3 ms·

I don't get it. If I'm being sued by a big record company, then unless I'm absolutely 100% sure I'm going to win, wouldn't a loser-pays system be an even bigger

by hugh3 15y ago

I don't get it. If I'm being sued by a big record company, then unless I'm absolutely 100% sure I'm going to win, wouldn't a loser-pays system be an even bigger disincentive to fight it in court? I'm sure their lawyers cost much more than mine do. In fact, doesn't loser-pays in general make it even easier for big players to intimidate small players? "I'm suing you for actual damages of twenty dollars. My legal team costs one million dollars a day. Want to settle?"

ScottBurson 15y ago
My understanding is that in loser-pays as it is actually practiced in Europe, the courts limit the fees paid by the loser to reasonable and customary levels, and don't look kindly on parties that inflate their legal costs. Still, I think you're right, if one is not fairly confident of winning, loser-pays provides additional incentive to settle. I don't see this as a bad thing, personally.
- rue 15y ago
  This is correct; more precisely, you can pay all you want, but reimbursement is for a reasonable cost.
jules 15y ago
How come loser pays works well in the rest of the world? Because that's not how loser pays works :) You don't pay a million dollars a day, you pay a reasonable price instead; they pay the rest. Also, loser pays is not decided on the whole case, but on specific subcases. So the suing party is less likely to use the shotgun approach where they throw every claim and the kitchen sink in, in the hope that they at least win something. Also, if you claim $1M damages, and the judge awards you $1k, that counts as a (partial) loss. So it also ends ridiculously high claims. > Nearly every Western democracy, other than the United States, follows the "English rule," which requires the loser of a civil suit to compensate the winner for his or her attorney's fees. -- http://en.wikipedia.org/wiki/English_rule http://en.wikipedia.org/wiki/English_rule There is much much more suing going on in the US than in Europe and the prime reason is that Europe has a loser pays system.
- monochromatic 15y ago
  > There is much much more suing going on in the US than in Europe This will be an unpopular opinion, but that's not necessarily a bad thing. How many wronged plaintiffs in Europe end up never having their day in court because of the threat of paying the other party's attorneys fees?
  - orp 15y ago
    Almost none. When people think they're in the right - they sue (or defend). Further, because of the 'loser pays' system, if the case is obviously bogus or blown up, often a lawyer will agree to take up a defense just for the right to claim the other side's expenses (e.g. instead of paying the lawyer, the lawyer takes a relatively small fee plus the right to any 'expense fees' leveled on the other side). In addition, I believe that in most of Europe lawyers cost a lot less than they do in the US (certainly so in Israel), to which a contributing factor is that less litigation going on.
    - monochromatic 15y ago
      > in most of Europe lawyers cost a lot less than they do in the US As a lawyer, I don't see how this is a positive thing :) But seriously, nobody knows how many cases there are at the margin that don't get brought due to the loser pays system. Neither system is perfect though, and I can certainly make arguments in favor of either.
jmilloy 15y ago
If you sue someone, you pay your court fees and lawyer fees no matter what, and if you lose, you pay the defendants court fees and lawyer fees in addition. But the defendant doesn't pay the plaintiff's legal fees. It's not perfect, but I think it's better, and this (however incorrectly) is how I usually imagine "loser-pays". Secondly, there would probably need to be (in either version) a basic rate set for lawyer fees. I can have an expensive lawyer if I want, but I can only be "reimbursed" by the loser at the "basic rate". Maybe if I represent myself, I could even get my time reimbursed in the same way.
te_platt 15y ago
You don't need to be 100% sure of winning, only more sure than the person suing you. Well, that's probably saying too much. Let's look at a few scenarios and see what comes out. In this case big means someone with lots of money, little has not so much. Being in the right means being more likely to prevail in a trial - this could be represented by a percentage. We also need to consider that there are people who are not very realistic in assessing the strength of their case. Let's call them irrational. That gives us the following possibilities: A. big v. big B. little v. little C. big v. little 1. big is clearly in the right (>90%) 2. bis is probably in the right (>50%) 3. little is probably in the right (>50%) 4. little is probably in the right (>90%) a. party in the wrong is rational b. party in the wrong is irrational So which combination benefits more from loser pays? My contention would be that any situation involving 1 or 4 very likely settles right away and those with 2 or 3 very likely don't get brought up in the first place. This is already much longer than I meant to get into but I think there would be an overall benefit in moving to loser pays.
mdasen 15y ago
It puts pressure on both sides. For example, The Hurt Locker is suing about 25,000 people. It's really unknown (both to the people they're suing and to The Hurt Locker) whether or not the case will succeed. Right now, there's a huge incentive for the individual to settle since the case might see the individual lose hundreds of thousands of dollars. With loser pays, maybe the loss goes from $100,000 to $120,000. However, on the other side, courts might start finding that The Hurt Locker has no case. In a loser pays system, The Hurt Locker could then be out the $20,000 for every suit they've filed. It puts pressure on people filing a case to make sure they have a good case and aren't just trying to extort a few grand out of someone that will have to pay more money to defend in court. It puts pressure on defendants that are actually in the wrong to settle for a reasonable amount. In cases like this (where we might not have a great indication of where courts will go), it puts pressure on both sides not to overreach. The Hurt Locker wouldn't be suing 25,000 people if they might be on the hook for paying those people should a court decide against them. They'd be more cautious - test the waters, see what happens. Loser pays is generally seen as protecting the small player. First, they can't claim unreasonable legal fees - they're often decided by the court. Second, usually loser pays incorporates the amount sought. If they're seeking $100,000 and they get awarded $10,000, they're the loser (even though they won an award). That would keep them from asking for too much in their suits since a jury might award actual damages and a little bit more. Likewise, in some areas arbitration processes are used in the process. For example, two legal teams sit down with the arbitrator who looks at stuff and determines an amount $X that seems fair. You think you deserve $10X so you go to trial. You only get $X. You wasted the court's time and money and are on the hook. It puts pressure on people who are in the wrong to settle and puts pressure on those in the right to accept reasonable offers. Right now, there's no real reason not to sue. The Hurt Locker is pushing out these suits since it's a little administration without a downside. If they could be on the hook for thousands of dollars to those they're trying to sue, they'd think twice about it, about the amount they sued for, and about whether they were sure about the strength of their case.

