Posts tagged as:

loser pays

  • We’re worth it: lawyers in credit card case want judge to award them $720 million [Alison Frankel, Reuters] Johnson & Johnson will fight $181 million payday for private lawyers in Arkansas Risperdal case [Legal NewsLine]
  • British Columbia, Canada: “Lawyer Ordered To Pay Costs Personally For ‘Shoddy Piece Of Counsel Work’” [Erik Magraken] Ontario client questions lawyer’s fee [Law Times]
  • Sixth Circuit: attorneys fees statute not intended to cover dry cleaning and mini-blinds [Legal Ethics Forum]
  • Indiana lawmaker goes back to drawing board on loser-pays bill [Indiana Law Blog]
  • ‘Shocked’ by $3M legal fee in fatal car-crash case, judge tells lawyers to pay plaintiff lawyer $50K [ABA Journal]
  • Seth Katsuya Endo, “Should Evidence of Settlement Negotiations Affect Attorneys’ Fees Awards?” [SSRN via Legal Ethics Forum] /li>
  • In Israel, more of a discretionary loser-pays arrangement [Eisenberg et al, SSRN via @tedfrank]
  • British cabbie beats ticket, recovers only some of his legal costs. Still better than he’d do here, right? [Daily Mail]
  • Turnaround guru Wilbur Ross: current structure of bankruptcy fees encourages lawyer “hyperactivity” [Reuters]

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Cathy Gellis, guesting at Popehat, has a long post on the latest in the Prenda Law saga. A relevant paragraph:

The default rule in American litigation is that everyone pays for their own lawyers. But some laws, the Copyright Act being one of them, have provisions so that the loser pays for both sides’ lawyers. … But just because a judge may grant an award of attorney fees doesn’t mean the money will ever be recovered; enforcing a judgment often presents its own expensive challenges, meaning a wronged defendant can still be saddled with the costs of his own defense. However the California Code of Civil Procedure has a provision, § 1030, to help mitigate that financial risk by allowing defendants in similar positions as Mr. Navasca [a man seeking fee recovery from Prenda Law over a questionable copyright action] to require plaintiffs to make an “undertaking;” that is, to post a bond that would guarantee, when the defendant inevitably wins his fees, that he would actually get the money.

Both provisions could prove important in bringing the rogue legal enterprise to heel. If only other areas of law besides copyright had loser-pays, and other states besides California emulated the “undertaking” idea. Earlier on Prenda Law here and here.

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  • Sounds promising: “Peeved politicians want ‘loser pays’ rule for patent trolls” [Joe Mullin, Ars Technica] Defense of patent trolls in Wired mag [Michael Risch]
  • Scènes à Faire: the copyright exception for scenes that inevitably suggest themselves [Bruce Boyden, ConcurOp]
  • If the terms of service/purchase say you don’t have a right to resell the digitized book or song, maybe you don’t [The Digital Reader on court decision against ReDigi startup]
  • Pay to quote a single word from a newspaper? That’s what the popup at Canada’s National Post seems to suggest [Doctorow, BoingBoing]
  • Inside copyright enforcers’ “bait-car” operations [TechCrunch]
  • “Firm and two of its lawyers must pay $200K over frivolous patent case” [Sheri Qualters, National Law Journal]
  • “Crazy copyright bot (now suspended by Twitter) threatens those who tweet tiny poem” [Rob Beschizza via @ChrisBellNZ]

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  • California Supreme Court: fee shift in disabled-rights claim can go to winning defendant, not just plaintiff [Jankey v. Song Koo Lee, Bagenstos/Disability Law]
  • That’s Olsen with an “e”: “Lawmaker wants to protect cities from frivolous lawsuits over A.D.A.” [California Assemblywoman Kristen Olsen; L.A. Times] “Gas stations confront disabled-access lawsuits” [Orange County Register] Serial ADA filer hits New Orleans [Louisiana Record] ADA drive-by suits in Colorado and elsewhere [Kevin Funnell]
  • And this lawyer follows a see-no-evil policy regarding ADA filing mills: “I refuse to pass judgment on other attorneys here.” [Julia Campins]
  • Child care center could not turn away applicant with nut allergy because Iowa disabled-rights law said to have expanded its coverage of categories when the U.S. Congress expanded ADA, though Iowa lawmakers enacted no such expansion [Disability Law]
  • Feds join in LSAT accommodation suit [Recorder]
  • Official in San Francisco’s mayoral Office on Disability files disability-bias claim [KGO]
  • “Testing employees for legally prescribed medications must be done carefully” [Jon Hyman]

