HB 1040 – Doing away with the “American Rule” for Attorney’s Fees

Rep. Leonard has introduced HB 1040 which essentially abolishes the “American Rule” for attorney’s fees. The “American Rule” is the default for civil litigation in the U.S. and basically establishes that, unless a law or contract specifies to the contrary, each party bears their own legal fees. This is distinct from the “English Rule” where the loser pays attorney fees. HB 1040 would provide that “in all civil actions, the court shall award attorney’s fees as part of the cost to the prevailing party.” (emphasis added.) On its face, this doesn’t sound like such a bad idea. It sounds fair. Why shouldn’t the person who was wrong have to pay the person who was not wrong for the expense of litigation? But, as a practical matter, it would discourage middle class people from bringing or defending against lawsuits. Rich people can afford the risk. Poor people have nothing to lose. Middle class people could be wiped out by a debatable point of law or an arbitrary jury. It would also tend to inhibit settlements beyond a certain point. If the legal fees get to a certain level, parties in a tenuous financial situation might not have any realistic option besides seeing it through to the bitter end and hope they win.