by hugh3 15y ago

ScottBurson 15y ago

My understanding is that in loser-pays as it is actually practiced in Europe, the courts limit the fees paid by the loser to reasonable and customary levels, and don't look kindly on parties that inflate their legal costs. Still, I think you're right, if one is not fairly confident of winning, loser-pays provides additional incentive to settle. I don't see this as a bad thing, personally.

rue 15y ago
This is correct; more precisely, you can pay all you want, but reimbursement is for a reasonable cost.

jules 15y ago

How come loser pays works well in the rest of the world? Because that's not how loser pays works :) You don't pay a million dollars a day, you pay a reasonable price instead; they pay the rest. Also, loser pays is not decided on the whole case, but on specific subcases. So the suing party is less likely to use the shotgun approach where they throw every claim and the kitchen sink in, in the hope that they at least win something. Also, if you claim $1M damages, and the judge awards you $1k, that counts as a (partial) loss. So it also ends ridiculously high claims. > Nearly every Western democracy, other than the United States, follows the "English rule," which requires the loser of a civil suit to compensate the winner for his or her attorney's fees. -- http://en.wikipedia.org/wiki/English_rule http://en.wikipedia.org/wiki/English_rule There is much much more suing going on in the US than in Europe and the prime reason is that Europe has a loser pays system.

