1 Answer

The American Rule is a concept in American jurisprudence that requires that in most civil suits, each side is responsible for its own legal expenses. The American rule is a controversial issue, and the nature of the controversy is best understood by understanding the rule it replaced — the English rule, or “loser pays.” In every case brought under the English rule, the party that prevails has attorney's fees paid by the losing party. This was seen as stacking the deck against a poor plaintiff, who might have a good enough case, but might not be willing to gamble on a courtroom victory. If a plaintiff is afraid to bring suit because of limited resources that would be destroyed in the event of a loss, then justice has effectively been denied.

The American rule is a default standard, overruled in some cases by statute. One such exception is that insurance companies who lose “bad faith” lawsuits brought against them by policyholders may be required to pay the policyholder's legal fees as a component of the award. In addition, some California plaintiffs who prevail in lawsuits brought in some areas of consumer law may be able to recover attorney's fees. In most cases nationwide, though, each party to a lawsuit pays its own attorney's fees.