The English Rule vs US Sanctions Quandary

October 16, 2013 GS2LAW

“Oh no Mr. Garson, that’s the English model!” Exclaims the judge, appalled at my suggestion that the losing party ought to pay the legal fees and costs of my winning client. At that point, the ugly reality dawned that for many Americans, suing on baseless claims has only upside, defending spurious suits is not incentivized and the system is geared towards cost-benefit settlement, which is often unjust.

Why is this so alien to a lawyer from abroad? One of the best aspects of the UK legal system is that “Costs follow the event.” Costs, in this context, include attorneys’ fees. This starting position, of which all are aware, obviously has a built-in discretion which is left to the judge, permitting unreasonably claimed fees to be reduced or even where a case has been a monumental waste of time, and awarding £1 in costs to the prevailing party.

What is remarkable is how the “English Rule” gives the prevailing party a genuine feeling of vindication as it is, at its very core, just. I have yet to hear of any proper reason why a party, who was right from the very outset and has been found to be correct should be forced to pay out of pocket, often to recover less than it has cost (taking into account time expended etc.).

More importantly, both litigants and lawyers in the UK know that if the case loses, adverse cost implications will most likely follow. Such a system, with a cultural and judicial Damoclean sword hanging over the parties, encourages rigorous scrutiny of claims by the attorneys at the pre-suit stage and discourages the pursuit of either vindictive cases or suits which are legally or factually lacking.

The omission of an attorneys’ fees clause is common in contracts prepared by non-US lawyers. Foreign litigants in the US need be on their guard as in most states unless there is a contractual clause awarding attorneys’ fees to the prevailing party, the only method to try to mitigate lawyer-inflicted damage is by way of sanctions.

Where I come from, a personal attack on either opposing counsel or the client is incredibly unbecoming, whereas in the US it seems to be par for the course. In practically every case that I have encountered here, at some point the threat of, or application for, sanctions occurs. To the newer practitioner, to face such exposure is nerve-wracking but as one sees the ubiquity of such posturing, it becomes wearisome, especially as the courts only award fees in the most extreme situations.

In my view, the system of sanctions entrenches a form of institutional aggression that wastes a monumental amount of court time and drafting costs, which ultimately harm both clients and the practice of law in the long run. There are some who even appeal lower courts’ denials of sanctions, even when the underlying claim has been finally determined against their client, simply to hit the pocket of their opponents who won the underlying case.

The aims of sanctions were supposed to be noble in trying to staunch frivolous practices but the convoluted way in which sanctions were introduced, set the bar high from the outset. Federal Rule of Civil Procedure 11(b) states:

Representations to the Court. By presenting to the court a pleading, written motion, or other paper—whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

  1. it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
  2. the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;
  3. the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and
  4. the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.

Therefore, the Court does not look at the end result i.e. win or loss but rather at whether the lawyer personally violated the duty not to submit frivolous papers. Such a system pits the Court against the lawyer, who would bear the brunt of any award for sanctions, rather than compensating the prevailing party for the monies expended. Understandably, the Court does not often make such awards, and the client is left out of pocket.

Many judges, both federal and state, complain about the length of their dockets and are seemingly disenchanted with the workload that it being foisted upon them. In the interests of both judicial economy and justice as a whole, taking the good from the English, might not be such a bad thing.

Robert Garson