American Rule – Definition

Cite this article as:"American Rule – Definition," in The Business Professor, updated February 10, 2020, last accessed May 25, 2020, https://thebusinessprofessor.com/lesson/american-rule-definition/.

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American Rule Definition

The American rule is the rule that says that no matter the winner in a case, each party bears its own attorney’s fees. This is different in the English common law in which the party that loses a case pays the cost for the party who wins.

Every party is allowed to bear its legal fees so that the plaintiff will not be deterred from seeking redress in the court due to costs and also everybody will have access to the justice system.

A Little More on What is the American Rule

This is a default rule in the American legal system but there are instances where the court can deviate from this general rule. Some of the exceptions are:

  • The availability of fee-shifting statutes in some states
  • The existence of contrary position in the contract between parties
  • Third-party litigation exception
  •  Anti-discrimination laws
  • Cases where government entities are parties.

One major case that exemplifies this exception is the Sierra Club versus the County of San Diego in 2012 where the court ruled that the plaintiff that is the sierra club who won the case should be paid by the other party the sum of $1 million in legal fees.

If paying the fees will be contrary to public opinion or it will be inequitable to do so, the judge may order that the losing party pay the legal fees of the party that won the case.

Reference for “American Rule”

https://en.wikipedia.org/wiki/American_rule_(attorney%27s_fees)

https://www.investopedia.com › Investing › Financial Analysis

https://definitions.uslegal.com/a/american-rule

https://www.lectlaw.com/def/a107.htm

https://investinganswers.com/financial-dictionary/laws-regulations/american-rule-2041

Academics research on “American Rule”

Toward a history of the American rule on attorney fee recovery, Leubsdorf, J. (1984). Toward a history of the American rule on attorney fee recovery. Law & Contemp. Probs.47, 9.

The American Rule on Attorney Fee Allocation: The Injured Person’s Access to Justice, Vargo, J. F. (1992). The American Rule on Attorney Fee Allocation: The Injured Person’s Access to Justice. Am. UL Rev.42, 1567.

Attorney Fee-Shifting in America: Comparing, Contrasting, and Combining the American Rule and English Rule, Root, D. A. (2004). Attorney Fee-Shifting in America: Comparing, Contrasting, and Combining the American Rule and English Rule. Ind. Int’l & Comp. L. Rev.15, 583.

The pioneer spirit and the public trust: the American rule of capture and state ownership of wildlife, Blumm, M. C., & Ritchie, L. (2005). The pioneer spirit and the public trust: the American rule of capture and state ownership of wildlife. Envtl. L.35, 673.

The American Rule That Swallows the Exceptions, Slater, J. E. (2007). The American Rule That Swallows the Exceptions. Emp. Rts. & Emp. Pol’y J.11, 53.

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