monochromatic 15y ago
> There is much much more suing going on in the US than in Europe This will be an unpopular opinion, but that's not necessarily a bad thing. How many wronged plaintiffs in Europe end up never having their day in court because of the threat of paying the other party's attorneys fees?
- orp 15y ago
  Almost none. When people think they're in the right - they sue (or defend). Further, because of the 'loser pays' system, if the case is obviously bogus or blown up, often a lawyer will agree to take up a defense just for the right to claim the other side's expenses (e.g. instead of paying the lawyer, the lawyer takes a relatively small fee plus the right to any 'expense fees' leveled on the other side). In addition, I believe that in most of Europe lawyers cost a lot less than they do in the US (certainly so in Israel), to which a contributing factor is that less litigation going on.
  - monochromatic 15y ago
    > in most of Europe lawyers cost a lot less than they do in the US As a lawyer, I don't see how this is a positive thing :) But seriously, nobody knows how many cases there are at the margin that don't get brought due to the loser pays system. Neither system is perfect though, and I can certainly make arguments in favor of either.

jmilloy 15y ago

If you sue someone, you pay your court fees and lawyer fees no matter what, and if you lose, you pay the defendants court fees and lawyer fees in addition. But the defendant doesn't pay the plaintiff's legal fees. It's not perfect, but I think it's better, and this (however incorrectly) is how I usually imagine "loser-pays". Secondly, there would probably need to be (in either version) a basic rate set for lawyer fees. I can have an expensive lawyer if I want, but I can only be "reimbursed" by the loser at the "basic rate". Maybe if I represent myself, I could even get my time reimbursed in the same way.

te_platt 15y ago

You don't need to be 100% sure of winning, only more sure than the person suing you. Well, that's probably saying too much. Let's look at a few scenarios and see what comes out. In this case big means someone with lots of money, little has not so much. Being in the right means being more likely to prevail in a trial - this could be represented by a percentage. We also need to consider that there are people who are not very realistic in assessing the strength of their case. Let's call them irrational. That gives us the following possibilities: A. big v. big B. little v. little C. big v. little 1. big is clearly in the right (>90%) 2. bis is probably in the right (>50%) 3. little is probably in the right (>50%) 4. little is probably in the right (>90%) a. party in the wrong is rational b. party in the wrong is irrational So which combination benefits more from loser pays? My contention would be that any situation involving 1 or 4 very likely settles right away and those with 2 or 3 very likely don't get brought up in the first place. This is already much longer than I meant to get into but I think there would be an overall benefit in moving to loser pays.

mdasen 15y ago

It puts pressure on both sides. For example, The Hurt Locker is suing about 25,000 people. It's really unknown (both to the people they're suing and to The Hurt Locker) whether or not the case will succeed. Right now, there's a huge incentive for the individual to settle since the case might see the individual lose hundreds of thousands of dollars. With loser pays, maybe the loss goes from $100,000 to $120,000. However, on the other side, courts might start finding that The Hurt Locker has no case. In a loser pays system, The Hurt Locker could then be out the $20,000 for every suit they've filed. It puts pressure on people filing a case to make sure they have a good case and aren't just trying to extort a few grand out of someone that will have to pay more money to defend in court. It puts pressure on defendants that are actually in the wrong to settle for a reasonable amount. In cases like this (where we might not have a great indication of where courts will go), it puts pressure on both sides not to overreach. The Hurt Locker wouldn't be suing 25,000 people if they might be on the hook for paying those people should a court decide against them. They'd be more cautious - test the waters, see what happens. Loser pays is generally seen as protecting the small player. First, they can't claim unreasonable legal fees - they're often decided by the court. Second, usually loser pays incorporates the amount sought. If they're seeking $100,000 and they get awarded $10,000, they're the loser (even though they won an award). That would keep them from asking for too much in their suits since a jury might award actual damages and a little bit more. Likewise, in some areas arbitration processes are used in the process. For example, two legal teams sit down with the arbitrator who looks at stuff and determines an amount $X that seems fair. You think you deserve $10X so you go to trial. You only get $X. You wasted the court's time and money and are on the hook. It puts pressure on people who are in the wrong to settle and puts pressure on those in the right to accept reasonable offers. Right now, there's no real reason not to sue. The Hurt Locker is pushing out these suits since it's a little administration without a downside. If they could be on the hook for thousands of dollars to those they're trying to sue, they'd think twice about it, about the amount they sued for, and about whether they were sure about the strength of their case.