“Fees Fi Fo Fum”: The English Rule and The American Rule, Part 1

Good morning and welcome back to Monday here on Lawyers & Liquor, where I try to recoup all the goodwill I burned through in recovering from an injury and being a general roustabout in anything not case related by redirecting you all away from my flagrant ignoring of my responsibilities on this site and back towards the questions of law, fact, and fun that tend to pop up profanely here. Isn’t that just one hell of a run-on sentence? Anyhow, I’m your hobbling host the Boozy Barrister, here to pour seething hot rage and recommendations into your eyeholes as we keep trucking on through the dark night of litigation finance.

You may remember that last week, before I disappeared into the netherworld of lazy lawyers in their off time, I spoke about the threats that are coming to bear on the Legal Services Corporation, the federal agency that provides grants to legal aid non-profits and assists them in letting the indigent have their day in court. The whole reason we have to have organizations like this is because, frankly, if someone hires me to bring a lawsuit or defend one I expect to get paid as a result. Now, some of you out there are saying “Boozy, I thought lawyers only get paid if you win!” To that I say: Do I sound like the type of guy who takes cases on contingency? I like eating my meals. The only gambling I ever do is at the pai gow table, surrounded by hard-smoking and hard-drinking Chinese businessmen screaming things in Mandarin and Cantonese (neither or which I speak) and occasionally I place a few bets on sports betting sites like FanDuel to see if I can make a quick buck. I’m not gambling in the office.

I mean, I would if I could. I could go to mega888 for that fix, but it just isn’t my style. I much prefer my settled table, but it’s been hell on wheels trying to get the partners to recognize the need for a pai gow table in the conference room. It is a necessary business expense in my humble opinion, but I am not about to bring in the Profit accumulator review one of them talked about as evidence of the need for such a space.

No, in most cases us American Attorneys get paid win, lose, or draw. You may go home with empty pockets and a judgment against you, but I go home with my check or I don’t sally forth into the legal battlefield with you in the first place. And that, for many people out there, is the problem. But…what if I told you there was another way? And there may be one, too, if we dig back through the past and examine the alternative method of paying for a lawsuit…which is what we’re doing this week.

But first, let me explain the two historical methods of paying for a lawsuit: The English Rule and the American Rule.

Independence Ain’t The Only Thing We Claimed

Alright, so you probably know that everywhere in the United States, except for Louisiana because of course the area of the country that eats alligators and builds cities below sea level has to be different, the legal system is built on the bones of the English Common Law. This means that the American legal tradition, concepts, precepts, and all the other “cepts” out there you can imagine are coming to us from jolly old England. Over time, however, we’ve adapted parts of the common law rule to fit the uniquely American experience, such as the issues of riparian law (like four of you just shuddered a bit) and the majority and minority rule states where water rights are a big deal when compared to other land rights. The law, even the ancient law built on the bones of a good cup of tea and a biscuit, is not a one size fits all experience.

So, when we emancipated ourselves from the yoke of the Brits and their stunningly red field jackets and fancy “marching in formation,” we not only took our independence but we also straight-up jacked their legal system. Of course, like I said, things have changed. For instance, we don’t wear wigs in court (I am not okay with this, as I’ve always dreamed of arguing a case wearing a stunning beehive hairdo), nor do we have the divided bar in the profession such as the delineation between “solicitors” and “barristers” (in the Good Old U.S. of A, everyone with a bar license has the ability to demonstrate their idiocy to the judge directly!). And, of course, we don’t have a system where the loser pays for the winner’s legal bills.

A Brief Explanation of the English and American Rules

The English Rule: You Lose, You Pay

The way things work in is Isle of Despair over there across the pond is that the loser in a civil suit pays the fees of the winner. I mean, I’m sure there’s a lot of other things that go into that calculation, but that’s the gist of it. There’s a whole idea behind it, mainly that if someone brings a claim and the defense against it is successful, they never should have brought the claim to begin with. Vice versa, if someone involves the courts in refusing to pay a debt owed, the plaintiff shouldn’t have to suffer additional injuries in bringing the might of a fearsome judge in a nightgown and wig to bear. Essentially, as with many English things, the keyword behind the English rule is “Be polite to each other and don’t start a mess unnecessarily or we’ll make you pay the costs the other side incurs.”

Isn’t that just about the most English thing you’ve ever heard? “Look here good chap, I know Lenny is a chav and all, but you really did owe him that 20 quid, so be a good lad and pay up. Also, reimburse the barrister for the time spent on this matter, would you? Where can you pay? Well, this is England, so…just queue up over there and wait your turn, eh?”

