Time To Rethink The American Rule
“Can I sue?”
I am asked the question almost daily. The answer is, of course, simple: You can always sue. The real question is, can you file a lawsuit and win. In the United States, there is little harm in trying. That’s because losers aren’t required to pay the cost of hauling a defendant into court. Neither the government nor private parties bears any risk when they take aim at someone and miss the mark.
In Great Britain, losers pay the other side’s litigation expenses. That seems just. It is expensive to wage war in the courts. Why should you be penalized for expensive legal bills if you’ve done nothing wrong?
The American Rule, as it is called, requires both sides to bear their own costs. This is a great boon for insurance companies, who can offer coverage of potential claims, and sell policies to those with the means to afford the premiums. But where’s the justice in that? The American Rule helps transform the civil justice system into a lotto. Why not take a chance at a jackpot if it costs nothing to try?
It obviously increases the odds of success to have a lawyer if you elect to go to court. Most lawyers try to avoid taking cases they believe lack merit. But there are always people angry enough to go to court for a fee. It is not uncommon on the law’s wild side for firms to take cases of questionable merit just because the client offers cash. A courtroom ought not to be a high-priced form of therapy.
If you cannot afford a lawyer, the courts are still open. Our dockets in Connecticut are now chock full of pro se (pronounced “pro say”) cases. Judges are in despair about the onslaught of such cases. The litigants strain the system because they are unfamiliar with court rules and procedures.
No one should be kept out of court because they lack fees. A mother fighting for custody of her children, or a family fighting foreclosure, needs representation. If they are indigent, and a lawyer cannot be found to take their case without a fee, they nonetheless have a case or controversy requiring resolution. Legal Aid societies do God’s work. They are a necessity for those in need.
But I am not so sure the court system should permit folks to play without paying. Court time is scarce. The judicial system is a time-intensive and scarce resource.
Abandoning the American Rule would be a good way to impose discipline not just on pro se litigants, but on lawyers, too. It could even have salutary effects on the criminal system.
If a lawyer files suit and loses, then why not require the lawyer to pay the legal fees of the losing side? The courthouse doors would still be open to any and all. But a lawyer would be required to assume the risk of failure. Lawyers could purchase insurance of their own to cover their failed risks. A lawyer with a horrible track record might find herself disciplined by a market unwilling to insure her, and then have to face the consequences of filing losing suits without coverage.
Those who cannot afford a lawyer could face a requirement that, if they lose a case, they do community service. Obviously, this will not compensate a losing side for the cost of defense. But it would still impose some economic discipline on the market for litigation. Every court clerk can tell tales of pro se litigants who file lawsuits just because they can — as a means of harassing other people, or working out some private grief at great public expense.
Imposing costs on prosecuting authorities might also be beneficial in the criminal courts. The state is never required to pay a defendant’s expenses when it loses a prosecution. While there is a provision in federal law that makes it possible for a successful federal defendant to recoup expenses, the statute is rarely used, and the threshold for recovery is so high that the government almost never pays for its mistakes. Why not make prosecutors financially accountable for what they do?
Prosecuting authorities live in a cost-free world. Their costs are fixed. Come what may, they have a staff of full-time prosecutors, police forces, investigators, crime labs — a phalanx of public-employees on fixed salaries just waiting for something to do. I often wonder whether we’d have so many prosecutions if prosecutors had to sit down and reckon whether what they are doing is worth the cost. Why not require the state to pay a defendant’s legal fees for every acquittal?
There are mechanisms in place now that permit parties to seek sanctions for frivolous pleadings, and, in some instances, to bring separate and independent lawsuits to recover for fees in the most egregious cases. But these rules reflect a not-so-subtle bias that court is a good thing. Do we really want to encourage people to use the courts? In a civil society, ought not litigation be the last resort, rather than a starting point, in the resolution of disputes?
Lawyers are familiar with a concept the lay public never hears about. It’s called nuisance value — the cost of a successful defense of even the least meritorious of claims. If it will cost $50,000 to defend an action, then the case’s nuisance value is just south of $50,000. In other words, a defendant “wins” economically by offering the party suing him some sum less than the cost of defense. Many claims are settled with nuisance payments just to make the cases go away — usually after the defense lawyer has billed some sum for his trouble. What a waste.
I am not suggesting that we have a means test for litigants. The courts can and should remain open for the resolution of disputes. But we don’t foster a sense of civic responsibility by making the courts a cost-free gamble for those with either money or rage to spare. Make losers pay the cost of the litigation they spawn.
Reprinted courtesy of the Journal Register Co.