Donald Trump’s legal antics underscore something that’s very wrong with the US legal system. When he encounters someone who says or writes something he doesn’t like, or refuses to be bullied, he sues. Trump even boasts that he uses the legal system to harass his opponents.
Here’s a small sample of the dozens of lawsuits Trump has filed over the years:
- In the 1980s, a family with the same last name – Trump – tried to buy a chain of drug stores. The name of their business was “The Trump Group.” Donald Trump sued them, alleging they were “trading on [his] goodwill, reputation and financial credibility.” It took five years, along with huge legal fees, before the case was thrown out of court.
- In 1984, the Chicago Tribune published an article suggesting that Trump would never succeed in building a structure in Manhattan taller than Chicago’s Sears Tower, then the world’s tallest building. The Tribune’s architecture critic, Paul Gapp, also suggested that Trump’s skyscraper would be “an atrocious, ugly monstrosity.” Trump claimed the story “virtually torpedoed” his dreams and sued, seeking $500 million. Again, the lawsuit was thrown out of court.
- In 2005, Warner Books published an unauthorized biography of Trump, entitled TrumpNation: The Art of Being the Donald. Author and New York Times reporter Timothy O’Brien claimed in the book that Trump had a net worth of no more than $250 million. At the time, Trump claimed that he was worth $2.7 billion. Naturally, Trump sued, but once again, the lawsuit was dismissed. Incidentally, Trump now claims he’s worth $8,737,540,000.
The passage of time has hardly mellowed Trump’s litigious personality. During his presidential campaign, he’s threatened lawsuits against numerous people and organizations. He’s sent opposing candidates and the political action committees that support them cease-and-desist letters demanding they retract their allegedly libelous statements about him. Trump’s lawyers even demanded that a company selling anti-Trump t-shirts withdraw them from the market because his name was “trademarked” and couldn’t be used without permission.
Now, I’m not going to speculate on how a lawsuit lover like the Donald would run the US. But love him or hate him, Donald Trump has done more than anyone else I can think of to underscore the risk of civil litigation in the US, by far the world’s most litigious society.
We Americans file more than 15 million lawsuits each year… that’s 40,000 lawsuits every day. One reason lawsuits are so prevalent is that unlike most other countries, US lawyers can take cases on “contingency.” The attorney receives no fees unless money is recovered from the defendant. As a result, those with chips on their shoulders can sue you and risk nothing more than time and energy. Investors have even formed hedge funds to invest in select US lawsuits by buying a share of the settlement based on the merits of the case. Web sites like this one match prospective litigants to attorneys willing to take their case. And in almost all cases, even in ridiculous and unjustified lawsuits, the losing side has no obligation to pay the winner’s legal expenses.
Another factor encouraging lawsuits is the growing number of federal and state laws that give plaintiffs (the person suing) a cause of action to recover damages against employers, landlords, and other businesses. Some of the most important of these laws are the Americans with Disabilities Act, the Fair Credit Reporting Act, and the Racketeer Influenced and Corrupt Organizations Act (RICO), but there are many others.
The concept of “strict liability” holds that even if you’re in no way negligent, you may still be liable for damages in a lawsuit. And under the theory of “joint and several liabilities,” someone suing you can hold you “fully financially responsible” regardless of your individual share of the liability. If you’re 1% responsible for a $10 million loss, you might be required to compensate the successful litigant the full $10 million! Almost every state has some form of joint and several liability statute in force.
Poor economic conditions also encourage lawsuits. People sue because they’re angry, desperate, or think they can get some easy money from a deep pocket. In an economic downturn, there’s plenty of anger and desperation. Hard times feed a blizzard of lawsuits connected to investment losses, worker layoffs, foreclosures, and abandoned property.
In the US, you can literally sue anyone for anything. But you’re at the highest risk if you’re prominent, have visible assets, and especially if you own a business or have a license to practice medicine, engineering, or other professional calling. Or of course, if Donald Trump has a beef with you.
A major focus of what we do here at The Nestmann Group is put together plans to help clients insulate themselves from lawsuits. One of the most fundamental strategies we use is encouraging clients to set up international trusts and LLCs and convey “nest-egg” assets into these structures. We create these entities in jurisdictions like Nevis, where attorneys can’t take cases on contingency, punitive damages are virtually nonexistent, and plaintiffs must prove their case beyond a reasonable doubt.
Once our clients have taken these steps, they’re in a much stronger position to defend themselves from sue-happy lawyers.
Perhaps you should consider a similar strategy, if you haven’t already started to put one together.
Mark Nestmann
Nestmann.com
