Also, many contracts contain arbitration clauses, which also prevent conflicts from making it into a courtroom.
The notion of lawyers being overly conservative I think is also an incomplete description of that dynamic. A good lawyer will tell you how much you can expect a potential lawsuit to cost, and therefor whether it is more or less than the expected benefit of the action. If your lawyer won't do this, you should fire them and hire someone else. As an illustration, think about universities violating the free speech and due process rights of their students, and getting sued for it. They do this because the cost of not doing it (in public relations, angry students/faculty/donors, Title IX lawsuits) is more than the cost of a potential constitutional lawsuit, and they know it. How do they know it? Because their lawyers told them so.
I think sometimes people don't want to take the advice of lawyers they perceive as overly conservative, even when they should. People trying to build something or make a deal will often get very excited about it, and only want to see the ways it can go well. Lawyers have seen, or at least studied, many past conflicts, and so they can often see more clearly what conflicts might arise as a result of some project, and advise clients on how to avoid them. That is often what clients pay lawyers for. But to the client, it can often feel like the lawyer putting an unnecessary damper on the shiny project they are excited about.
There is also the moral aspect. Laws often have a moral point behind them. Sometimes when people refrain from doing things to avoid being sued, they are refraining from doing immoral things. And sometimes when people disregard legal advice, do a thing, and get sued, they actually did an immoral thing. To take an example that I watched closely at the time, and that connects to one of Alyssa's examples, during the 2014-2015 school year Rolling Stone published an article, based on a single young woman's account, of gang rape being used as a form of fraternity initiation at UVA. Rolling Stone did not do the sort of fact checking that is standard in journalism. (If memory serves the Columbia School of Journalism put out a report detailing the failures here). Over the course of several months, the story fell apart, it turned out to be a complete fabrication. And Rolling Stone was sued, and had to pay out. I can imagine Rolling Stone's lawyers advising them not to publish that article without doing some more fact checking, and those lawyers would have been right on the law. But more fact checking also would have been the morally correct thing to do. Even in the case of abuse/rape, defamation law does have a moral point to make - you shouldn't make up stories about being abused/raped and present them as the truth.
Finally, as an ex-lawyer, I unreservedly endorse Alyssa's advice not to take on six figures of debt to go to law school without researching the job market.
This reminds me of something Paul Graham wrote in How to Start a Startup:
There is more to setting up a company than incorporating it, of course: insurance, business license, unemployment compensation, various things with the IRS. I'm not even sure what the list is, because we, ah, skipped all that. When we got real funding near the end of 1996, we hired a great CFO, who fixed everything retroactively. It turns out that no one comes and arrests you if you don't do everything you're supposed to when starting a company. And a good thing too, or a lot of startups would never get started. [5]
[5] A friend who started a company in Germany told me they do care about the paperwork there, and that there's more of it. Which helps explain why there are not more startups in Germany.
an organization that always listens to lawyers is being more cautious than the optimum.
Even an organization that disobeys the lawyers sometimes but never regrets not having obeyed them is being more than optimally cautious.
I'm in two minds about this post.
On one hand, I think the core claim is correct Most people are generally too afraid of low negative EV stuff like lawsuits, terrorism, being murdered etc... I think this is also a subset of the general argument that goes something like "most people are too cowardly. Being less cowardly is in most cases better"
That being said, I have a few key problems with this article that make me downvote it.
Isn’t this just an example of the loss aversion tendency in action? It’s a well known concept rooted in our primate evolutionary past, nowadays broadly accepted by mainstream academia, that people care more about losing X then gaining Y when X = Y. Maybe the ratio is as great as losing 1*X = gaining 2*Y.
So in the liminal zone where there isn’t sufficient activation energy where X < Y < 2*X, it should be expected that humans avoid taking such actions, for example like legal risks. Even if it’s a net benefit, because the net benefit is insufficiently large.
The real challenge is finding a scenario where losing 1*X = gaining >2*Y.
I found this post valuable for putting a meme "into the water" which, on the margin, I expect made people's risk assessments more accurate.
While there are probably first-mover disadvantages for highly legible institutions attempting to follow this advice, it seems much more possible for individuals, which makes this an example of an inadequate equilibrium.
Nitpick: Trump himself has often had his own high-powered legal teams to fight things (including a key lawyer with a long Wikipedia article). So he probably "handled" legal risk in ways the average person would have a hard time replicating. (E.g. won't go broke form missing work while he's being sued, it's just a background task for his team to handle --> therefore, he can outlast the plaintiffs and then settle.)
Cryptocurrencies can make you less vulnerable to lawsuit extortion by making you appear poorer. The government will suck out your bank account before you know what happened.
One sad feature of modern American society is that many people, especially those tied to big institutions, don't help each other out because a fear of lawsuits. Employers don't give meaningful references, or ever tell their rejected interviewees how they could improve their skills. Abuse victims keep silent, in case someone on their abuser's side files a defamation case. Doctors prescribe unnecessary, expensive tests as "defensive medicine". Inventions don't get built, in case there's a patent lawsuit. I'm not an attorney myself, but my best guess is that letting litigation fears stop you is often a mistake, and I've given this advice to friends several times before. Here's why:
Threats are easy - anyone can threaten to sue anyone else, with two minutes of time and a smartphone. Actually suing is much harder. Outside of small claims court, hiring an attorney will usually cost tens of thousands of dollars, at least. Litigating a case takes months or even years, while angry feelings often go away after a few weeks. The person suing will have to give up a lot. Instead of playing games or taking a vacation or putting in extra hours at work, they will have to do legal research and give testimony. Most people are distracted by their families, their career, their hobbies, and their lives, and will (often rationally) eventually give up, rather than remaining obsessed with whatever the case was about.
