<P> The People's Court deals in small - claims matters . When the show premiered in 1981, litigants could not sue for more than US $1,500, which was the limit for small - claims court at the time in California . As the laws in California changed, so did this amount . Starting in 1990, litigants could sue for up to US $5,000, which is now the law in most states . </P> <P> Researchers for the show examined small - claims filings in Southern California and approached the plaintiff and defendant in interesting cases . The producers offered to have Judge Wapner arbitrate the dispute if they would agree to dismiss their action and be bound by Judge Wapner's decision . Through this approach, the show could get real people with real cases . Though the show is decorated and run like a real courtroom, it is not a real court or part of any judicial system, but instead a form of binding arbitration . </P> <P> The losing party does not actually need to pay the judgment, as such . Instead (as is stated in the disclaimer at the end of each show), both parties are paid from a fund (set up by Ralph Edwards - Stu Billett Productions). This fund was based on the amount of the lawsuit claim, but an exact formula was not stated . The fund was to be first divided equally, then any monetary judgment ordered was subtracted from the loser's half (and presumably both halves in the case of cross judgments). Each litigant received at least what remained of their half in shows concluding with that disclaimer . </P> <P> The disclaimer did not call this fund an "appearance fee", a term which appeared later in connection with The People's Court and other court shows . There may have been a later period when The People's Court paid the judgment, plus expenses and only a modest appearance fee to each litigant . </P>

Who pays the settlements on people's court