Friday, November 21, 2008

Lemon Law Cases and Car Companies

Here's a secret tip that should be obvious. Car companies do not want to go to court on a lemon law case. The risk of going to court far outweighs the cost to settle. Here is why:

1. Defending a lemon law case is expensive for these companies. By the time a lemon law trial is completed, the car company can easily spend $20,000 defending itself from your claims. These cases are rarely completed with their own attorneys so it is really all money out of pocket to them. With that much money at risk, defending a lemon law case is already very expensive, even if they win.

2. In most cases, the lemon law lets you collect up to three times the damages that you are owed. That means that if your car originally cost $25,000, they can risk losing $75,000 due to a jury decision, plus their own attorney fees, plus the possibility of having to pay your attorney fees. Since they can replace your car at cost AND still recover some of their loss by selling your old car, it makes more sense to replace your $25,000 car with a new one that can cost them as little as $10,000. Their choices are really simple, they can risk losing $100,000 or more or settle with you at their cost for $10,000.

3. Car companies do not want to have to deal with the bad publicity from dealing with a lemon law case. Obviously, your case is likely not going to make headlines in the NY Times, but it still registers as newsworthy and could be picked up locally. Public attention to a lemon law case risks more than a loss in court for these companies. It can also represent a loss of their public image which can result in a significant loss of sales.