Wednesday, December 24, 2008
Ongoing Discussion on Loser-Pays Lawsuit Financing
An article in the Wall Street Journal -- The Debate Over Who Pays Fees When Litigants Mount Attacks, by Dan Slater -- chronicles the increasing discussion over loser-pays lawsuit financing. (H/t Torts Prof Blog.) Professor Richard Nagareda (Vanderbilt) is quoted in the article. In a recent symposium piece in the Widener Law Journal Download stier_crimtorts_class_actions_and_the_emerging_mass_tort_method.pdf , I suggested that rather than class actions, a properly crafted loser-pays system may be preferable for small-value claims. Here's an excerpt from the article in the Wall Street Journal:
Who should foot the costs of a lawsuit? It's a question that splits the legal world.
Should each side bear its own lawyers' fees and other costs, as they do in the U.S.? Or should the loser pick up the tab for both parties, as they do in Canada, the U.K. and Germany?
The debate simmers across the international divide. In the U.S., the plaintiffs' bar generally cheers the "American rule" status quo, saying it is the only way to ensure that even the poorest litigants can access the courts. Tort-reformers say adopting the "English rule" would cut down on frivolous lawsuits while encouraging defendants to settle meritorious claims.
A recent trade article zeroed in on a long-overlooked component of the loser-pays system: insurance that covers legal fees. That article, penned by Marie Gryphon, an attorney and a fellow with the right-leaning Manhattan Institute's Center for Legal Policy, is reframing the debate.
UPDATE: More on the loser-pays discussion from the Wall Street Journal Law Blog.