American rule (attorney's fees)
The American rule (capitalized as American Rule in some U.S. states) is the default legal rule in the United States controlling assessment of attorneys' fees arising out of litigation. It provides that each party is responsible for paying its own attorney's fees, unless specific authority granted by statute or contract allows the assessment of those fees against the other party.
Internationally, the English rule is used, under which the losing party pays the prevailing party's attorneys' fees.
The American rule is merely a default rule, not the blanket rule in the United States. Many statutes at both the federal and state levels allow the winner to recover reasonable attorney's fees, and there are two major exceptions in federal case law as well. Under the Federal Rules of Civil Procedure 54(d)(1), federal statutes may supersede the default rule of not awarding attorney fees. The Magnuson–Moss Warranty Act is one such federal law. 28 U.S.C. § 1927 authorizes federal courts to award attorneys’ fees and expenses against any attorney who unreasonably and vexatiousness multiplies a proceeding. Federal courts also possess inherent authority to assess attorney’s fees and litigation costs against a plaintiff who has acted in bad faith, vexatiously, wantonly or for oppressive reasons.
Several states also have exceptions to the American rule in both statutes and case law. For example, in California, the Consumers Legal Remedies Act allows plaintiffs to recover attorney's fees, and in insurance bad faith cases, a policyholder may be able to recover attorney's fees as a separate component of damages. Nevada Rule of Civil Procedure 68 is unique in that a party who declines a pretrial offer of judgment (essentially a settlement offer) and fails to obtain a better result at trial is liable for all reasonable attorney's fees and costs incurred by the offeror after the time the offer was given.
In May 2017, the state of Oklahoma unintentionally removed the American rule for all civil cases not involving real property. House Bill 1470 was originally intended to increase the age at which victims of child sexual abuse could sue their abusers from 20 to 45. An amendment removing the American rule was added before the bill passed both houses of the legislature and was signed into law by Governor Mary Fallin. According to the original author of the Senate's version of the bill, the amendment was initially believed to apply only to losers of civil cases involving child sexual abuse, but the scope of the amendment proved far greater than many legislators intended. The new law took effect on November 1, 2017, and a spokesperson for Fallin said that legislators had several options for correcting the apparent error before that time.
The rationale for the American rule is that people should not be discouraged from seeking redress for perceived wrongs in court or from trying to extend coverage of the law. The rationale continues that society would suffer if a person was unwilling to pursue a meritorious claim merely because that person would have to pay the defendant's expenses if they lost.
- Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975).
- See "Federal Rules of Civil Procedure, Rule 54. Judgment; Costs". Legal Information Institute. Cornell Law School. Retrieved 24 September 2017.
- see Henry Cohen, "Awards of Attorneys' Fees by Federal Courts and Federal Agencies," in Capiscio, Mary V. (2002). Awards of Attorneys Fees by Federal Courts, Federal Agencies and Selected Foreign Findings. New York: Novinka Books. ISBN 1590332466. Retrieved 24 September 2017.
- "12 Reasons to Love the Magnuson-Moss Warranty Act" (PDF). Journal of Texas Consumer Law. 11: 127. 2008. Retrieved 24 September 2017.
- "Mark Hammervold and Hammervold PLC's Motion for Attorneys' Fees and Costs Due to Bad Faith by Diamond Doctor". Retrieved 12 June 2019.
- See subsection (e), "California Civil Code, Sec. 1780". California Legislative Information. California State Legislature. Retrieved 24 September 2017.
- "Brandt v. Superior Court, 693 P. 2d 796, 37 Cal. 3d 813, 210 Cal. Rptr. 211 (1985)". Google Scholar. Google. Retrieved 24 September 2017.
- Hoberock, Barbara (May 15, 2017). "Unsuccessful civil cases could cost thousands more as new law would make loser pay all attorney fees". Tulsa World. Retrieved May 21, 2017.