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by bdowling 1261 days ago
In the American legal system, each party pays its own legal fees unless there is (1) a statute that specifies fee-shifting or (2) a contract between the parties that specifies fee-shifting.

The reasoning behind this is that to require the loser to pay all fees would discourage "good" lawsuits. (e.g., an individual with a decent case against a big company, may be discouraged from filing because of the potentially catastrophic costs if he doesn't win.)
2 comments
AndrewOMartin 1261 days ago
This is presumably why American corporations typically live in such fear of individuals with a good case and modest resources.

I know this isn't your idea @bdowling, and it's actually interesting to hear the reason, but I couldn't resist /s posting.

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bdowling 1260 days ago
The "American Rule" also leads to many lawsuits of questionable merit being brought against corporations (and wealthy individuals). Attorneys take these cases on contingency, knowing that the defendant will likely just settle rather than incur a lot of legal fees, and the firm will take 33-40% of the settlement. These "nuisance lawsuits" are a big problem for some industries. If there was universal fee-shifting, these suits would be discouraged.

It can be worse though. In some jurisdictions and for certain types of claims (e.g., employer-employee wage/hour suits in California), statutes provide for "one-way fee shifting". One-way fee-shifting means that if the plaintiff wins, the defendant pays the plaintiff's legal fees, but if the plaintiff loses, the plaintiff does not pay the defendant's legal fees. Predictably, this leads to some law firms specializing in these types of cases, taking cases on contingency, discouraging the plaintiff from settling, and racking up huge legal fees that will be paid by the defendant if they win. And the law supports this. I read one article about the California Court of Appeals upholding a $250,000 fee award in a case over $20,000 in unpaid wages.

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danuker 1261 days ago
> because of the potentially catastrophic costs if he doesn't win

Well, a judge could rule how much of a company's costs are fit for compensation, also considering the material situation of the plaintiff.

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