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Scott Greenfield, contra Radley Balko, believes the idea would prove “problematic, if not disastrous,” in real life, especially if enacted in the form of two-way fee-shifting (as distinct from a one-way fee payable only to defendants). It is worth noting that although legal systems around the world predominantly embrace loser-pays principles in civil litigation between private parties, they more or less uniformly decline to carry a similar principle over to criminal prosecution.

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According to a press release from Feld Entertainment, which owns the Ringling Bros.-Barnum & Bailey circus, the American Society for the Prevention of Cruelty to Animals (ASPCA) has agreed to pay $9.3 million to settle racketeering and other charges arising from alleged litigation abuse in lawsuits beginning in 2000 over elephant welfare. Feld says ASPCA and others paid a plaintiff and fact witness in the case whose testimony a judge described as not credible. It says it intends to continue suing other animal-welfare groups that it has named in connection with the episode, including the Humane Society of the United States, and Fund for Animals, as well as attorneys. [more on circus's side of dispute; earlier here, here, here, here] More: John Steele, Legal Ethics Forum.

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October 2 roundup

by Walter Olson on October 2, 2012

  • CFPB hopes to fix regulation that has prevented stay-home moms from getting credit [Bloomberg Business Week, earlier]
  • Uncertified class action: “Federal judge orders cost-shifting for fishing expedition” [PoL] Ted Frank objects to $10 million fee in “cosmetic” Johnson & Johnson settlement [Daniel Fisher, PoL]
  • “Accused of Providing Blank Arrest Warrants to Police, Georgia Magistrate Resigns” [ABA Journal]
  • Lester Brickman, Peter Schuck in new podcast on Brickman’s book Lawyer Barons [Federalist Society]
  • “Wright and Ginsburg on Behavioral Law & Economics” [NW Law Review and SSRN via Adler]
  • “17th injury claim in 12 years got Chicago cop her disability deal” [Sun-Times]
  • “Injured while working for the Empire? Call Lando Calrissian.” Law firm ad parody [YouTube]

His speech is titled “Economic Lessons from American History,” (printable PDF version) and one of the lessons has to do with loser-pays:

…if Jefferson’s decimal coinage concept was a good idea that quickly spread around the world, another idea that developed here at that time was lousy: the so-called American Rule, whereby each side in a civil legal case pays its own court costs regardless of outcome. This was different from the English system where the loser has to pay the court costs of both sides.

The American Rule came about as what might be called a deadbeat’s relief act. The Treaty of Paris (which ended the American Revolution) stipulated that British creditors could sue in American courts in order to collect debts owed them by people who were now American citizens. To make it less likely that they would do so, state legislatures passed the American Rule. With the British merchant stuck paying his own court costs, he had little incentive to go to court unless the debt was considerable.

The American Rule was a relatively minor anomaly in our legal system until the mid-20th century. But since then, as lawyers’ ethics changed and they became much more active in seeking cases, the American Rule has proved an engine of litigation. For every malpractice case filed in 1960, for instance, 300 are filed today. In practice, the American Rule has become an open invitation, frequently accepted, to legal extortion: “Pay us $25,000 to go away or spend $250,000 to defend yourself successfully in court. Your choice.” …

…policing the marketplace has long been considered a quintessential function of government. The reason for this is that when policing has been in private hands, self-interest and the public interest inevitably conflicted. The private armies of the Middle Ages all too often turned into bands of brigands or rebels. The naval privateers who flourished in the 16th to 18th centuries were also private citizens pursuing private gain while performing a public service by raiding an enemy’s commerce during wartime. In the War of 1812, for instance, American privateers pushed British insurance rates up to 30 percent of the value of ship and cargo. But when a war ended, privateers had a bad habit of turning into pirates or, after the War of 1812, into slavers.

