Fee Shifting and the Free Market

TLDR: In this article, a combination of procedural reforms and market mechanisms is proposed to improve matters for both sides and to make it less likely that a party with a meritorious litigation position will fall victim to an adversary's sharp tactics.

Abstract: It is uncontroversial that litigation is too expensive. Controversy abounds, however, over who is to blame and what is to be done about the problem. Plaintiffs and defendants each accuse the other of pursuing weak or meritless litigation positions that inflict needless expense. This article suggests that regardless of who is correct— — and who is more often at fault— — the same set of solutions may be available to assuage the problem. The article embraces a combination of procedural reforms and market mechanisms designed to improve matters for both sides and to make it less likely that a party with a meritorious litigation position will fall victim to an adversary’’s sharp tactics. Specifically, I embrace an English-style approach, one which combines a loser-pays, fee-shifting regime with a market-based, risk-allocation mechanism designed to counterbalance the evils of fee shifting and to protect risk-averse litigants against losing a meritorious case and being forced to bear their opponents’' legal fees as well as their own.