Is the British “loser pays” rule sweeping America? The idea is popular in polls, and already it is in effect in Alaska and some parts of Florida.

The United States inherited its legal system from the British. But one salient feature of the British system that never quite made it across the Pond is the requirement that a losing party pays the winner’s legal fees.

In the United States, the parties normally bear their own legal fees irrespective of the outcome of the case. In Britain, the rule is very different: loser pays.

There are a number of statutes in the United States that require fee shifting in certain kinds of cases such as employment discrimination, civil rights violations or copyright infringement. Few ever require a losing plaintiff to pay the winning defendant’s fees and the courts at times speak of certain statutes that shift fees to the defendant as aimed to encourage the assertion of “colourable” claims. Accordingly, defendants sometimes pay when they lose but plaintiffs generally do not.

Poll results on the question are of little moment. The American public harbour the perception that the system is saturated with “frivolous” cases brought by unscrupulous lawyers. A frivolous case is one that is lacking in legal and factual merit and brought only for settlement value, the principal component of which is the cost of defence. So why do defendants settle meritless cases? Whatever happened to “millions for defence, but not one penny for tribute”?

Quite often, it is the lawyer, not the client, who is the decision maker with regard to making a particular claim or defence. There is law on the books to deal with American lawyers who bring on frivolous claims or defences. A federal statute provides that an attorney who “multiplies the proceedings in any case unreasonably and vexatiously” may be docked personally for the other side’s excess costs and reasonable attorneys’ fees, attributable to such conduct. I have rarely seen this statute enforced, however, and in the real world lawyers routinely advance claims or defences having a low probability of success without much fear that they will be brought to book.

Lawyers have always been an unpopular profession. When Dickens in Bleak House created the interminable case of Jarndyce v Jarndyce, where the legal fees consumed the corpus of the inheritance, the fictional story rang true to life. No wonder Sandburg asked why “is there always a secret singing when a lawyer cashes in . . . why does a hearse horse snicker hauling a lawyer away?” The public’s perception of lawyers is all the worse now when the cost of litigation has soared into the stratosphere.

Loser pays is viewed by many legal scholars as particularly un-American. Embedded in the due process clause of the US Constitution is the notion of access to the courts for all. Loser pays, it is argued, would disincline would-be litigants to assert good-faith positions. Inflexible application of the rule, moreover, would fall most heavily on the less affluent members of society who, despite a meritorious case, must run the double risk of not only losing but also sustaining a crushing judgment for the legal fees of a corporate behemoth. Only the well-heeled could afford to have their day in court.

Would loser pays reduce the volume of litigation and calm the stormy seas of a litigious society? There is no consensus that loser pays reduces the filings of lawsuits. The UK and Germany have loser pays and, along with the United States, have the highest litigation rates among developed nations. Research, moreover, in Alaska, the one state that has adopted a fee-shifting regime, provides no evidence that frivolous cases are deterred. Alaskan defence lawyers say that the loser pays rule has only increased the value of plaintiff’s cases.

One virtue of the American rule is that only a foolhardy lawyer will take on a case if her estimate at the outset is that the legal fees will approach or exceed the amount of the probable recovery. A plaintiff with an appetite for risk, and who does not mind being beaten, is much more likely, to bring a marginal lawsuit under the British system. When Max Mosley sued the News of the World for invasion of privacy, he was awarded only £60,000 in damages. But, on top of it the High Court gave him an estimated £450,000 in legal fees which he had paid his lawyers for the trial. This could not have happened under the American regime

The controversy, of course, applies only to civil cases. Even in England, loser pays does not happen in criminal proceedings. If the “loser pays” logic is sound, however, an innocent defendant should recover from the Government the cost of his defence. But, is it thinkable that a notorious mobster such as John Gotti, who was acquitted three times after 1986 and convicted but once, could recover two thirds of his legal fees and wind up way ahead of the game?

There is little likelihood that English-style loser pays will be adopted very soon in the United States. The American rule is too greatly developed and too universally venerated by lawyers, and Congress obviously has bigger fish to fry. But American rules of procedure are supposed to “secure the just, speedy and inexpensive determination” of every case. So judges must take account of the high cost of litigation, especially when they deny summary judgment in close cases or order protracted depositions or blunderbuss document production — particularly, in the digital age of e-discovery.

The author is a New York trial lawyer and co-host of the cable talk show Digital Age

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