Who Pays the Bill?

Last month a member of the Indiana House of Representatives proposed a bill to shift the payment of attorneys' fees in a civil case to the losing party. This loser-pays system is followed almost everywhere in the world--everywhere except the U.S. This country has always required the parties to pay their own expenses (except where a court exercises its discretion to the contrary and awards attorneys' fees to be paid as part of the damages).

And there are policy reasons for this system. The U.S. legal system provides access to courts for the "little guy." Through the contingency fees charged by many plaintiffs' counsel, a poor plaintiff may sue for his injury without risking a fee he will not be able to pay. Requiring all losing plaintiffs to pay the costs of defense would deter many plaintiffs, particularly the poor, from ever bringing suit. Many may feel inclined to cheer the thought of such a disincentive, but this "solution" is not all it's cracked up to be. While the bill would prevent frivolous suits, it goes too far, and prevents nonfrivolous suits. It fails the truly injured individual by preventing him from bringing suit, and thereby fails society by protecting defendants who have violated the law.

There is another consideration: a defendant who knows the plaintiff may pay his bills has every reason to flood the plaintiff with massive (expensive) discovery. Many parties already engage in such dilatory practices in violation of the Rules of Civil Procedure. This problem would only grow if a wealthy defendant could scare a plaintiff by increasing the bills. Even a plaintiff who braved the risks and brought suit may notice the growing defense fees he cannot pay and either settle for a nominal amount or dismiss the case altogether.

Surrounded by the loud call for tort reform, legislators are trying multiple means to cut down frivolous lawsuits that waste the resources of individuals and the judicial system. Reforms are important, as judicial efficiency is a vital policy. But reforms should not go so far as to deter any suit by a destitute plaintiff. Our country thrives on the equal opportunities afforded its citizens, and this bill would burden Indiana's poor by virtually eliminating their ability to litigate.

Update: After researching this issue a little further this afternoon, I would like to broaden my original stance to include disincentives to the middle class. In fact, a Utah medical malpractice defense lawyer, Francis J. Carney, published an article about this issue in the May 1995 volume of the Utah Bar Journal. He points out the ways the "loser-pays" system has failed in England. In England, the government pays the litigation costs of the poor, so the sytem actually harms the middle class plaintiff, who has assets to lose, rather than the poor or the wealthy. See Francis J. Carney, "'Loser Pays'--Justice for the Poorest and the Richest, Others Need Not Apply," 8 UTAH B.J. 18 (May 1995).