January 16, 2007
The "American Rule"
Litigation is expensive. Any time you engage legal professionals for a process that frequently takes years, you're looking at a hefty bill for attorney's fees. In America, each side generally pays their own attorney's fees, regardless of who wins.
But in Britain, the loser pays the attorney's fees for both sides. Which is what's going to happen in this case, to the tune of approximately $2 million.
The advantage of the American rule is that if you lose, all you've got is your own costs, and if you were the plaintiff, you frequently don't have to pay anything, as many attorneys take cases on a contingency basis. This means that people who cannot afford to lose can still have their day in court, as losing doesn't cost them anything.
The advantage of the British rule is that if you win, you really win, as most of your costs are passed on to the losing party. So if you're the plaintiff and win, not only do you get whatever judgment is awarded you, but the losing party also pays your attorney's fees. But if you lose, you have to pay for everybody. The advantage here is that it keeps many frivolous cases out of court, as you don't dare bring a case you aren't really sure you're going to win. The other advantage is that barristers generally can't dip into the award or settlement, as their pay comes from the side that loses, not the side that wins. In America, attorneys working on contingency have a vested interest in winning as much as possible and going after rich targets, because they'll get a third of whatever they win. This isn't true in Britain, which some argue keeps things on a more even and sensible keel.
