TABLE OF CONTENTS. 1 Introduction 2 Choosing small claims 4 Going to court 6 Litigation funding 7 Your privacy 8 Further resources

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1 SMALL CLAIMS GUIDE Disclaimer: this Guide is meant to be legal information and not legal advice. Users should not rely on this information but should rather seek independent legal advice regarding their own case.

2 TABLE OF CONTENTS 1 Introduction 2 Choosing small claims 4 Going to court 6 Litigation funding 7 Your privacy 8 Further resources

3 WHY SMALL CLAIMS? Equifax, one of three major consumer credit reporting agencies, revealed last week that hackers had gained access to company data, compromising Social Security numbers and driver s license numbers for 143 million American consumers. For many consumers, this data breach compromised their most personal information, resulting in identity theft and security risks that affected their time, money, and financial futures. But consumers have power, too. Here at Legalist, we believe you don t need to wait for governing bodies and class action lawyers to take action against Equifax. Dozens of class actions have already been filed against Equifax, and while class actions are effective for negotiating large settlements, those settlements rarely result in large payouts for individual consumers. You can file your own case in small claims court and win. Keep reading to learn more about how small claims court works, and whether litigation finance is a good fit for you. We want you to understand all of your options before you commit. If at the end, you decide that you want to represent yourself in court, we d love to help. Power to the people, The Legalist Team PAGE 1

4 CHOOSING SMALL CLAIMS WHAT IS SMALL CLAIMS COURT? Small claims court is a special court for people to resolve small disputes quickly and cheaply. In small claims court, the rules are simplified and attorneys are generally not allowed. In California, over 150,000 small claims are filed each year, according to the 2015 California Court Statistics Report. 70 percent of these claims are heard by a judge within 90 days. By contrast, most cases in civil court take up to two years to resolve. Terminology If you re new to the court system, here s some helpful terminology that will be referenced through this guide. Plaintiff: The person who files the lawsuit is called the plaintiff. Defendant: The person or business against whom the lawsuit is filed is called the defendant. Liability: One of the two key issues you will be asked to prove in court is whether the defendant did something wrong. This is called liability. Damages: The second key issue you will have to prove in court is damages. Damages are the amount that you suffered, which can be costs incurred or non-monetary losses. Hearing: A hearing is an in-person meeting in front of the judge that both the plaintiff and the defendant are asked to attend. In small claims court, there is generally only one hearing where the judge will ask you questions, after which you will receive a judgment. Judgment: A judgment is the ruling that the judge will pass down regarding if/how much the defendant must pay the plaintiff. Default Judgment: If the defendant fails to show up at the hearing, the plaintiff will be granted a positive judgment by default. This is known as a default judgment. PAGE 2

5 SMALL CLAIMS VS. CLASS ACTIONS When a big case like Equifax occurs that affects many consumers, many lawyers will begin class action cases, which are in civil court and have separate rules and procedures. Class action cases consolidate the claims of many consumers and allow for more efficient litigation. Class actions are known for resulting in multi-million dollar settlements. When a settlement is reached, the class counsel, or the lawyers representing the entire class, distribute the proceeds between all the members of the class. The benefit to participating in a class action is that experienced attorneys will be able to negotiate on behalf of the class without any effort or expenditure on your part as an individual. By contrast, small claims require significant effort on your part. You have to argue your own case in court in front of a judge, and prove your own damages, instead of having an attorney settle the case for you. While the potential for damages is greater, you also are more at risk to expend great effort with little or no reward. The benefit of small claims is that you may recover from Equifax sooner and that you will be able to have your case heard in front of a judge personally. If you decide to pursue a small claim, you may have to opt-out of any class action proceeds. Small claims cases are significantly riskier, so if you decide to pursue a lawsuit on your own, you may be giving up easy winnings via a class action. PAGE 3

6 GOING TO COURT STEP 1: FILING First, you have to notify the court that you are initiating your claim. This usually entails paying a filing fee to the court and submitting multiple copies of your complaint, which is a form issued by the court that differs from jurisdiction to jurisdiction. In many places, you can either mail your documents to the court, along with a self-addressed envelope, or you can bring your complaint, along with the filing fee, directly to the court to have it stamped by a clerk. Filing fees can vary, but in most states they range from $20 to $80. Check your local rules for confirmation. STEP 2: SERVICE OF PROCESS Next, you have to notify the defendant, that they are being sued. This is called service of process. You should look into the individual rules by state, but generally you can have a friend act as a third party process server, after which your friend must then usually complete a Proof of Service form, which must again be filed with the court. Alternatively, you can request that the court serve the defendant via certified mail. This sometimes incurs additional charges. STEP 3: NOTICE OF HEARING If the court is satisfied that the defendant has been adequately served, they will issue a court date for the final hearing, which is usually within 90 days of filing. The hearing is mandatory to attend. If either party does not attend the hearing, they lose the case by default. This cannot be stressed enough: if you miss your hearing date, you will lose your case. PAGE 4

