Constitutional Opinions

Winner Pays

Why our present system makes no sense.

By 12.18.08

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Days after my septuagenarian father's vehicle was struck side-on by an obviously crack-addled motorist, Dad was served papers informing him he was being sued. The plaintiff was none other than the automotively challenged crack-head, represented by a local law firm that seems to specialize in placing tacky billboards in impoverished areas of town that promise to "get your money!" The same plaintiff, who had neither liability insurance nor license, had been ticketed for a multitude of violations, including failure to yield right of way at a stop sign. He now claimed to have suffered a grab bag of injuries in the accident. He may have, but it was hard to see how my father was responsible for them.

Upon hearing the news, most of us had the same naive reaction: "He can't do that! ["He" being the plaintiff.] He was at fault! He was ticketed!" But lawyers know he can do that. And what's more, they wholeheartedly support his right to do so.

In the U.S. you can sue anyone for pretty much anything, even for looking at you crossways. There is little incentive not to. It doesn't mean you will win, but there is always the chance you may. Many litigants seem to regard the court system as they do the state lottery. You may not get lucky this time, but eventually you will, and when you do you'll be set for life.

This is because the U.S. -- unlike nearly every other industrialized nation -- does not have a loser-pays rule for lawsuits. Typically, loser-pays demands that if I sue you and lose, I have to pay your attorney fees. A loser-pays rule would have prevented travesties of justice like the one that befell a Washington, D.C. family dry cleaner recently dragged through two years of litigation by a customer seeking $54 million for a lost pair of pants. To date, the cleaning business's legal costs have totaled $100,000. Not surprisingly, the plaintiff who brought this absurd lawsuit was a D.C. judge.


LOSER-PAYS RULES have been around since Homo sapiens decided to settle disputes not with stone axes, but with lawyers (ah, for the good old days). Yet all attempts to introduce reform have been stonewalled. The GOP floated the idea of losers-pay back in the early 1990s in the Contract with America, and when a U.S. News & World Report poll asked, "If someone sues you and you win the case, should he pay your legal costs?" a whopping 85 percent surveyed said yes. But the organized bar was steadfastly against the reform so the idea stalled. Leading the opposition were the influential plaintiffs lawyers and the American Bar Association. The ABA called loser-pays an "attack on access to the courthouse," and a "tax on the right to litigate." Together they have compiled an ominously long list of reasons why loser-pays is bad for all concerned, a list long ago addressed by European courts. (Ironically, the court system is the one area where Europhiliac liberals do not feel the U.S. should emulate Europe.)

Topping the list is the fear that loser-pays rules will bar the courthouse door for middle-class litigants who, say, want to sue McDonald's when the former dribbles hot apple pie filling down his or her leg. (Note that half of lawsuits against businesses are filed against small businesses, which can ill afford the thousands of dollars to defend themselves against often frivolous lawsuits filed by disgruntled employees.) Europeans long ago solved this issue by offering litigation insurance, commonly offered as part of your automobile insurance package. But even if you choose to be uninsured and sustain injuries when some crack-head smashes into your SUV, you can still purchase "after-the-event" legal expenses insurance, which protects you in the event Sue Easy, Esq. flubs your case.

"Both types of litigation insurance protect the viability of strong cases while deterring weak claims through the underwriting process," writes Manhattan Institute senior fellow Marie Gryphon in a report released this month. "Insurance can spread the risk of losing a good case across many such claims affordability, while poor cases are uninsurable."

Another concern is that boutique law firms will drive up costs, but in Europe posh firms have to justify every cent, and losers only have to pay the winners' "reasonable" attorney fees.

The benefits of a loser-pays system will be courts that are less clogged with nuisance lawsuits, litigants who are guaranteed speedier trials, and the withering of the litigatious, speculative mindset that has for decades plagued our courts, and, perhaps best of all, fewer lawyers. It is easy to see why the organized bar objects.

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About the Author
Christopher Orlet writes from St. Louis.