A Final Consideration of the English Rule. It's ill-conceived

Let’s take a closer look at the anti-consumer proposal of the Manhattan Institute on the payment of legal fees in civil cases, including personal injury cases. As reported in the Legal Times many years ago, anecdotal evidence from England reflects the harshness of their rule. A widow, suing as a result of her husband’s death from gallbladder surgery at age 38, won at trial, but lost on appeal- losing the $396,000 in the award, but also being ordered to pay the doctor’s legal bill of $144,000. It is no wonder that the Director of Legal Affairs for the British Consumers’ Association has criticized the rule, primarily because of the chilling effect on would- be litigants. Anecdotal evidence in this context is highly relevant as word could spread of the horrors of such a system.

That the “loser pays” rule emanates from Britain seems logical in a country noted for its class-based society. In our society, however, we pride ourselves on accessible justice and “loser pays” is alien to that concept. Significantly, the British have a system in place which “cushions the impact” of the English rule. This is because their citizens are exempt from the Rule by one of the three following avenues: legal aid where about 51% of the population is eligible to have their own legal costs paid; trade unions where legal representation for their eight million members is provided even for accidents not on the job, and will pay the other side’s legal fees if the case is lost; and legal expense insurance which covers costs and fees. In contrast, the United States has far less of a program of legal assistance, no trade union funding, and no social insurance program. In an irony, the move in America towards the English Rule comes at a time when the English are considering American alternatives, such as contingency fees.

The perceived advantage of adopting the English Rule has been questioned by none other than the Harvard Law Review. A commentary in the Harvard Law Review concludes that the rate of settlement will be identical under the American and British Rules. Opting for British Rule, or if Posner and Shavell Can’t Remember the Coase Theorem, Who Will?, 104 Harv. L. Rev. 1093 (1991). But that is not what concerns me as a plaintiff’s personal injury lawyer. It is the aforementioned chilling effect on litigants who do not have access to a cash reserve to insulate themselves from the risks of litigation. The contingent fee system in its present form is fair for all regardless of financial means.