In the field of law and economics, the English rule is a rule controlling assessment of lawyers' fees arising out of litigation. The English rule provides that the party that loses in court pays the other party's legal costs. The English rule contrasts with the American rule, under which each party is generally responsible for paying its own attorney fees (unless a statute or contract provides for that assessment).
Some argue that the American system encourages frivolous or "extortionate" suits against businesses with "deep pockets," because plaintiffs can have a contingency fee arrangement with the attorney whereby they pay nothing to the attorney if the case loses. Under a contingent fee arrangement, the attorney for the plaintiff faces no consequences, other than lost time and effort, for bringing a suit that loses, but he can collect huge fees (typically 30% to 40% of the damages awarded) if he wins. By the same token, wealthy defendants have a strong incentive to pay the plaintiff to get a settlement, if they face a small chance of having to pay a huge amount.
The rationale for the English rule is that a litigant (whether bringing a claim or defending a claim) is entitled to legal representation and, if successful, should not be left out of pocket by reason of their own legal fees. It should be borne in mind that, in virtually all English civil litigation, damages are merely compensatory.
The English rule is followed by nearly every Western democracy other than the United States. [1] [2]
In the United States the "American rule" is generally followed, each party bearing its own expense of litigation. However, 35 U.S.C. § 285 provides that in patent cases, the losing party may have to pay attorney fees of the winning party if the case is deemed "exceptional." However, after the U.S. Supreme Court's decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc. on April 29, 2014, it is now easier for courts to award costs for frivolous patent lawsuits initiated by patent trolls.
Alaska has long been an exception to the U.S. pattern, where the English rule applies. A very limited version of the English rule was adopted in Texas during the 2011 legislative session that applies only to the filing of a baseless lawsuit. Tex. R. Civ. P. 91a. [3] Then Texas governor Rick Perry called in his state of the state address for a one-way version of the English rule which would apply only to those who initiate a suit, the plaintiff. [4]
In legal terminology, a complaint is any formal legal document that sets out the facts and legal reasons that the filing party or parties believes are sufficient to support a claim against the party or parties against whom the claim is brought that entitles the plaintiff(s) to a remedy. For example, the Federal Rules of Civil Procedure (FRCP) that govern civil litigation in United States courts provide that a civil action is commenced with the filing or service of a pleading called a complaint. Civil court rules in states that have incorporated the Federal Rules of Civil Procedure use the same term for the same pleading.
Frivolous litigation is the use of legal processes with apparent disregard for the merit of one's own arguments. It includes presenting an argument with reason to know that it would certainly fail, or acting without a basic level of diligence in researching the relevant law and facts. That an argument was lost does not imply the argument was frivolous; a party may present an argument with a low chance of success, so long as it proceeds from applicable law.
A lawsuit is a proceeding by one or more parties against one or more parties in a civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. The term "lawsuit" is used with respect to a civil action brought by a plaintiff who requests a legal remedy or equitable remedy from a court. The defendant is required to respond to the plaintiff's complaint or else risk default judgment. If the plaintiff is successful, judgment is entered in favor of the plaintiff, and the Court may impose the legal and/or equitable remedies available against the defendant (respondent). A variety of court orders may be issued in connection with or as part of the judgment to enforce a right, award damages or restitution, or impose a temporary or permanent injunction to prevent an act or compel an act. A declaratory judgment may be issued to prevent future legal disputes.
Malicious prosecution is a common law intentional tort. Like the tort of abuse of process, its elements include (1) intentionally instituting and pursuing a legal action that is (2) brought without probable cause and (3) dismissed in favor of the victim of the malicious prosecution. In some jurisdictions, the term "malicious prosecution" denotes the wrongful initiation of criminal proceedings, while the term "malicious use of process" denotes the wrongful initiation of civil proceedings.
In English civil litigation, costs are the lawyers' fees and disbursements of the parties.
Deep pocket is an American slang term; it usually means "extensive financial wealth or resources". It is typically used in reference to big companies or organizations, although it can be used in reference to wealthy individuals.
The Private Securities Litigation Reform Act of 1995, Pub. L.Tooltip Public Law 104–67 (text)(PDF), 109 Stat. 737 ("PSLRA") implemented several substantive changes in the United States that have affected certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation, and awards fees and expenses.
A supersedeas bond, also known as a defendant's appeal bond, is a type of surety bond that a court requires from an appellant who wants to delay payment of a judgment until an appeal is over.
