Lawyers' fees: what are the American Rule and the English Rule?

Today we talk legal costs and, particularly, lawyers' fees.

What's the rule governing the assessment of lawyers' fees arising out of litigation?

Well, it depends.

In western democracies the rules are basically two: the American Rule and the English Rule.

• The American Rule is the default legal rule in the United States. It provides that each party is responsible for covering its own attorney's fees, unless otherwise provided by statute or contract.
  The rationale is that no-one should be afraid to sue, or to pursue a claim, because of the risk of paying the expenses both of his or her lawyer and the defendant's lawyer.
  The drawback is that a stronger party, in the position to appoint the best and most expensive lawyers, would have a clear advantage against a weaker party, regardless of the justness of the claim.
• On the other hand, the English Rule states that the party losing the case must cover the other party's legal costs.
  The rationale for the English Rule is that no party should suffer an economic loss if the claim is just and therefore accepted by the Court.
  The drawback here is that pursuing a claim, even if it is obviously just, exposes the party to bear significant legal costs which will often take time, effort – and more money – to recover.

And what about Italy?

Well, in Italy the English Rule is applied but in many circumstances the law allows the judge to provide that each party, despite the outcome of the lawsuit, must pay its attorneys' fees. This is particularly frequent when the amount of the lawsuit is low.

Unfortunately, this results in people giving up without even trying: given the preposterous length of lawsuits in Italy, if you add the risk of having to bear your own legal costs after and despite winning the case - you guessed it - it's no wonder that many people tend to steer away from Courts even if they have suffered an injustice.

However, this means that just as many people get away with it because too often it's not worthwhile to sue. Luckily, suing is just an option – there are many alternatives I've talked about in a previous video: I'll leave a link to it down below.

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Lawsuit in Italy: what options? Alternative dispute resolution