No one wants to be served with a lawsuit, especially in situations in which the case has no legal merit. While the majority of lawsuits filed in the U.S. involve legitimate claims, there are always frivolous lawsuits filed that have no basis in law or fact.
Many wealthy individuals fail to address the threat to their personal wealth that can result from a frivolous lawsuit. Their higher profiles, combined with the ease at which personal information can now be acquired via the Internet, increase the risk of wealthy individuals becoming the unfortunate targets of frivolous lawsuits.
The most critical point to understand is that once you are sued, it is too late to protect your assets. The best strategy to protect your family is to work with an asset protections attorney who can create fire-wall protection and reduce risk by creating a trust or similar vehicle before you are sued. From time to time, clients come to our firm after they are sued but asset protection strategies will no longer protect you, your assets or your legacy.
If you opt out of creating true risk mitigation strategies, you are at risk for becoming a victim of these types of lawsuits. The following is some information that may assist you in fighting a frivolous lawsuit, if you’re sued. Depending on the circumstances surrounding the claim, there are possible options that you, as a defendant, can take to try and remedy the situation.
In many frivolous lawsuit cases involving wealthy and/or high profile individuals, the defendants are more concerned with the stress and time that goes into mounting a successful defense as well as protecting their reputation, even if the charges are clearly unfounded. Therefore, they may enter into settlement negotiations to keep the case out of the court and the media. But this option will not protect the plaintiff who sued you from possibly winning the lawsuit and collecting sums of money from your unprotected assets.
California’s Code of Civil Procedure provides some limited, but not often successful, remedies for fighting back against frivolous lawsuits. Therefore, it is more effective to discourage the lawsuit in the first place by protecting your assets. This creates limited reason to sue if the plaintiff realizes they can’t collect, even if they win. The state’s anti-SLAPP statute, Code of Civil Procedure section 425.16, is a type of motion to strike that may be brought at the beginning of a lawsuit.
The California state legislature enacted the anti-SLAPP motion in an effort to provide for an early dismissal of meritless suits when the defendant believes that the intention of the lawsuit is chilling “the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances”. If the plaintiff cannot prove that there is a “probability of success” with his or her claim, the complaint can then be stricken, and the defendant is entitled to recover attorney’s fees and costs.
While a case is pending, it is possible to obtain sanctions under California’s Code of Civil Procedure section 128.7 which defines frivolous, in part, as “totally and completely without merit.” Section 128.7 requires that all pleadings and motions filed with a court be signed by an attorney or unrepresented party, thereby certifying that the documents have not been presented for an improper purpose and that their allegations can be supported by law and evidence.
Make a Plan for When You are Sued
No one plans on getting sued, but for wealthy individuals with high assets, there is a real risk of losing everything to a frivolous lawsuit. Establishing a comprehensive estate plan with proper asset protection strategies in place can protect your assets, your family, and your legacy from meritless legal attacks.
The Jeffrey M. Verdon Law Group, asset protection attorney in Redwood City, can provide expert legal advice about a variety of asset protection strategies that allow you to control your wealth. Our top priority is to manage and mitigate risks to keep your assets safe and sound.