As a follow-up to an earlier posting about the overall costs of justice in NJ to the taxpayer, I want to look at the costs of civil lawsuits and litigation to the taxpayers of the state. Mark Fellows of the National Arbitration Forum published an analysis of the costs of litigation to the taxpayer in several states in the December 2007 issue of The Metropolitan Corporate Counsel. He is making an argument for the use of arbitration over litigation, which would remove cases from taxpayer funded courts into litigant funded arbitration settings.
New Jersey happens to be one state which publicly breaks out its judicial costs by part. Fellows analyzed FY2006, where $571,570,000 was appropriated for the judiciary and $130,112,080 was allocated to the civil courts. 100,332 civil cases were resolved in NJ in 2006, leaving an average of a little under $1300. That number, though, includes cases resulting in default judgments (where the other side doesn’t answer the complaint), dismissals for want of prosecution, settlements without judicial action and settlements through ADR. When you exclude these cases, the estimated average cost to the taxpayer of a contested civil case is $3,112.36.
Of course, this does not even account for the costs to the litigants themselves in attorneys fees, experts fees, filing fees and more. In a typical case, these can be in the tens of thousands which does not even guarantee a positive return on the investment (in a favorable judgment).
In a state with among the highest tax burdens in the country and no shortage of underfunded solutions for societal problems, moving cases out of the courts and into far less costly ADR forums such as arbitration and mediation can help far more than just the litigants involved. It can help every person in the state.
If you would like to learn more about using mediation or arbitration to resolve your dispute, please feel free to contact me.