Predictably, the American Rule has spread exactly nowhere since its inception at the same time as the decimal coinage system. There is not another country in the common-law world that uses it. … Few things would help the American economy more than ending the American Rule.

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“After achieving a university entry rank of 99.95, winning fifth place in the state for chemistry and a place at the University of Sydney studying medicine, the former Abbotsleigh student Sarah Hui Xin Wong believed she could have done better in the [Higher School Certificate].” A New South Wales administrative tribunal has now turned down her complaint that she suffered disability discrimination by not being allowed further accommodations on the test, specifically a computer and extra time. But Australia does have loser-pays: “Ms. Wong has been ordered to pay some of the Board of Studies’ costs, including a proportion of the fees of the leading Sydney barrister Chris Ronalds, SC.” [Sydney Morning Herald]

In other Australia schools litigation news, a “former student who is suing Geelong Grammar School says she decided to seek damages after she failed to qualify for her preferred university course. Rose Ashton-Weir, 18, alleges Geelong Grammar gave her inadequate academic support, particularly in maths.” [Melbourne Age] More in update at The Age (“was perpetually disorganised and failed to attend classes, a tribunal has heard.”)

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July 23 roundup

by Walter Olson on July 23, 2012

  • Oh, ABC: “America’s Wrongest Reporter” Brian Ross achieves another feat of wrongness [Hans Bader] “Don’t turn Aurora killer into celebrity” [David Kopel, USA Today] For the media: five tips on how not to misreport the gun angle [Robert VerBruggen, NRO]
  • Ed Brayton of Dispatches from the Culture Wars challenges me on the War For Roberts’ Vote, and I respond;
  • The “contains peanuts” warning on a peanut jar [Point of Law]
  • “California Stats Show Elected Judges Disciplined More Often than Appointed Judges” [ABA Journal] New Federalist Society guide on state judicial selection procedures;
  • “Science Quotas for Women–A White House Goal” [Charlotte Allen, Minding the Campus; Hans Bader] More: Heritage. “Title IX swings wildly at invisible enemy” [Neal McCluskey]
  • So that’s what his business card meant when it said he practiced at Loeb and Wachs [AP: "Hawaii attorney convicted in ear licking case"]
  • Rare occasion in which defendant is allowed to strike back: California appeals court says software executive can pursue malicious prosecution case against class action lawyers [NLJ]

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Now posted: a recent Federalist Society podcast of a discussion that includes me, Texas attorney E. Lee Parsley, Texas lawprof Ronen Avraham, Judge Dennis Jacobs as moderator and Dean Reuter of the Federalist Society introducing. Running time is an hour and you can listen directly here. More from me on the new Texas law here.

Overriding a veto from Gov. John Lynch, the New Hampshire legislature on June 27 enacted SB 406, establishing the nation’s first “early offer” system for medical malpractice claims. The law establishes incentives for defendants to make offers early in the litigation process that cover plaintiff’s economic losses such as medical bills and lost wages. The early-offer process is at claimants’ option only; claimants are free not to request such an offer. [Kevin Pho; supportive website; trial lawyers' opposition website]

Importantly, the new procedure also contains pioneering elements of loser-pays in both directions. If a claimant chooses to accept a defendant’s early offer of economic-loss expenses, the defendant will pay an additional sum to reflect a scheduled assessment of pain and suffering, plus the reasonable costs of attorney representation. However, if the claimant invokes the early-offer process but then turns down the offer as inadequate, there is a real risk of a fee shift in the opposite direction:

XII. A claimant who rejects an early offer and who does not prevail in an action for medical injury against the medical care provider by being awarded at least 125 percent of the early offer amount, shall be responsible for paying the medical care provider’s reasonable attorney’s fees and costs incurred in the proceedings under this chapter. The claimant shall certify to the court that bond or other suitable security for payment of the medical care provider’s reasonable attorney’s fees and costs has been posted before the court shall consider the case.

At TortsProf, Christopher Robinette explains in some detail (contrary to an error-filled screed in a Litigation Lobby outlet) why this adds up to a generally good deal for claimants (who, of course, are free not to trigger the process if they disagree) as well as making the system fairer. “Early-offer” proposals have been championed over the years by Jeffrey O’Connell, the distinguished University of Virginia torts scholar, and by Philip K. Howard of Common Good, among others. More on loser-pays here.