Now, I know this sounds nice and fair, right? “You bad boy, you should pay!” It has a certain appeal to it, but there are other things such as…well…trial courts don’t always get it right, do they? And sometimes even a valid defense may not succeed, and part of a lawyer’s job is to advocate and make the facts and theory fit their argument, right? I mean, that’s how the whole deal works. Plus there’s this whole thing with a Defendant could end up getting stuck with a legal bill that equals the amount of the judgment, depending on who the Plaintiff has representing them…so…you know…we had to go and mess it up when we founded our own nation.

The American Rule: Everybody Pays.

Back in 1796 in a case called Arcambel v. Wiseman the Supreme Court of the United States shook the bones of civil litigation by saying “Yeah, that thing we do where we make you pay the counsel fees of the winner? We’re not doing that anymore. This is America, and we expect you to carry your own weight in the court!” Now, the justification behind that decision was the English Rule could be abused to keep a poor litigant out of court. If they have a claim that may have merit but later turns out to be unfounded or subject to a significant defense, the unwary indigent would find themselves saddled with attorney’s fees for their rival and therefore, in the theory of the court, be less likely to bring a lawsuit in the first place. It was a classic case of “we’re doing it for the poor!” Accordingly, the Supreme Court determined that it would increase access to justice if everyone had to pay their own damn lawyers and attorneys’ fees were disallowed from being made part of a judgment.

The result is the system we have now, where no matter what the lawyer is going to get paid and both sides have to bear their own expenses of bringing a suit. I will note, however, that the English Rule is by far the most popular rule in the Western World. Meanwhile, the American Rule has turned the whole “access to justice” thing on its head.

Does the American Rule Increase Access to Justice?

Well, the Court’s reasoning in Arcambel was specifically the “access to justice” thing and the idea that a party should be able to manage the costs that they’ll incur as a result of seeking redress or raising a defense in the courts. In short, it was only fair to let a party determine what the legal expenses they’d incur would be.

However, it’s also important to note that Arcambel was determined in a period of time where it was entirely appropriate, and not unexpected, to pay an attorney not just in money but in labor or goods as well. There are stories (non-apocryphal stories) of future Presidents accepting cases where the payment literally was “Give me X amount of meat for the next three months” and the like. That’s cool, because opposing counsel was unlikely to accept salt pork as a viable method of paying legal fees ordered by the court. However, the times, as Bob Dylan once stated, have a-changed.

For instance, if you walk into my office and offer to give me a whole ham once a month for the next three months in return for representing you in a case against your landlord, I’m going to promptly tell you to season that ham where the sun don’t shine and point to the sign on the counter that explicitly states the many ways you can pay me. All of them, by the way, require some degree of payment in advance. Because I like to sleep indoors and I don’t trust people further than I can throw them.

Likewise, the practice of law has changed. In the older days it wasn’t uncommon for a case to be a relatively quick matter. You had a claim, you raised the claim, a lawyer took the case, a lawyer worked on the case a bit, a lawyer argued the case, the case was done. Sometime between loading flintlock muskets and buying bump-stocks, however, the nature of the law changed. Now a lawsuit is not a quick fix. Lawsuits stretch months at the very least, and with discovery, depositions, researching statutes, motions for summary judgment, motions in limine, etc. you’re lucky if you get out of a lawyer’s office paying for less than a year of the lawyer’s time.

To put this in “ham payment” terms, I’m going to want a secured interest in every pig your farm produces for the next twenty years if we’re going down that fucking road, and someone better be willing to come over and cook it for me. I may even demand it be pre-chewed and spit into my mouth like a baby bird. Because fuck you, I am not going to put in the extra effort of chewing if I’m getting paid in pork.

So, while Arcambel may have been decided with “access to justice” in mind, it’s definitely a relic of the time period in which it was decided, when hiring a lawyer didn’t have the distinct possibility of spelling financial ruin for you and your family, and when the practice of law didn’t require a WestLaw subscription and hours spent flipping through dozens of cases to craft a written argument. Or discovery disputes. Or policing the fuck out of emails. The end result of the American Rule these days has been the opposite of why it was created: Now the specter of paying an attorney a substantial sum of money in advance to bring or defend against a claim has resulted in people with meritorious claims not seeking redress from the courts at all.

When your choice is down to “pay the retainer” or “pay the power bill,” 90% of the folks out there with a legal claim are going to keep the lights on and let their cause of action die.

And that certainly doesn’t increase access to justice.

Next Time

On Wednesday we’re going to talk about the exceptions to the American Rule, Contingent Fees, and possible and proposed changes to the way litigants in America pay legal fees.

Now, if you’ll excuse me, I have to go flog some poor people for my invoices.