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As low ball estimate, let's estimate a lawyer costs $250 CAD/hr. Consider what happens if private lay person sues corporation with deep pocket is sued for a quantum less than or equal to a lawyer's fees. She is so angry about her product for whatever reason, and sues Apple or Samsung for $900, just as example, in Small Claims Court.

I won't assume anything on merits of lay person's case, because even investigating lay person's case can cost more $900. Apple or Samsung probably has to pay more $900 to hire a lawyer, in house or not, to represent them in Small Claims Court, like write defence, attend pre-trial settlement conference, and appear in trial.

Won't these corporations always try settle for $900, but with a NDA? If she accepts, they save lawyer's fees, public shaming, and no case record on CanLII. If corporations don't even offer this, they have to pay lawyers. Public can shame them, and they can lose more profit than $900! If they show up on CanLII, they look unimpressive and can create precedent for other lay persons to rely to sue them!

  • Assuming they don't sue you for lawyers fees and associated costs for a frivolous suit... Most cell phone companies require you to use binding arbitration anyway, with the losing party covering those costs specifically to discourage these types of things. – Ron Beyer Jul 4 at 23:20
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Costs follow the event

In most common law jurisdictions and in most cases the loser pays the winner’s legal fees.

So, for your example, a meritless claim for $900 lands the plaintiff with a $2,000 legal bill from the winner.

That said, you have rightly identified that how you respond to litigation is fundamentally a business decision, not a legal one. Some fights are not worth fighting even if they are fights you can win.

NDA’s notwithstanding, word gets out. A company that is known for easily settling dubious claims will be inundated with them. One known for vigorously defending every claim gets far fewer claims. Companies factor that into the above business decision.

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