Personal Injury Law

The Case for a "Loser Pays" Rule

By John A. Day

The Manhattan Institute for Policy Research has issued a report extolling the virtues of a "loser pays" rule.

Here is an excerpt from  the "Executive Summary:"

This study explores the likely effects of adopting a "loser pays" rule for attorneys' fees in the United States. Loser pays, sometimes called the "English rule" but actually, in essence, the rule in place in the rest of the world, refers to the policy of reimbursement by the parties who lose in litigation of the winners' legal expenses, including attorneys' fees. This study argues that loser pays could be an important part of a larger effort to reduce litigation costs, better compensate prevailing litigants, and better align tort law with its goal of deterring socially harmful conduct. A loser-pays rule would discourage meritless lawsuits, but because any such rule should also ensure plaintiffs of modest means but strong legal cases access to justice, our proposal calls for:

1. A robust litigation insurance industry similar to those that now exist in other loser-pays countries; and

2. A cap on recoverable fees to eliminate the incentive that large litigants might have to attempt to "buy a verdict" under loser pays.

This study explores in depth how a loser-pays rule would change litigation in America. It includes key findings about the likely effects of loser-pays reform and evaluates previous experiments with loser pays in America.
 

Here is a copy of the complete report. 

And here is a link to a site where you can purchase your  own "Complete and Utter Bullshit" stamp so that you can mark the report appropriately after you read it.

Hat tip to the Torts Prof Blog.

Full post as published by Day on Torts on December 05, 2008 (boomark / email).