The American Rule

One idea for tort reform is to have the loser of a lawsuit pay the costs and attorneys fees for the prevailing party. It is believed that this rule, if implemented, would prevent "frivolous" lawsuits from being filed. While a rule requiring losers to pay in all situations would likely reduce the number of lawsuits from being filed, it would not serve the ends of justice we seek to have our court system achieve.

The rule discussed is commonly referred to as the "English Rule" because in Great Britain, the loser of a lawsuit is required to pay the costs and fees of the prevailing party. The "American Rule" has traditionally been that each party pays for their own representation. There are some exceptions to the American Rule. For instance, in federal civil rights cases, if the plaintiff wins, he/she can require that the government pay the costs and attorneys fees expended to vindicate the person’s rights. There are also specific statutes on the federal and state levels that provide for a prevailing party to be awarded attorneys fees. For the most part, however, every party is responsible for their own attorney’s costs.

For over ten years people were suing the tobacco companies alleging that the product that they put on the market was dangerous as designed and the tobacco companies should have been held liable for the harm caused by their product. For over ten years, the tobacco companies took a hard line stance on the issue and required that each and every case go to trial. This strategy served several purposes. First, the tobacco companies did not want to set a precedence of paying damage awards to anyone who died of lung cancer. Second, they figured they could win number of the cases through a war of attrition, which is to say the tobacco companies knew they could out spend the plaintiffs, inundate that plaintiffs with hoards of paper, and a number of the cases would go away simply because the plaintiffs could not afford to continue fighting the legal battles. This strategy worked for a long time.

In the late 1990s the first cases against the tobacco companies was won. A jury, for the first time, awarded a plaintiff with a stunning victory against one of the largest corporations in the nation. This seemingly anomalous result came about when it was learned that the tobacco companies had lied about knowing just how addictive their product was and their work to manipulate the addictive nature of the product. Now the tobacco companies are settling or consistently losing the cases that are brought against them.

During the years they were winning cases, the tobacco companies were able to pay for extensive legal representation. They paid the top firms huge sums of money to have numerous attorneys work on each case throughout the country. The attorneys’ fees were likely in the millions for each and every case that went to trial.

For ten years, plaintiffs lost their cases, but were they frivolous cases? At the time, they probably seemed to have been, but in retrospect, it is clear that they were appropriate. Additionally, it was in large part the ground work laid by the early cases that have allowed the later cases to succeed. Under the English Rule, however, each of the plaintiffs who lost the early cases would have been required to pay millions of dollars to the tobacco companies for their attorneys’ fees. This would have bankrupted even the most prosperous of plaintiffs.

The plaintiff has no control over the type of legal representation that corporations retain. Some corporations will retain the largest most expensive firms. Some corporations, like the tobacco companies, will not only retain these large expensive firms, but they will also seek to have numerous attorneys from those firms work on each and every case. It is not appropriate for the corporations to become immune from lawsuit simply because they are able to scare people out of bringing suit, even legitimate suits, based upon the fear of having to pay millions of dollars in the corporation’s attorneys’ fees in the event the plaintiff loses.

The English rule would have prevented the tobacco companies from ever getting sued for the hazards they created. It would have probably prevented Ford from being sued over the Pinto or the SUV rollovers, and it would have prevented a number of other cases which are meritorious from being brought simply because everyone knows that these corporations can outspend any individual that might consider suing a large conglomerate. This type of tort reform is bad policy and should be avoided and resisted by everyone who looks to the courts to assist people to vindicate their rights.