"The practical case for loser-pays is equally compelling. Litigants naturally think too well of their cases; loser-pays pushes them to size up their prospects more realistically. It also curbs the brand of extortion, so routine in American law as almost to have lost its ethical taint, by which lawyers use the costs of the process itself, or the risk of a fluke outcome found in any trial, to strong-arm their opponents into settlement."
I'm facing this very scenario right now. We're being sued by a lawyer who is working on contingency for a client who is so delusional it makes me sick to my stomach to think about it. The really ugly side of this is that lawyers of the ilk that are suing us find specific loopholes through which they can (or attempt to) attach you personally, even if you're incorporated. We're being strong-armed to settle, and will likely pay these jerks something, just to have it go away.
If "loser-pays" applied here, this lawsuit would have been wrapped up after the very first round of inquiry.
While 'loser pays' might benefit your particular case, it's easy to imagine an equal number of scenarios where a guilty corporate defendant uses the threat of running up huge legal fees to discourage valid lawsuits against it. The result is a windfall for corporations with no net improvement in actual justice. To put it another way, it decreases the likelihood of frivolous plaintiffs but increases the likelihood of frivolous defendants.
>To put it another way, it decreases the likelihood of frivolous plaintiffs but increases the likelihood of frivolous defendants.
An acceptable trade-off in my view. The defendant is by definition not the one starting the court case so its more difficult to abuse. e.g. I can go onto the street & hit 10 guys with a baseball bat. Compare that with waiting on the street to get punched in the face (unlikely to happen) & then hitting them back with a baseball bat. Both involve the possibility of someone getting hit with a baseball bat but the one is less likely to happen & more difficult to abuse.
If a corporation operates a big oil platform in a reckless manner and causes billions in damages, who is "starting the court case?" Corporations are far more likely than individuals to cause widespread harm, and they're also far more likely to use a cost/benefit analysis rather than morality to guide their decision-making. After all, contrary to the what the law says they're not people---individual responsibility is too dissipated in a big corporation for individual morality to influence behavior.
Such a corporation as you describe will act that way (recklessly) regardless of whether its loser pays or not. Besides, its unreasonable to expect such a mechanism (loser pays) to catch cases involving billions in damage & unethical corporations. i.e. Just because there are cases that loser pays will not prevent doesn't mean loser pays is a bad idea.
Don't guilty corporate clients already spend heavily to defend themselves necessitating a concomitant response by the righteous(?) plaintiff who can't afford it? At least with loser pays, the plaintiff has the option of finding a lawyer who will accept the case contingent on recouping his presumably huge legal fees.
That's why there are lawyers who take cases on contingency. And while some of them are quick-buck artists just looking for a quick settlement, most are looking for real cases with a high likelihood of success, with plaintiffs who simply couldn't afford to bring their solid case otherwise.
So what's your example of a scenario in which it's worth it for a corporate defendant to spend a lot on legal fees but in which a plaintiff can't find a lawyer who judges the chances of recovering his own fees acceptably likely to take the case?
"Loser pays" isn't aimed at changing lawyer behavior, it's aimed at changing plaintiffs' behavior. If the case is good the plaintiff will always find a lawyer, the question is whether the plaintiff can stomach the risk of loss even if he has a case that he's 90% sure of winning. Would you take a gamble where if you win you get $2M but if you lose you pay $100K, even if the chance of winning is 90%? It's not an easy decision if your net worth is less than that $100K.
If there's a 90% chance of winning, maybe the lawyer would be willing to pay the defendant's legal fees if he lost.
Maybe. How about a 65% chance? Should we discourage that plaintiff if his lawyer declines to back him financially? After all, lawyers are lawyers, not bankers.
He almost certainly would. Many lawyers already work for contingency fees - this isn't much different, except the potential downside is slightly larger.
...except the potential downside is slightly larger.
That's quite an understatement. If the plaintiff's attorney spends half of what the defense spends, he's looking at tripling his exposure if he loses. That's an enormous difference.
According to TFA that's not how it works in Europe: if you deliberately run up costs, the court will not assign them to the loser. Only reasonable fees are passed on to the loser. And the loser can challenge.
A big corporation can run up an awful lot of perfectly legitimate legal fees. And the challenge remedy is not going to be much comfort to an indigent plaintiff as it's unlikely his lawyer is going to take that challenge on contingency.
At least in Germany, what is a reasonable fee is strictly regulated and tied to the total value disputed. At the very least, you'll know the cost (roughly) at the outset of the case.
Good luck trying that kind of regulation in the US.
@vannevar you have obviously never been sued or threatened on a meritless claim by a multi billion $ company. Loser pay is a significant equalizer because let's say the case is speech related, the ACLU will defend you all day long necuase their attorneys get paid in the end. I imagine other attorneys would take up your defense for similar reasons...
How often is an individual sued by a corporation on a free speech case, compared to the number of times individuals sue corporations because they've been harmed? I'd guess that ratio is something on the order of 1000 to 1 or more in favor of individuals suing corporations. Unless you're Oprah, it's pretty unlikely that a corporation is ever going to sue you for something you say.
Look through any local ACLU chapters' case list and you'll find plenty. Or read http://reason.com/blog/2008/12/10/slapp-silly
-- that is an archetypal case. Environmental activists, whistleblowers, online reviewers. Lawsuits are the perfect way to shut them up, no matter how much of a effing farce they are. And for every 1 case that actually gets filed as a suit, my guess is there are hundreds of c&d letters sent.
Oh, I agree such suits exist, though SLAPP suits against individuals are still pretty rare. I'm just saying that I believe the ratio of ordinary suits by individuals against corporations is several orders of magnitude more common.
Good luck trying that kind of regulation in the US.
Indeed, it's about as likely as getting Germany's system of universal health care here. It just reinforces the fact that conservatives favor draconian government regulations when they benefit corporate interests but argue against those that benefit the public at large.
I'm facing this very scenario right now. We're being sued by a lawyer who is working on contingency for a client who is so delusional it makes me sick to my stomach to think about it. The really ugly side of this is that lawyers of the ilk that are suing us find specific loopholes through which they can (or attempt to) attach you personally, even if you're incorporated. We're being strong-armed to settle, and will likely pay these jerks something, just to have it go away.
If "loser-pays" applied here, this lawsuit would have been wrapped up after the very first round of inquiry.