Will we Americans be importing the English system of loser pays?
Today the Manhattan Institute took up that subject as have many other august legal and tort reform organizations. If it comes to be, this could shake up the U.S. legal system just as the Beatles transformed American music.
We lead paint watchers know Loser Pays, at least a modified version of it, from the Rhode Island lead paint public nuisance litigation. After nine years the plaintiff - that is the state of RI - became the loser. That's what the RI Supreme Court decided last July 1st Download Statev.LeadIndustriesAssoc.,Inc.
Instead of having all the fees reimbursed by the loser, in this specific litigation the defendants such as Sherwin-Williams and NL Industries would only receive compensation for certain administrative costs. Last August both parties were back in RI Superior Court: The defendants presenting their arguments for the first round of costs, that is, those for the abatement co-examiners. The plaintiffs arguing against this based on sovereign immunity, that the state is broke, and that the case was argued in good faith.
But the fuller version of Loser Pays reimburses the winner for the whole enchilada, ranging from attorney fees to those transcription costs. In England, that total can run even higher than in the U.S. since its kind of attorneys charge more than ours do. Given this system, there are few if any Mickey D coffee spill lawsuits. If the plaintiff loses that party could be paying off the bill forever, losing house, pension, everything in the frivolous process.
Of course, anyone who's done their Court TV watching realizes that Loser Pays can also block access to the courts for legitimate complaints. The English aren't clueless about that either. That's why the English legal system has mechanisms which makes it possible to alleviate this burden on the plaintiff.
For example, litigation can be treated as an investment vehicle and portions of it sold to shareholders. In addition, as Manhattan Institute senior fellow Marie Gryphon pointed out in her report today, "England's recent quasi-privatization of civil justice demonstrates that markets for litigation insurance can develop rapidly in response to legal reforms, and that reasonable limits to the parties' exposure to liability for fees, if they are incorporated into an offer-of-judgment mechanism, can promote early settlement."
Of course, American attorneys are duly creative - and entrepreneurial. They can join with the financial world to put together mechanisms which provide a Loser Pays approach but don't make access impossible. In RI, even that modified type of Loser Pays is, legal experts tell me, supposed to send a clear message to future plaintiffs: Don't mess with these particular companies. They go the distance, including collecting tolls at the end of the road.
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