To answer this question properly, it depends on which side of the battleground you are on. Are you the one that is suing someone or are you’re the one being sued?
In this article I’m going to offer an estimate of what the rough costs of filing a lawsuit might be. In other words, the monetary value in dollars that are spent to file and proceed through the lawsuit process.
Keep in mind that in many cases when someone is suing you, especially in your capacity of a real estate investor as a property owner and landlord you are the one being sued. The cost of the legal process for defending any lawsuit is much higher than a simple dollar amount, even though the financial cost alone can be devastatingly high, even if the case is eventually dismissed. The main costs of getting sued is the nerve racking, emotional stress and strain that can last for years, requiring time off of work while attending dispositions, court appearances; add to that your family’s stress, and the fear of losing literally EVERYTHING – if you lose the case.
On the other hand, when you are the one initiating a lawsuit you should be aware that the lawyers that handle lawsuits are the most vicious, money hungry attorneys that are professionals at sucking money out of each case for themselves. Although the person they represent in initiating the lawsuit is their client, over the course of time their client is usually coaxed to keep going and reaching into their wallets to pay the lawyer over what could be a lengthy, continually extending, period of time.
On your defense side, the longer your opponent’s attorney continues the case, you are affected the most by all the reasons I mentioned in paragraph three above…including continued legal fees. So, in effect, the reality is that the lawyers control the process and by manipulating the process – and in most cases take all or the majority of the money (from both sides).
Everybody, at one time or another is curious about the financial cost of filing a lawsuit. They are very expensive to bring, so the question is: Who has $10,000 to finance one? The reason I mention the round figure of $10,000 is because that is probably the minimum that it would cost. The ones I’ve seen range from $30,000 to $150,000 and continue the agony for everyone involved (except the attorneys) for several years.
One thing to know is that close to 90% of the lawsuits filed are frivolous or very trivial at best. With that said, the question again begs: Who has $10,000 to finance one?
- Complaint filing fee: $320. The initiator of the Lawsuit pays this fee. Then when the person being sued shows up for the first time in court, they pay an identical fee of $320.
- Motion filing fee: There is a $40. Fee for each motion that is filed in the court, and there may be many as the case progresses. There is no way to know how many motions may be filed in any given case. You’ll also pay your attorney to prepare these documents.
- Depositions: $1,500 to $3,500 or more per day is the cost of interviewing witnesses. The cost breakdown involves Serving the deposition subpoena (notice), paying for the scheduling for each deposition, paying the hourly fee of each attorney (plaintiff & defendant), hiring a court stenographer/transcriber to officially write it all down (and probably audio and/or video record the proceedings), and a professional translator if anyone giving testimony doesn’t speak English.
- Document Photocopies: Usually you will have to pay to have lots of documents from the defendant copied either from the defendant’s attorney’s office or a bonded copying company. With costs sometimes reaching to fifty cents per copy!
- Professional ‘Experts’: Many lawsuits require the hiring of several experts on various topics concerning your case. These are people who are professionals in their fields and they are paid top dollar for their testimony, many times ranging from $250 to $450 or more per hour, which may additionally cost for their travel time and related expenses.
- Appeals: When there is dissatisfaction with the ‘final’ results of the case, it is very possible that the losing party may an appeal. The filing fee alone is $700. and that is just the start. Court clerk fees to prepare a record can be hundreds of dollars more…and of course much more in legal fees to your attorney.
- If you lose: Losing is not just a bad thing, it’s worse. You would not only be out all the money mentioned above including all your attorney’s fees, and you may have to pay for all your opponent’s expenses. Depending on how your case was lost, such as proven to be frivolous, you may have to also pay the defendant’s attorney’s fees, which could be astronomical. Attorney’s fees range anywhere from $200 an hour to over $1,000 per hour.
- If you win: You may find out that your opponent is ‘judgement proof’, meaning although you have a judgement in your favor, you can’t collect.
Now the twist: Some attorneys are known as contingency fee attorneys with arrangements where the plaintiff’s lawyer may collect their fee if they win the case and may also pay for the costs of the lawsuit. These attorneys take a percentage of the winnings after deducting their expenses. Take note: if the attorney is willing to do this arrangement you probably have a great case – not a frivolous one. On the other hand, if the attorney is not willing to do this – you may be better off moving on and forgetting about any lawsuit.
How to avoid lawsuits:
In the third paragraph of this article, I mentioned “when someone is suing you, especially in your capacity of a real estate investor as a property owner and landlord you are the one being sued.” What if, you eliminated any possibility of ‘you’ ever being successfully sued? Not only as a real estate investor, landlord, or owner of real estate, but in all aspects of your life?
This is how I live my life and I can show you how to live worry free from someone who would want to take everything away from you, or who would want to make life miserable for you as you continually defend yourself, your family, your finances, and your property (real estate and everything else you own).
Watch for my next article “What is the True Cost of a Lawsuit,” where we’ll explore more than the price of a lawsuit.
In ‘The Millionaire Mindset of Asset Protection and Realty Trusts’ Course, how to avoid most all lawsuits and how to hold your real estate investment properties is covered in detail.
With Your Successes, I’ll See You Over the Top,
– Alan David Kosinski, Real Estate Extraordinaire