The American rule is the default legal rule in the United States controlling assessment of attorneys' fees arising out of litigation. It provides that each party is responsible for paying its own attorney's fees, unless specific authority granted by statute or contract allows the assessment of those fees against the other party.
In international law and business, patent trolling or patent hoarding is a categorical or pejorative term applied to a person or company that attempts to enforce patent rights against accused infringers far beyond the patent's actual value or contribution to the prior art, often through hardball legal tactics Patent trolls often do not manufacture products or supply services based upon the patents in question. However, some entities, which do not practice their asserted patent, may not be considered "patent trolls", when they license their patented technologies on reasonable terms in advance.
Attorney's fee is a chiefly United States term for compensation for legal services performed by an attorney for a client, in or out of court.
Personal injury is a legal term for an injury to the body, mind, or emotions, as opposed to an injury to property. In common law jurisdictions the term is most commonly used to refer to a type of tort lawsuit in which the person bringing the suit has suffered harm to their body or mind. Personal injury lawsuits are filed against the person or entity that caused the harm through negligence, gross negligence, reckless conduct, or intentional misconduct, and in some cases on the basis of strict liability. Different jurisdictions describe the damages in different ways, but damages typically include the injured person's medical bills, pain and suffering, and diminished quality of life.
Tort reform consists of changes in the civil justice system in common law countries that aim to reduce the ability of plaintiffs to bring tort litigation or to reduce damages they can receive. Such changes are generally justified under the grounds that litigation is an inefficient means to compensate plaintiffs; that tort law permits frivolous or otherwise undesirable litigation to crowd the court system; or that the fear of litigation can serve to curtail innovation, raise the cost of consumer goods or insurance premiums for suppliers of services, and increase legal costs for businesses. Tort reform has primarily been prominent in common law jurisdictions, where criticism of judge-made rules regarding tort actions manifests in calls for statutory reform by the legislature.
The Civil Rights Attorney's Fees Award Act of 1976 is a law of the United States codified in 42 U.S.C. § 1988(b). It is often referred to as "Section 1988." It allows a Federal court to award reasonable attorney's fees to a prevailing party in certain civil rights cases. The Act was designed to create an enforcement mechanism for the nation's civil rights laws without creating an enforcement bureaucracy, because the prospect of being awarded attorneys' fees is thought to incentivize attorneys to bring civil rights cases on behalf of plaintiffs.
Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), was a United States Supreme Court case that addressed the standards governing awards of attorneys' fees in copyright cases. The Copyright Act of 1976 authorizes, but does not require, the court to award attorneys' fees to "the prevailing party" in a copyright action. In Fogerty, the Court held that such attorneys'-fees awards are discretionary, and that the same standards should be applied in the case of a prevailing plaintiff and a prevailing defendant.
Court costs are the costs of handling a case, which, depending on legal rules, may or may not include the costs of the various parties in a lawsuit in addition to the costs of the court itself. In the United States, "court costs" are differentiated from attorney's fees, which are the hourly rates paid to attorneys for their work in a case. Court costs can reach very high amounts, often far beyond the actual monetary worth of a case. Cases are known in which one party won the case, but lost more than the monetary worth in court costs. Court costs may be awarded to one or both parties in a lawsuit, or they may be waived.
Legal financing is the mechanism or process through which litigants can finance their litigation or other legal costs through a third party funding company.
A copyright troll is a party that enforces copyrights it owns for purposes of making money through strategic litigation, in a manner considered unduly aggressive or opportunistic, sometimes without producing or licensing the works it owns for paid distribution. Critics object to the activity because they believe it does not encourage the production of creative works, but instead makes money through the inequities and unintended consequences of high statutory damages provisions in copyright laws intended to encourage creation of such works.
A private attorney general or public interest lawyer is an informal term originating in common law jurisdictions for a private attorney who brings a lawsuit claiming it to be in the public interest, i.e., benefiting the general public and not just the plaintiff, on behalf of a citizen or group of citizens. The attorney may, at the equitable discretion of the court, be entitled to recover attorney's fees if they prevail. The rationale behind this principle is to provide extra incentive to private attorneys to pursue suits that may be of benefit to society at large. Private attorney general suits are commonly, though not always, brought as class actions in jurisdictions that permit the certification of class action lawsuits.
Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014), is one of two U.S. Supreme Court decisions issued on April 29, 2014 regarding patent lawsuit fee-shifting. The Supreme Court essentially made it easier for courts to make the loser pay for all attorney costs if the lawsuit is regarded as frivolous. In other words, "the Supreme Court's decision grants judges more leeway to crack down on baseless claims."