SAN DIEGO – Small claims court cases have been in decline nationwide for several years.
The National Center for State Courts estimated that small claims filings fell by roughly one-third between 2018 and 2022, even as other forms of court filings and lawsuits rebounded following the nadir of the COVID-19 pandemic.
One of the primary reasons for the dip in small claims cases was obvious, Michael Egenthal argued.
“Essentially, nobody wants to do this, nobody knows how to do this, it’s a headache, it takes forever, you don’t know if you’re doing it right and you don’t know if you’re going to get paid,” he said. “All these things are issues.”
Egenthal, an attorney and professor at the Monterey School of Law, is the founder of Squabble, a web platform designed to help shepherd people through the small claims filing and pre-hearing process.
Roughly 35% of small claims filings in California are rejected, according to Egenthal, and less than half of those are refiled. This presented an opportunity to help claimants file their case correctly the first time, he argued, and determine the relevant jurisdictional differences that may have otherwise tripped them up.
Simplifying Complexities
Small claims cases are typically disputes between individuals, such as a landlord and a tenant arguing over the return of a security deposit, or between an individual and a business over lost money or valuable goods.
Small claims cases can be disputes of up to $25,000 but are typically closer to around $10,000 or less. According to Egenthal, more than 10,000 disputes have been submitted to Squabble and around 90% of the platform’s users either reach a settlement with the other party in their claim or win a judgement in a small claims court.
“We try to simplify (complexity) as much as humanly possible,” he said, adding that the company’s goal is to reduce the maximum amount of work required to file a small claims case down to answering around eight questions and letting Squabble file the case on the claimant’s behalf.
As part of that effort to reduce complexity, Squabble announced in January that it added an artificial intelligence-based agentic advisor named Sophie to the platform, which can explain court rules in all 50 states, help users organize facts and aid users through each step of filing a claim.
Sophie was primarily designed to help users with basic questions, according to Egenthal, freeing up the company’s human advisors to work with claimants on thornier issues.
However, Squabble’s human advisors are not considered legal counsel and do not form an attorney-client relationship with the platform’s users.
“We just simply empower the individual to be self-represented, so we’re sort of putting the notion of justice with the individual, the small business owner,” he said.
M&A Offers Aplenty
While Squabble has around 15-to-20 investors, the company has refrained from seeking a formal funding vehicle, both because of the continued growth of Squabble’s userbase and because the company has opted to focus on ensuring the platform’s case preparation and filing services are as precise as possible.
Egenthal added that Squabble gets multiple requests each week about a potential acquisition, but said that he’s not interested in entertaining those offers for the time being.
“The genesis of this has always been access to justice; our daily grind is being a player in the access to justice movement, and that’s what we’re all passionate about,” he said. “So we just have the virtue of creatively growing something alongside being what we think is providing an important service as part of that movement.”
Squabble
FOUNDED: 2017
CEO: Michael Egenthal
HEADQUARTERS: San Diego
BUSINESS: AI-based platform to make small claims filing more efficient
EMPLOYEES: 15
WEBSITE: squabbleapp.com
CONTACT: (877) 245-2328
NOTABLE: Egenthal is a graduate of the University of San Diego School of Law.
Eli is an award-winning reporter primarily covering the tech and life sciences industries. He previously worked as the San Diego City Hall reporter for the regional wire City News Service. He has also covered public health, transportation and state and local politics in the San Francisco Bay Area for Local News Matters, the nonprofit arm of the regional wire Bay City News Service, where he also oversaw the development and daily content management of the outlet’s public health and COVID-19 news and resource webpage. He is also a contributing writer covering Minor League Baseball for the analysis and commentary website Baseball Prospectus. Eli is a graduate of San Francisco State University and a native of Northern California.
