The English Rule & the American Rule [POLICYbrief]
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The English Rule & the American Rule [POLICYbrief]


The English rule as it applies to the payment
of attorneys’ fees means that the loser is going to pay the attorney’s fees for the other
side. That’s very different than the American rule. The American rule is that you don’t pay the
other side’s attorney’s fees if you lose, you only pay your own lawyer’s fees. It’s certainly become a very important distinction
between the way court systems work in the United States and in the rest of the world,
and frankly, you can measure that by the number of lawyers in the United states versus the
number of lawyers in other countries that also have bipartisan legal systems. In the United States, being a lawyer is a
business, very much so, whereas in other parts of the world, it’s viewed as a much different
type of profession. In the United States, lawyers charge upwards
of $2,000 an hour in commercial cities such as New York City. Whereas in other parts of the country, they
charge less, but nonetheless, it’s a free market system. You charge what you can to the client. There are exceptions to the American rule. The most obvious are where you have a contract
which requires that you pay the other side’s fees in the event you lose. About 60% of all contracts have a provision
like that, so there are ways that litigants today can accomplish the functional equivalent
of the English rule. There’s the recognized exception where, by statute,
a legislator or Congress, for example, decides that a particular type of case merits fee
shifting, but the American rule is still the default rule, and has been really for hundreds
of years. The impact that the American rule has on the
practice of law in America is that cases can be brought which are novel, inventive, cutting-edge, and can be litigated without the fear that if you’re wrong, as a lawyer or a client,
you’re not going to have to pay the other side’s fees in order to test what may be novel
waters. That’s the benefit of the American rule, but
the fact of the matter is the American rule has consequences, and fee-shifting does have
the effect of having or encouraging a more sober consideration of what you are undertaking
before you go into a lawsuit. On the other hand, the prospect of paying
the other side’s fee can have a chilling effect on less than merited lawsuits. I think the objections to the American rule
are based upon commercial realities. The objections to the American rule are most
vigorously voiced by those who find themselves having to pay lawyers, but not be able to
recover the cost of litigation from the losing party. It’s an economic reality that litigation in
this country is expensive. Lawyers are expensive. Jury trials are expensive if you get there. Because legal costs have gone up so substantially
over the past several decades, it is understandable that people would want to look at the economic
balance that’s created by the American rule. Does the American rule foster the interest
that it was set out to accomplish when first established? That is, you don’t pay the other side’s fees
in the event you lose. Is that a good thing?

5 Comments

  • setiisforeal

    The American rule is, in some ways, tied to American exceptionalism. Part of the idealism that founded America (as opposed to being formed as a territory where people shared a common history) was to more easily allow challenges to authority and existing precedents. So, regardless of whether it was originally concieved through this lens or not, the American rule has strong ties to concepts such as judicial review, i.e. it becomes much easier for public interest groups to get live cases/controversies in front of a court when they know they can do so with staff attorneys who work for (comparatively) less money, but this would cease to become feasible if organizations such as The Institute for Justice, ACLU, etc. had to contemplate paying white-shoe hourly rates to the opposition every time they lost a case. In essence, the main way that judicial review actually happens in practice is predicated on the American rule continuing to be viable. It certainly has its downsides, but I think it's necessary to maintain here if America wants to live up to the founder's principles.

  • Stay EZ My Friends

    I live in Canada and this is why nobody sues anyone. The judges themselves will tell you to your face you can be on hook for up to x thousands of dollars if you lose. So people don't bother cause you get punished severely for trying and failing.

    To counter this, we have small claims courts where paying the other sides fees is limited to a very small amount, but your claim cannot exceed 25 grand.

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