Doctors as a profession are traditionally concerned with legal risk. But the total value of medical malpractice claims is around $5 billion per year in the US - compared to healthcare spending of $3,800 billion, malpractice lawyer fees of $3 billion, and "defensive medicine" costs of $45 billion according to one study. Likewise, the cost to media companies and journalists of not publishing articles to stop defamation suits surely exceeds that of the few dozen defamation cases against them every year (stats from the UK, but British defamation law is widely considered plaintiff-friendly). The cost of things like rape victims staying silent because of defamation threats is hard to quantify, but clearly also bad. Some of these costs will fall on you directly, but often many more are externalized; eg., the cost to a patient of not giving them the right treatment out of fear can be enormous.
Since most people aren't legal specialists, the "knowledge" that something is a legal risk can be passed around from place to place without ever being checked, like many urban legends or droplet disease transmission or stories about the amount of iron in spinach. For example, a lot of people "hear" that IQ tests are illegal in hiring. But not only is this not true, any company can easily buy one right now - "the CCAT is a pre-employment aptitude test that measures an individual's aptitude, or ability to solve problems, digest and apply information, learn new skills, and think critically. Individuals with high aptitude are more likely to be quick learners and high performers than are individuals with low aptitude." Likewise, it's easy to make up a story where something might be hypothetically risky, even if it's never happened in court, and hard to do enough research to make sure it isn't.
One study found around 750,000 civil lawsuits per year in big counties, with a population around 75 million, for a total annual risk of ~1% per person. But the distribution of case types is thin-tailed. Courts and lawyers are somewhat machine-like, and mostly handle the same mundane problems over and over again (this is also true for criminal cases). A majority of all the cases were either about car crashes or debt collection. Another ~9% were mortgage foreclosures. The incidence of all employment lawsuits was 1 per ~10,000 person-years; fraud lawsuits were 1 per ~5,000; product liability suits were 1 per ~6,000. The number of cases involving something like the GPL license is tiny, despite its ubiquitous use in software. Most lawyers have little quantitative training, and won't try to crunch the numbers to calculate probabilities or expected values.
If someone is rich, idle, and vindictive enough to really sue you, your paranoid lawsuit-proofing actions might not help. They can often sue even without a good case, and the cost to you might not be that different; time costs and lawyer fees are often similar whether you win or lose. In the infamous Prenda Law case, a team of unscrupulous lawyers took advantage of this to put porn on torrent sites, wait for it to be pirated, send mass lawsuit threats asking to be paid off (where the price was a lot, but less than that of hiring an attorney), and then eventually drop any case that someone contested as a form of extortion. Groups will sometimes use laws like CEQA as a form of legal blackmail - their goal is not to correct the "problem" they cite, but to get you to go away or pay them off. CEQA is so complex, covering over a hundred "environmental" topics (where the "environmental damage" has often been something like not providing enough parking spots), that a determined litigant can almost always find something to object to no matter what one does.
"Lawyer" is traditionally a high-status job, and most people look to lawyers with some degree of deference and authority. When a lawyer says "don't do X, you might get sued", people usually listen. But lawyers are institutionally trained and personally incentivized to be conservative, largely because of asymmetric justice - if you get sued and the lawyer didn't speak up, they could be blamed, while lawyers are almost never blamed for shooting down an otherwise high-value idea out of inaccurate risk assessment. Just like airports and missing a flight, an organization that always listens to lawyers is being more cautious than the optimum.
Donald Trump, despite being a cackling cartoon villain, was able to get as far as he did largely because he wasn't afraid of risk, including legal risk. He often did things that were pretty clearly illegal, he and his companies were sued all the time, and he mostly just kept fighting until the case was dropped or otherwise shrugged it off. People who dislike Trump, who wonder how anyone like that could get elected President, should take notice that this tactic worked, that even someone like Donald Trump wasn't stopped by litigation despite being sued by everybody at a million miles an hour. In business, for example, if a competitor sues you, by the time the suit is resolved your company will likely have succeeded or failed anyway.
If your life is completely perfect, then you should try not to ever change anything, since by assumption any change can only make something worse. On the flip side, if your life is already as bad as it could possibly be, then any change must logically be good. Just in case anyone has been living under a rock, things in general are going wrong right now, and it makes sense to take risks (increase variance) if on your current path you lose by default. On a smaller scale, many individuals and companies are in a bad situation, where they have big problems with no obvious solution or are trending towards bankruptcy, and could stand to benefit from more risk-taking.
If you are sued, try everything you can, lose anyway, and can't afford to pay the judgment, your wages can be garnished, but only up to 25% (in some states less, in Texas nothing at all). That's bad, but it's not infinitely bad; it roughly works out to -0.1 standard deviations on typical happiness/well-being metrics, and is comparable to the cost of routine things like divorce (without the romantic heartbreak!) or changing careers. For a business or other organization, the worst case is usually bankruptcy, but businesses go bankrupt all the time when markets change or key employees leave. People are vastly more afraid of lawsuits than other things with similar outcomes, like taking on six figures of student debt to go to law school without having researched the job market. Please don't do that. :)