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New York City: Lawsuit Capital of the World (original)

January 30, 2011
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5min read

When most people think about New York City, images of the Empire State Building lit up at night, star-studded marquees outside Broadway theaters, and overstuffed subway cars speeding across Manhattan come to mind.

When we think about New York City, though, we think about one thing and one thing only: a whole bunch of lawsuits.

Ok, not really -- we're not that single-minded.

But still, living and working in a city where the morning news seems full of lawsuits, lawsuits-waiting-to-happen, and settlement reports -- it's hard for us to have time to think about anything else.

There's definitely no doubt about it: New York is one litigious city. More importantly, though, it's an openly litigious city. Every year, the city comptroller releases a data and analysis report on the claims filed against New York City. It's a nerdy legal funder's dream: a bevy of settlement data -- published by a defendant! It's not typical for such settlement data to be published for everyone to see, and since the shape of the legal funding industry directly relates to the number and value of cases filed, we thought it would be worthwhile to point out some of the most interesting findings in the Comptroller's fiscal year 2013 report.

This fiscal year, the City has budgeted $674 million dollars solely for settling suits filed against it and its various  departments. That sum is nearly 40% larger than what was doled out in FY 2012 -- $485.9 million. Just to emphasize how massive this year's budget is: the city is spending nearly $80 per resident to fund all of these claims. 

That's pretty astounding.

According to the Comptroller's report, a majority of these claims are tort claims filed by individual plaintiffs, including medical malpractice claims and motor vehicle accidents. Non-tort claims filed against the City typically involve contract disputes between the City and its employees, and other government matters. With nearly 9,500 claims filed against it, the NYPD is responsible for a majority of the city's litigation. These claims are frequently related to allegations of civil rights violations and police misconduct, and they're disproportionately filed by plaintiffs living in certain areas-- like Central Brooklyn and the South Bronx -- even when controlling for variations in police-civilian interactions.

While it's often difficult to determine true liability in these cases -- and thus their strength and potential settlement value -- the sheer number of allegations filed against the NYPD piques our interest. While the City's Health and Hospitals Corporation has greatly reduced the number of claims filed against it in recent years, the total amount it paid in FY 2013 was second only to the amount paid by the NYPD.

Medical malpractice settlements can be expensive; though the claims filed against the HHC accounted for only 3% of all tort claims, the resulting settlements accounted for 27% of the total tort settlement value. Police misconduct, civil rights disputes, and medical malpractice claims are perhaps the most sensational cases brought against New York City -- but they're not the only ones.

For example, the Department of Parks and Recreation has received notably more suits filed against it since 2007, when it announced an initiative to plant one million trees in New York, and 2009, when the mayor's office cut its tree pruning budget. This lethal combination -- more trees, with less caretaking -- correlated with an increase in personal injury and property damage cases in FY 2010 and 2011, with the total number of cases stabilizing after the tree maintenance budget stabilized in 2012.

Of course, direct causation is impossible to prove here, but it's always important to pay attention to how budgetary and regulatory decisions interact to shift the landscape of the legal industry. This year's Comptroller report was issued alongside an announcement of the new Claimstat program, which uses case data to help agencies limit mistakes and issues -- and thus litigation. The City's hope is that this data, freely available online, will allow for thorough analysis and proactive policy decisions.

For example, the Department of Sanitation could use localized data to determine which of its routes are responsible for the high number of Motor Vehicle Property Damage claims raised against it, and then evaluate how adjusting particular routes and pushing for better road conditions could reduce these claims. Further, the NYPD could better understand its officers' relationships and interactions with the public on a precinct-by-precinct basis.

Claimstat is intended to help the City's agencies limit the number of lawsuits filed against them, but we hope that this data will also help plaintiffs and their attorneys better understand what their cases are worth. It can often take months or years to settle complicated lawsuits, which is why many people seek out legal funding in the first place. But with more information and transparency made publicly available, legal proceedings can more quickly and easily be resolved -- benefiting both plaintiffs and the city, even if fewer people seek out funding options.

We believe legal funding can level the playing field in many lawsuits and for many plaintiffs, but  increased transparency on the part of defendants like the City of New York can only help in the fight for a more egalitarian justice system for all parties involved.

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