THE OTHER SIDE OF THE COIN

One final thought before plunging into the actual mechanisms of fee shifting….. Fee shifting is not necessarily a good thing. In many countries it is automatic—the losing side pays the winning side’s costs. In many of those countries there is a lot less litigation than in the United States. Your knee jerk reaction might be that less litigation is a good thing, but is it? If you are a large corporation, it may be. Especially if you’re a large corporation subject to lots of lawsuits by smaller plaintiffs that think of you as a target for big game hunting. If the plaintiff will have to pay your legal costs if they loose, it is likely that they will give serious consideration to the strength of their case before dragging you into court. That will lead to a reduction of cases where plaintiffs take long shots of dubious merit because their attorneys have time on their hands and the cases are relatively inexpensive to pursue (and might be prosecuted on a contingency basis), and where the potential long shot award is very sizeable. On the other hand, fee shifting provisions can be abused by the side with the resources to hugely outspend its opponent. Parties with good (but less than certain) cases might not be able to risk asserting their rights in court primarily because they cannot afford the risk of paying the disproportionate cost of the mega firm attorneys (and consultants and experts) that their opponents will bring to bear against them. In short, there will be cases where fee shifting exacerbates the very problem it was intended to solve. Fortunately, the potential for this undesirable result has not been lost on the courts or the legislatures. As we will see, many fee shifting mechanisms address the issue to one extent or another.



The information contained in this blog is not legal advice and should not be relied on as such. For legal advice or for answers to specific questions, please contact the blog's author.