In the field of
law and economics
Law and economics, or economic analysis of law, is the application of microeconomic theory to the analysis of law, which emerged primarily from scholars of the Chicago school of economics. Economic concepts are used to explain the effects of law ...
, the English rule is a rule controlling assessment of
lawyers' fees arising out of
litigation. The English rule provides that the party that loses in court pays the other party's legal costs. The English rule contrasts with the
American rule, under which each party is generally responsible for paying its own attorney fees (unless a
statute or
contract
A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tr ...
provides for that assessment). The American rule can make it easier for a poor person to bring suit, but by the same token it gives everyone more risk of being sued. Some argue that the American system encourages frivolous or "extortionate" suits against businesses with "deep pockets," because plaintiffs can have a contingency fee arrangement with the attorney whereby they pay nothing to the attorney if the case loses. Under a contingent fee arrangement, the attorney for the plaintiff faces no consequences, other than lost time and effort, for bringing a suit that loses, but he can collect huge fees (typically 30% to 40% of the damages awarded) if he wins. By the same token, wealthy defendants have a strong incentive to pay the plaintiff to get a settlement, if they face a small chance of having to pay a huge amount. The rationale for the English rule is that a litigant (whether bringing a claim or defending a claim) is entitled to legal representation and, if successful, should not be left out of pocket by reason of their own legal fees. It should be borne in mind that, in virtually all English civil litigation, damages are merely compensatory.
The English rule is followed by nearly every Western democracy other than the United States.
United States jurisdictions
In the United States the "American rule" is generally followed, each party bearing its own expense of litigation. Alaska has long been an exception to the U.S. pattern, where the English rule applies. A very limited version of the English rule was adopted in Texas during the 2011 legislative session that applies only to the filing of a baseless lawsuit. Tex. R. Civ. P. 91a.
Then Texas governor
Rick Perry called in his state of the state address for a one-way version of the English rule which would apply only to those who initiate a suit, the plaintiff.
See also
*
Costs in English law
In English civil litigation, costs are the lawyers' fees and disbursements of the parties.
In the absence of any order or directive regarding costs, each party is liable to pay their own solicitors' costs and disbursements such as a barrister's ...
*
American rule (attorney's fees)
The American rule (capitalized as American Rule in some U.S. states) is the default legal rule in the United States controlling assessment of attorneys' fees arising out of litigation. It provides that each party is responsible for paying its own ...
References
{{reflist
*''Black's Law Dictionary'' (8th Ed. 2004).
External links
*
Walter Olson
Walter K. Olson (born 1954) is an author and blogger who writes mostly about legal subjects, including tort reform. Olson is a senior fellow of the Cato Institute, a libertarian think tank in Washington, D.C. Formerly, Olson was associated with t ...
"Loser Pays"GS2Law comments on the differences with US
Civil law (common law)