WASHINGTON — In making the case for legal reform in the United States, former Hawaii Gov. Linda Lingle said there is “no downside” to suing someone in this country.

“This is the only country that has what’s known as the American Rule, which says you can sue someone and if you lose, you have no downside, you don’t pay anything,” Lingle said before the Kaneohe Business Group last month in an appearance to promote her U.S. Senate candidacy. “Other industrialized nations, if you run up bills in the court system, and you lose, there’s some downside to it, you have to pay the costs of the other side.”

Is Lingle’s characterization of the so-called American Rule accurate?

“No, this is not an accurate way to characterize the American Rule, or to describe the situation in other countries,” University of Hawaii law professor Linda Hamilton Krieger told Civil Beat in an email. “The picture is far more complex.”

Starting within the U.S., Alaska requires the loser of a case to pay some portion of the other party’s attorney fees, according to the Alaska Rules of Civil Procedure. The law in that state entails a formula to determine what percentage of the fees the losing party has to pay, and it is within a judge’s discretion to award more than that amount.

“Even if you file a civil case and you prevail and there’s no monetary reward, you can still file a request for attorneys fees (to be paid for by the losing party),” said Anchorage-based lawyer Kara Nyquist in a phone interview. “You can also get your costs reimbursed. In Alaska, we really do have a mechanism to discourage people from filing litigation.”

But Alaska is an exception. Most states do not have a legal structure in place that requires the losing party to pay the prevailing party’s fees, though individual judges can still order losing parties to do so.

As legal scholar Matthew Wilson wrote in a 2005 paper for the Emory International Law Review: “While the American Rule dates back to the eighteenth century, numerous
exceptions to this rule started appearing in America around 1950 on both the
federal and state levels. Except in the state of Alaska, these exceptions did
not typically take the form of general ‘loser pays’ liability for attorney’s
fees.”

Wilson states that “although the absoluteness of the American Rule has diminished over time,
it still remains the benchmark of U.S. litigation.”

At the federal level, there are also instances — though “not as common” — in which the losing party pays for the prevailing party’s attorneys fees, said Carolyn Lamm, the president emeritus of the American Bar Association.

“The American Rule is not absolute,” Lamm said in an interview. “If you’re involved in something that may be bad faith litigation (the losing party would have to pay)… Under the federal rules of civil procedure, if you initiate a proceeding that is wrong as a matter of fact or law, courts do impose costs on parties and lawyers.”

So Lingle doesn’t give the complete picture when she says that in the United States, “you can sue someone and if you lose… you don’t pay anything.”

But it is true that the American Rule was developed to enable citizens to file lawsuits, rather than to discourage them, Lamm said.

“Here, we believe that it really protects individual rights, and permits citizens — the poor, the disadvantaged — to be able to bring claims that they might not be able to bring,” Lamm told Civil Beat in an interview.

Lingle’s statement about other industrialized nations is also too broad. Both Lamm and Krieger said there is at least one other industrialized nation that follows the American Rule model: Japan.

“Because Japan and the United States are virtually alone among modern legal systems in not automatically holding losing litigants responsible for at least some portion of the winning party’s attorney’s fees, this rule might be referred to as the ‘AmericanJapanese Rule,'” wrote Wilson.

Even in countries that follow the so-called “English Rule,” judges can decide not to shift attorneys’ fees to the losing party.

Bottom line: Lingle’s claim that “this is the only country that has what’s known as the American Rule” is false. Japan has essentially the same rule. She’s also overly sweeping in her statement about losing plaintiffs not having a financial downside. The American Rule may be the benchmark for litigation in this country, but it is not as absolute as Lingle suggested. Alaska is the prime example of that.

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