Decisions made by litigants are often not beneficial to society. A rule governing fee allocation in tort cases should encourage meritorious suits and discourage frivolous suits. America is one of the only countries in the world that does not use a loser-pays rule to assign legal costs. Employing a loser-pays rule could make the legal system more efficient and more equitable. The effect of a loser-pays rule is analyzed with economic theory and empirical evidence. Possible limitations of the rule are also considered. A carefully applied system of loser-pays may positively affect the U.S. legal system.
Major Themes in Economics
©2005 by Major Themes in Economics
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Loos, Jaime Leigh
"The Effect of a Loser-Pays Rule on the Decisions of an American Litigant,"
Major Themes in Economics, 7, 31-45.
Available at: https://scholarworks.uni.edu/mtie/vol7/iss1/4