[Research assistance: Cato Institute intern Byron Crowe; cross-posted at Cato at Liberty]

More from John Steele Gordon at Commentary: “This looks like a big step in the right direction.”

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Competition through patent suits, circa 1857: I’ve got a new post at Cato on how loser-pays works to improve the general fairness of an inevitably imperfect litigation system.

April 25 roundup

by Walter Olson on April 25, 2012

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April 18 roundup

by Walter Olson on April 18, 2012

  • “MPAA: you can infringe copyright just by embedding a video” [Timothy Lee, Ars Technica]
  • NYC: fee for court-appointed fire department race-bias monitor is rather steep [Reuters]
  • Larry Schonbron on VW class action [Washington Times] Watch out, world: “U.S. class action lawyers look abroad” [Reuters] Deborah LaFetra, “Non-injury class actions don’t belong in federal court” [PLF]
  • Will animal rights groups have to pay hefty legal bill after losing Ringling Bros. suit? [BLT]
  • You shouldn’t need a lobbyist to build a house [Mead, Yglesias]
  • “Astorino and Westchester Win Against Obama’s HUD” [Brennan, NRO] My two cents [City Journal] Why not abolish HUD? [Kaus]
  • “Community organized breaking and entering,” Chicago style [Kevin Funnell; earlier, NYC]

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Universal be not proud

by Walter Olson on March 21, 2012

Veoh, like YouTube, pioneered the idea of enabling users to self-post video to the Internet. Then Universal, the entertainment company and owner of many copyrights, began a particularly aggressive campaign of litigation against it. Though Veoh Networks won a judicial decision in its favor, Universal appealed, having also taken the unusual step of suing three Veoh investors personally. In December the Ninth Circuit reaffirmed Veoh’s victory, but in the mean time Veoh had declared bankruptcy. Company founder Dmitry Shapiro recalls:

As you can imagine the lawsuit dramatically impacted our ability to operate the company. The financial drain of millions of dollars going to litigation took away our power to compete, countless hours of executive’s time was spent in dealing with various responsibilities of litigation, and employee morale was deeply impacted with a constant threat of shutdown. Trying to convince new employees to join the company in spite of this was extremely challenging.

By the end, “The company that we had built, that was once valued at over $130 million was gone,” writes Shapiro. Ron Coleman writes:

Under the American Rule, the cost of maintaining a meritorious defense to relentless litigation is prohibitive and what fee-shifting is available favors is applied with sickening asymmetry, virtually always favoring the party to which legal fees mean the least.

According to Eric Goldman, “This case’s real result is that Veoh is legal, but Veoh is dead – killed by rightsowner lawfare that bled it dry.” Mike Masnick points out that Universal is still pursuing its action.

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European roundup

by Walter Olson on February 2, 2012

  • Overseas press excoriates new FATCA tax-Americans’-foreign-earnings law; some foreign banks now turn away American customers [Dan Mitchell, Cato, Reason] “The Fatca story is really kind of insane.” [Caplin & Drysdale's H. David Rosenbloom, NYT via TaxProf] Will Congress back down? [Peter Spiro/OJ, more]
  • Important new book from James Maxeiner (University of Baltimore) and co-authors Gyooho Lee and Armin Weber on what the U.S. can learn from legal procedure overseas: “Failures of American Civil Justice in International Perspective” [TortsProf]
  • Don’t do it: British administration mulls further move away from loser-pays rule in search of — what exactly, a yet more Americanized litigation culture? [Guardian, Law Society]
  • Apparently in Norway it’s possible to lose one’s kids by feeding them by hand [Shikha Dalmia, Reason]
  • Financial transaction tax? Ask the Swedes how that worked out [Mike "Mish" Shedlock, Business Insider]
  • Notes from conference on globalization of class actions [Karlsgodt] Related: Adam Zimmerman;
  • “Another conviction in Europe for insulting religion” [Volokh; Polish pop star] Campus secularists’ speech under fire in the U.K. as “Jesus and Mo” controversy spreads to LSE [Popehat] British speech prosecution of soccer star [Suneal Bedi and William Marra, NRO]

In a new Cato post, I explain why I wish such an organization existed.