Alabama district courts have been hearing more cases since September 1. Alabama district courts are known to many as ‘small claims court’, although district courts function in several other capacities and small claims cases are distinguishable. This summer, the Alabama Legislature passed SB 297 which increased the jurisdictional limit for Alabama district courts from $10,000 to $20,000 (effective September 1).

Prior to SB 297, circuit courts maintained exclusive jurisdiction over claims exceeding $10,000, forcing larger claims onto slow-moving circuit court dockets. With the passage of SB 297, claims up to $20,000 may now be filed in district court, where cases are typically litigated more quickly.

This new jurisdictional limit is expected to have an impact on business entities. More disputes involving business entities will now fall within the jurisdiction of the district courts, exposing those businesses to the accelerated district court process. Many entities may elect to file claims below the $20,000 limit to take advantage of the expedited process and dispose of their claims more quickly, an option with often too high a price tag when claims were capped at $10,000.

Businesses were similarly impacted by the 2015 increase in the jurisdictional limit for small claims court from $3,000 to $6,000.(1) Also heard by district courts, cases under the $6,000 small claims cap allow businesses to sue without attorney representation. Cases that fall under the general district court limit of $20,000 but above the small claims limit require business entities to be represented by counsel.

Although businesses may now fast-track more claims through the district courts, they must be represented by licensed attorneys prepared to litigate their claims on a much shorter timeline. This presents a different set of pros and cons that should be assessed with the assistance of counsel.