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The problem with 'loser pays' is that it can actually encourage frivolous litigation like this. Often there are civil suits where the defendant and plaintiff ag

The problem with 'loser pays' is that it can actually encourage frivolous litigation like this. Often there are civil suits where the defendant and plaintiff agree that there are some valid claims, but they disagree on the specifics and amount of the damages. If the plaintiff knows that eventually they will 'win' their fees and costs regardless, they have an incentive to disagree with settlement offers. It looks like this: You sell me a broken printer for $30 and I hire a lawyer to sue you for $30,000. I refuse to settle for less and tie things up as long as possible in court. Eventually I 'win' with a court finding of $30 in damages. Then you pay my attorney $50,000 in fees and costs because you 'lost'. Edit: Possible improvement would be to pay based on the distance between the award and settlement offers?

nimblegorilla 10y ago
That isn't how it always works. In some countries when the other party agreed to pay $30 up front then they would be considered the winner. You would pay their legal fees for trying to extort $27,970.
- TheCoelacanth 10y ago
  Who pays if the actual damages are somewhere in the middle?
  - cortesoft 10y ago
    You could do it like baseball does arbitration. Each side presents a figure they think is fair, and a judge picks one of the two (she can't pick somewhere in the middle, she has to pick one or the other). That way, each side is encouraged to present a reasonable amount, otherwise the other sides value will be chosen.
    - mywittyname 10y ago
      Ah, the old trick my mom used for dividing goods: one kid makes the division, the other makes the first choice.
- slantyyz 10y ago
  >> You would pay their legal fees for trying to extort $27,970. Also, the cost of the legal fees may not be the same as what "they" paid. In some countries, I think the judge can determine what the fair price for the legal fees. This way the "loser" of the case isn't burned because the other party chose to hire a $1,000/h lawyer.
rbehrends 10y ago
> Edit: Possible improvement would be to pay based on the distance between the award and settlement offers? That's how it works in Germany, basically (the so-called "Baumbach'sche Formel"). You want $30k and get $30: you'll pay (30,000-30)/30,000 = 99.9% of court and attorney's fees. Also, the amount of attorney's fees that can be reimbursed is regulated and therefore capped at a reasonable amount. Finally, you may be required to make a deposit for the court fees beforehand.
talmand 10y ago
But in that case you do not profit from the frivolous lawsuit; which, I think, was the idea behind suggesting loser pays to help prevent such lawsuits. Of course your lawyer may profit nicely. Now, if you were representing yourself...

nimblegorilla 10y ago

That isn't how it always works. In some countries when the other party agreed to pay $30 up front then they would be considered the winner. You would pay their legal fees for trying to extort $27,970.

TheCoelacanth 10y ago
Who pays if the actual damages are somewhere in the middle?
- cortesoft 10y ago
  You could do it like baseball does arbitration. Each side presents a figure they think is fair, and a judge picks one of the two (she can't pick somewhere in the middle, she has to pick one or the other). That way, each side is encouraged to present a reasonable amount, otherwise the other sides value will be chosen.
  - mywittyname 10y ago
    Ah, the old trick my mom used for dividing goods: one kid makes the division, the other makes the first choice.
slantyyz 10y ago
>> You would pay their legal fees for trying to extort $27,970. Also, the cost of the legal fees may not be the same as what "they" paid. In some countries, I think the judge can determine what the fair price for the legal fees. This way the "loser" of the case isn't burned because the other party chose to hire a $1,000/h lawyer.

rbehrends 10y ago

> Edit: Possible improvement would be to pay based on the distance between the award and settlement offers? That's how it works in Germany, basically (the so-called "Baumbach'sche Formel"). You want $30k and get $30: you'll pay (30,000-30)/30,000 = 99.9% of court and attorney's fees. Also, the amount of attorney's fees that can be reimbursed is regulated and therefore capped at a reasonable amount. Finally, you may be required to make a deposit for the court fees beforehand.

talmand 10y ago

But in that case you do not profit from the frivolous lawsuit; which, I think, was the idea behind suggesting loser pays to help prevent such lawsuits. Of course your lawyer may profit nicely. Now, if you were representing yourself...