Why Is the “American Rule” Important?

When working with a personal injury attorney , you may be wondering, “what happens to my legal fees if I lose my case?” Fortunately, most personal injury lawyers work on a contingency fee basis, which means that you don’t pay for any legal expenses if you don’t receive any compensation from your claim. If you do win, your payment will depend on the agreement set by you and your attorney at the beginning of your case.

This sort of arrangement is possible thanks to the so called “American Rule,” a part of our country’s legal system since its inception. So how does this rule help you and the legal system in personal injury cases?

The premise of the American Rule is that all parties involved in a lawsuit or other legal matter will pay their own individual attorney fees, regardless of who wins and loses a case. It’s possible to have an exception to this rule through a previously agreed-upon statute or contract in place, but in most cases, this rule means every party only needs to consider their own legal fees, and not anyone else’s.

While this may be the most familiar system, it’s doesn’t exist anywhere else in the world. The colloquial term, “American Rule,” is derived for being unique to the United States. At the founding of the country, this rule contrasted with the legal system in Britain, where the losing party would pay everyone’s legal fees. Other countries have their own distinct policies and laws in place about this matter.

Putting the burden of paying for the attorney fees of everyone involved in a case on the losing party seems unfair. After all, many lawsuits, especially those involving personal injuries, happen because a party needs compensation for damages they can’t cover on their own. For such parties that are in dire financial straits before a case, making them pay for expenses in the event of a loss may put them in further distress.

On a similar note, both the attorney and the client work to agree upon the legal expenses involved in the case. Without the American Rule, many people would end up responsible for fees of the other party, to which they had no control in negotiating. When there is financial disparity between the involved parties, one individual may end up with a bill that far exceeds their ability to pay. Rather, this rule allows people to take their cases to court without the fear of shouldering the costs of a wealthier individual or corporation’s attorney in the aftermath.

Likewise, the American Rule helps avoid drawn-out cases. Attorneys and clients on both sides need to consider the cost of an ongoing case because, no matter the result, the client will be responsible for the ensuing legal fees. Resolving the claim through settlement negotiations costs less and can be a preferable option for all parties. Settlements take less time, thereby lightening burden on the judicial system.

Countries may debate whether the American Rule is the best approach to handling legal fees, but this system helps protect the rights of everyone who enters a lawsuit, no matter who the opposing party may be. Unless your case involves qualifying contracts or statutes, you can count on the American Rule to keep your legal fees reasonable, even in a loss, as you agree upon them with your attorney.

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