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. The field emerged in the United States during the early 1960s, primarily from the work of scholars from the Chicago school of econ ...
, the English rule is a rule controlling assessment of
lawyers' fees arising out of
litigation
A lawsuit is a proceeding by one or more parties (the plaintiff or claimant) against one or more parties (the defendant) in a civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. ...
. 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
A statute is a law or formal written enactment of a legislature. Statutes typically declare, command or prohibit something. Statutes are distinguished from court law and unwritten law (also known as common law) in that they are the expressed wil ...
or
contract
A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ...
provides otherwise).
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, although there are specific exceptions when different rules apply.
United States jurisdictions
In the United States the "American rule" is generally followed, each party bearing its own expense of litigation. However, provides that in patent cases, the losing party may have to pay attorney fees of the winning party if the case is deemed "exceptional." However, after the
U.S. Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that turn on question ...
's decision in ''
Octane Fitness, LLC v. ICON Health & Fitness, Inc.'' on April 29, 2014, it is now easier for courts to award costs for frivolous patent lawsuits initiated by
patent trolls.
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
James Richard Perry (born March 4, 1950) is an American politician who served as the 14th United States secretary of energy from 2017 to 2019 in the first administration of Donald Trump. He previously served as the 47th governor of Texas fr ...
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
*
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 ow ...
References
*''Black's Law Dictionary'' (8th Ed. 2004).
External links
*
Walter Olson"Loser Pays"GS2Law comments on the differences with US{{Webarchive, url=https://web.archive.org/web/20140106101252/http://www.gs2law.com/the-english-rule-vs-us-sanctions-quandary/ , date=2014-01-06
Civil law (common law)