Armstrong Economics Blog/Rule of Law
Re-Posted Apr 5, 2020 by Martin Armstrong
COMMENT: As an Englishman qualified to practice law in Virginia and Federal Courts, and very interested in your criticisms of injustices in the American litigation system, I have a suggestion which may seem trivial at first glance but would have an important impact.
My suggestion is that you promote a simple but very beneficial change in the American Rule of Costs, under which each side in litigation pays its own legal costs (subject only to certain statutory exceptions). In most of the rest of the world, the loser in litigation pays most or all of the costs. At present a potential litigant with a just case is discouraged from proceeding in an American court by the prospect that, even if he wins, his gain would be less than his legal costs. This obviously tends to deny to the poor and middle-classes their right of access to the courts. For civil defendants, the American Rule encourages frivolous cases, and promotes corrupt and uneconomical settlements, including those otherwise unjustifiable by, for example, insurance companies. In criminal cases the present American Rule obviously militates against the innocent, and promotes the corrupt practice of plea-bargaining.
A change in the American Rule to that of the rest of the world is clearly desirable from the point of view of individual rights, and the interests of the US economy, where the total cost of unproductive litigation must be huge. Together with that change, it would also be desirable to impose the Common Law prohibitions of Barratry and Champerty to prevent lawyers from taking financial interests in their clients’ gains from civil cases, which encourage ambulance chasing.
Lawyers have a productive part to play in the Economy, essentially aiding commerce and industry. There should be more to American legal practice than endless politicking and unproductive litigation!
REPLY: That is a very good suggestion.