In starting a lawsuit, the first matter to resolve is which court has jurisdiction, or the authority to resolve the controversy.

Federal courts have jurisdiction over matters involving controversies between the states, questions of federal law, and controversies between parties from different states in which the amount involved exceeds $50,000. Others matters are to be brought in state courts. Under federal law, it is the requirement of the plaintiff to establish that the court has jurisdiction over the controversy.

State courts typically have a two or three tier system. Each system has a threshold dollar amount, or authority based upon subject matter. For example, small claims courts might have jurisdiction over controversies less than $5,000, municipal court for controversies less than $25,000 and superior court for controversies in excess of $25,000. In addition, there may be rules which establish special courts for certain matters (traffic courts, family law courts, juvenile law, landlord/tenant court, and probate court). In state court, it is usually the responsibility of the defendant to raise the issue that the court lacks jurisdiction over the matter, (although a judgment from a court that lacks jurisdiction can be challenged in the future).

In addition to jurisdiction, proper venue must be established in both federal and state court. Venue is where the court is located with respect to both the parties involved and the controversy. Venue for a matter is usually based upon residence of the defendant, although with some actions the venue is based upon where the plaintiff resides.