The p.i. lawyers promptly formed the Big Apple Pothole Corporation, which sends people down every urban street finding potholes. They photograph them and put the city on notice, maximizing the chances that when Jane or John Doe steps in a pothole, or runs their car over one, the case will not be barred by the ordinance.
Its a pretty funny story, but it highlights a phenomenon worthy of serious attention.
Litigation is a system designed to handle the one-off case. Jones sues Smith. Jones has never sued Smith or anyone before, and Smith has never been sued before. They cannot amicably resolve their differences, and a judge must navigate them either to a settlement or a verdict. It makes sense as a system.
When the Big Apple adopted the pothole ordinance, it used a bureaucratic approach to shield itself from liability. And the attorneys, amusingly, created a shadow bureaucracy to defeat the city's attempt to avoid responsibility.
But what you end up with is a pot of money at one end of the rainbow, a bunch of gold seekers at the other end, and litigation itself as the bureaucratic process employed to determine who gets what. That's a really poor approach.
What it really means is that the city is completely out of control of part of its budget. Money that could have been used to improve services, hire more cops, or (ironically) fix holes in streets is being paid out to plaintiffs instead, or at least is laid out in insurance premiums.
A bureaucratic approach to compensating pothole victims would, like worker's comp, follow a standard set of rules ad be subject to administrative review for fairness. In theory, you wouldn't find Jones recovering ten million dollars while Smith recovers ten thousand on the same facts--because Jones had a more skillful attorney or a better jury-selection consultant. And you wouldn't be devoting a third of your pot of gold just to paying the lawyers.
Although the court system is designed as an arena of dialectical combat in which the truth comes out, once you use it to redistribute wealth in a bureaucratic fashion it turns into a very poor tool. As a medium for making such decisions, it is expensive, inefficient and extremely time-consuming. Recent trends away from requirements of strict proof of causation and towards junk science make it even more plain that the courts are being used as a mere bureaucracy. You have something, I want some of it and because I stumbled in the pothole, I have an excuse to ask for some of it. To the lawyers, these cases are a lottery where the odds favor the player, not the house. Insurance companies will settle most accident claims, even the groundless ones, at some minimum amount; and the one home run pays for the ten or hundred cases where you didn't cover your costs.
You will argue that this is the insurance racket, and as long as the insurance companies are happy, no-one is harmed. But I won't agree with you if my taxes are paying the premiums.