American rule (attorney's fees)
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The American rule (capitalized as American Rule in some U.S. states) is the default legal rule in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
controlling assessment of
attorneys' fees Attorney's fee is a chiefly United States term for compensation for legal services performed by an attorney (lawyer or law firm) for a client, in or out of court. It may be an hourly, flat-rate or contingent fee. Recent studies suggest that when l ...
arising out of litigation. It provides that each party is responsible for paying its own attorney's fees,See unless specific authority granted by statute or
contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tr ...
allows the assessment of those fees against the other party. In other parts of the world, the English rule is used, under which the losing party pays the prevailing party's attorneys' fees.


Exceptions

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), federal statutes may supersede the default rule of not awarding attorney fees. The
Magnuson–Moss Warranty Act The Magnuson–Moss Warranty Act (P.L. 93-637) is a United States federal law ( ''et seq.''). Enacted in 1975, the federal statute governs warranties on consumer products. The law does not require any product to have a warranty (it may be sold "a ...
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 vexatiously 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 California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
, the Consumers Legal Remedies Act allows plaintiffs to recover attorney's fees, and in
insurance bad faith Insurance bad faith is a tort unique to the law of the United States (but with parallels elsewhere, particularly Canada) that an insurance company commits by violating the "implied covenant of good faith and fair dealing" which automatically exis ...
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 Mary Fallin (; née Copeland; born December 9, 1954) is an American politician who served as the 27th governor of Oklahoma from 2011 to 2019. A member of the Republican Party, she was elected in 2010 and reelected in 2014. She was the first and s ...
. 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.


Rationale

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.


See also

*'' Octane Fitness, LLC v. ICON Health & Fitness, Inc.'' *'' Olusegun Falana v. Kent State University and Alexander J. Seed'' *''
Peter v. NantKwest, Inc. ''Peter v. NantKwest Inc.'', 589 U.S. ___ (2019), was a United States Supreme Court case from the October 2019 term. In a unanimous opinion, the Supreme Court ruled that the United States Patent and Trademark Office (USPTO) was not entitled to ...
'' (2019) *
English rule (attorney's fees) In the field of law and economics, the English rule is a rule controlling assessment of lawyers' fees arising out of litigation. The English rule provides that the party that loses in court pays the other party's legal costs. The English rule cont ...


References

{{reflist Civil law (common law) Legal costs Practice of law Law of the United States