Understanding the In Terrorem Effect of Litigation

[Bolares]

 

[Dioltach]

The American Rule, briefly, is that (absent a statute, rule, or contractual provision stating otherwise) each side in the litigation has to pay for their own attorney's fees and their own costs. In many other countries, this isn't the default- the default, instead, is the so-called, "Winner Winner Chicken Dinner Rule," which is that the prevailing party in litigation has their fees and costs paid by the loser. #Winner #IsCharlieSheenStillAlive?

In the Netherlands, this is subject to restrictions. Even if one party is ordered to pay the "full" costs, this will generally be capped (except in cases of frivolous litigation). Mostly, though, compensation for costs is limited to "reasonable" costs, and then usually according to a formula based on the work performed and the interests at stake or the complexity of the case.

 

[Ryujin]

In the Netherlands, this is subject to restrictions. Even if one party is ordered to pay the "full" costs, this will generally be capped (except in cases of frivolous litigation). Mostly, though, compensation for costs is limited to "reasonable" costs, and then usually according to a formula based on the work performed and the interests at stake or the complexity of the case.

In the US also. One of the most nototious "copyright trolls" has been censured for many things, including inflating the costs of his services. I don't think that he currently has a license anywhere, anymore.

 

[Snarf Zagyg]

In the Netherlands, this is subject to restrictions. Even if one party is ordered to pay the "full" costs, this will generally be capped (except in cases of frivolous litigation). Mostly, though, compensation for costs is limited to "reasonable" costs, and then usually according to a formula based on the work performed and the interests at stake or the complexity of the case.

In the United States, the general rule (at the federal law, and in many states) is that when you do get fees (through statute, rule, or contract), you use the lodestar method to determine reasonableness.

While it possible to recover more than you would normally earn (through a "multiplier"), this is highly unusual.

One issue that has come up repeatedly is that settlements allow attorneys to make much more than they normally would, such as in a class action case. Imagine this:

Class action filed.
Settlement is based on class members settling for X.
Attorneys get a percentage of X.
But the settlement is structured so that many class members will not go through requisite hoops to get their settlement.