7 STEP 4: THE HEARING At the hearing, you will have the chance to speak about the liability of the defendant and any damages you incurred as a result. The judge will then issue a judgment that either dismisses your claim or entitles you by law to a sum of money from the defendant. If the defendant does not attend, you will be issued a Default Judgment, which is also enforceable by law. STEP 5: COLLECTIONS If you receive a favorable judgment or a default judgment, you will then have to collect the money you are owed from the Defendant. Collecting a court judgment is one of the most challenging and frustrating aspects of any lawsuit. The defendant, although they are obligated to pay the judgment, may simply refuse. Some of this risk is mitigated when the defendant is a large company, but collections may still require a great deal of added effort. APPEARING IN COURT When you appear in court, the judge will ask you to present your case. Here are some tips regarding court appearances: Tip 1: Dress nicely for the occasion. Small claims court is still a part of our judiciary process, and judges will expect the same respect they are accorded by lawyers and plaintiffs in every other courtroom. Tip 2: Always address the judge as, Your Honor. Tip 3: Never interrupt, shout, or be rude to either the defendant or the judge. You will not help your case and may be asked to leave the courtroom by the court marshals. Tip 4: Speak calmly and clearly about the damages you incurred, including but not limited to: +Expenses incurred when filing for new credit cards +Cancellation fees +Expenses from rectifying identity theft +Credit monitoring services you have paid for or will be paying for in the future +Time spent handling preventative measures PAGE 5

8 LITIGATION FUNDING WHAT IS LITIGATION FUNDING? Litigation funding is where a third party litigation funder like Legalist helps you win your court case by providing funding for costs. All litigation funding is non-recourse, which means that you only repay Legalist out of the money you win in your lawsuit. WHY DO PEOPLE USE LITIGATION FUNDING? Many plaintiffs use litigation funding when they don t have the money to pay for the costs involved in a lawsuit. Although filing fees for small claims court are under $100, small claims court is an exception. In most cases, costs can include attorney s fees, deposition costs, expert witness costs, and other fees that pop up through the case. Even when attorneys are on contingency, plaintiffs usually have to pay some of the out-ofpocket costs themselves. Litigation funding means that plaintiffs don t have to worry about paying those costs until they win their case. It makes going to court a lot less risky. SHOULD I USE LEGALIST IN MY CLAIM AGAINST EQUIFAX? Even in the Equifax case, litigation funding may or may not be suitable. For cases against Equifax, Legalist is helping plaintiffs front the cost of filing fees in their small claims case in exchange for 30 percent of the final proceeds from the case. If you have the money to pay for the filing fees yourself, you may choose to pay for your own costs instead of using litigation funding -- and keep the entirety of the judgment for yourself. If you sign a contract with Legalist, you have a contractual obligation to file your case in court and follow all proper procedures in litigating your case, including service of process and fully prosecuting your case at the hearing. If you don t follow your suit to the end, you must repay Legalist the full amount of the filing fees. PAGE 6

9 YOUR PRIVACY IMMEDIATE STEPS Legalist is a litigation finance firm, not an expert on consumer privacy. However, there are some useful and widely accessible resources that may help to protect your privacy in the short term. Most notably, filing a lawsuit in small claims court will not replace the need to protect your privacy, so if your data has been affected in the Equifax hack, you should take immediate steps to check your credit report and make sure your information is not already being used. Other preventative measures, such as credit freezes and signing up for credit monitoring services, can be found in the Resources section on page 8. Please note that the legal process is distinct from preventative measures, and should go hand in hand. PAGE 7

10 RESOURCES SMALL CLAIMS COURT New York City Small Claims Help Center Harvard Small Claims Advisory Service & Helpline San Mateo Small Claims Advisor California Small Claims Court Basics Los Angeles Small Claims Advisors SMALL CLAIMS COURT Legalist Litigation Finance 101 How Legalist Works (Video) The New Yorker, What Litigation Finance is Really About PRIVACY USA Today, Here are the best ways to protect yourself after the Equifax security breach Federal Trade Commission: Equifax Breach and What to Do PAGE 8

11 GET IN TOUCH To find out whether Legalist is a good fit for your case, please visit and fill out our brief questionnaire. A B O U T U S C O N T A C T Legalist is a litigation finance company based in San Francisco, California. We help individuals and small businesses access the justice system. PH: (415) founders@legalist.com Questions? Please visit our website at W W W. L E G A L I S T. C O M