Litigation is the most expensive option to resolve a legal conflict.

The American Rule
Determining When to LitigateWhen viewed through the lens of the so-called “American Rule” -which requires each party in civil litigation to pay their own attorney fees and costs regardless whether they win or lose – the litigation option is often impractical or unaffordable.

The exceptions to the American Rule fall generally into two categories:

  • Contingency fee cases
  • Fee-shifting cases

Cases covered by insurance are not an exception. A party covered by insurance is still obligated to pay fees and costs if sued but has contracted with an insurance company to pay those fees and costs on its behalf.

Of the two exceptions, most people are familiar with contingency fee cases involving personal injury or medical malpractice where the attorney agrees to accept a fixed percentage of the amount of money recovered on behalf of the injured party.

There is less familiarity with fee-shifting cases based on state or federal statutes or a contract. State and federal fee-shifting statutes require a prevailing party’s attorney fees and costs be shifted to the losing party.

Examples of fee-shifting statutes include those where harm or injury is caused by violation of a civil rights statute (e.g., sexual harassment, racial discrimination) or the breach of a consumer protection law (e.g., false/deceptive advertising, illegal credit collection).

Private contracts routinely include provisions for shifting the fees to the loser of a dispute.

The Bottom Line
What this all means is that, unless a lawsuit fits into one of the exceptions, anyone who files a lawsuit, or is involved in a lawsuit, must pay their own way. Consequently, bankrolling a lawsuit in which costs exceed those that stand to be gained amounts to economic and financial nonsense. Even if the gains stand to exceed the cost, sometimes the cost is just plain unaffordable. When faced with either one of these situations, justice can seem to be little more than a commodity when the worth is determined by a cost/benefit analysis and who can afford to spent the most money.

The bottom line: You get the justice for which you can or are willing to pay.

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