Introduction
The rules around the world regarding what party pays attorney's fees in litigation generally fall under one of two paradigms: "The American Rule" and "The German Rule." This article provides a brief overview of these two rules. Its primary goal is to enable Texas audiences to understand the why behind who pays attorney's fees in Texas divorces.
The American Rule
The American Rule is based on the principle that parties should generally bear their own litigation expenses, regardless of the outcome of the case. It is the default rule followed in the United States, including Texas. Its cited aims are to promote access to justice and discourage frivolous lawsuits.
There are exceptions to this rule, however, such as statutory provisions or contractual agreements that allow for the recovery of attorney's fees in specific circumstances.
The German Rule
The German rule, also known as the "loser pays" rule, or “cost-shifting” rule, differs from the American Rule in that the losing party is typically required to pay the attorney's fees and other litigation costs of the prevailing party. In Germany, the cost-shifting principle is codified in the German Code of Civil Procedure.
The German rule aims to incentivize parties to resolve disputes outside of court and to discourage frivolous or unreasonable litigation. By imposing the financial burden on the losing party, it serves as a deterrent against pursuing baseless claims and encourages parties to consider the potential costs and risks of litigation.
One cited criticism of this rule is that it can create a barrier to justice for individuals with limited financial means, as they may be deterred from pursuing valid claims due to the fear of potentially high legal costs if they lose. This criticism seems to lack certain logical cohesion, however, as in practice this rule should encourage parties with limited financial means to file lawsuits with a solid grounding in fact and law, as it can reduce the financial burden on the prevailing party by enabling them to recover a significant portion of their attorney's fees from the losing party.
It's important to note that the German rule is not absolute, and there may be exceptions and limitations based on the specific circumstances of the case. Moreover, variations of the cost-shifting rule exist in different legal systems around the world, with varying degrees of application and exceptions.
Summary
Overall, the American Rule and the German rule reflect different approaches to the allocation of attorney's fees, with the American Rule generally placing the burden on each party individually and the German rule imposing the costs on the losing party as a deterrent against frivolous litigation.
It is the opinion of the author, after witnessing first-hand far too many frivolous cases in the United States that the German Rule is the better rule for justice and fairness for the average middle-class person, as The American Rule often results in frivolous lawsuits brought simply to bully, intimidate, or control the other side.