American rule (attorney's fees)
- For other uses of term American rule, see American Rule.
In the field of law and economics, the American rule (capitalized as American Rule in some jurisdictions) is a rule controlling assessment of attorneys' fees arising out of litigation. The American rule 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. Under the American rule every party—even the party prevailing—must pay its own attorneys' fees. The American rule contrasts with the English rule, 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.
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.
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 also Rule 54(d) of the Federal Rules of Civil Procedure.
- Henry Cohen, "Awards of Attorneys' Fees by Federal Courts and Federal Agencies," in Awards of Attorneys Fees by Federal Courts, Federal Agencies and Selected Foreign Findings, ed. Mary V. Capisio, 1-134 (Hauppauge, NY: Nova Science Publishers, 2003), 1-3.
- 12 Reasons to Love the Magnuson-Moss Act. Journal of Texas Consumer Law. Reprinted with permission from the National Consumer Law Center.
- See California Civil Code Section 1780(e).
- Brandt v. Superior Court, 37 Cal. 3d 813 (1985).
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