There are other countries, where this issue is solved (more or less) by the fact that the side which have lost the case is covering trial costs. This does stop 'court trolling' because even is the cost of winning the case is higher than the cost of the settlement, winning the case nullifies that cost. But hey, US is special this way! (and many others... ;)
Having litigated against adversaries who use the courts primarily to be a nuisance, with little or no regard to the actual strength or weakness of their claims, I've become convinced "loser pays costs and attorney's fees of prevailing party" is a better system than what we have in the U.S.
This is not the only difference between the justice systems in US and EU (EU is what I consider to be elswhere): in US the case is the battle between boths sides lawyer, and the judge is simply a watching function, that a the end calls the sentence, based on the outcome of that battle. In EU, the case is a so called 'process of finding material truth' and the judge can take active stance, call witnesses, ask additional questions, call for professional opinions and so on - it is no longer a battle of who has better lawyers but a way to find what's the actual state of things.
The US system is also supposed to be a process of truth-finding, just that we leave the parties to support their own positions as adversaries. Without advocacy, American courts do very little on their own. So far that doesn't bother me, but I'm a lawyer. For someone thrown into the system, there can be an incorrect expectation that the court will automatically act to do justice.
Part of the problem with the adversarial system is that if one party has bad lawyers, you can end up with bad case law as a result of them failing to properly argue their case.
You could end up with one party intentionally losing a case in order to establish precedent that they expect to profit from in the future, because they expect they'll usually be on the other side of similar cases.
Not sure, but I seem to recall a case where Microsoft was on the other side of a suit from where you'd expect them to be, and people were afraid they'd lose intentionally. No idea what it was about or how it ended, though.
There's an important qualifier: loser pays reasonable costs of prevailing party, and the judge decides what is reasonable. It's not automatic. This addresses the concerns about a deep-pocketed party spending lavishly and winning, and the loser being forced to pay a massive legal bill.
(I'm not an expert on the subject, but it's been discussed before on HN, and this is my recollection.)
It occurs to me that an interesting variation would be for the loser to pay an amount equal to the lesser of the two parties' legal bills. That would limit the risk, and remove the incentive for the deeper-pocketed party to spend money just to inflate the bill.
I am small troll A suing company B. I lose, judge orders that troll A pay all the legal fees. I don't have the money, I file bankruptcy, I flee the country.
Lawyers still want to get paid. I doubt any legal team will just chase some random around into collections because "loser pays"
>>There's an important qualifier: loser pays reasonable costs of prevailing party,
I remember a comment a while back on HN or somewhere which suggested an approximate solution to this : the loser must pay the costs equal to its or the winners fees- whichever is lower.
Is there any issue with unfair inflation of costs? From what I understand these patent trolls are mostly teams of lawyers. Under this ruling could they charge themselves exorbitant rates, then the few times they do win makes up for the times they lose?
What about the situation with east Texas where they side with the patent holder the majority of the time?
Under this I might almost be more likely to just settle. Do I pay nothing, a paltry sum to settle, or 2-4x the cost without "loser pays" to lose? If I have even a 10% chance of losing it sounds like settling might be a good deal.
>Under this ruling could they charge themselves exorbitant rates, then the few times they do win makes up for the times they lose?
Not to mention that the costs to the losers the few times they win would really scare anyone who isn't able to eat the massive costs anyways. Would you sue someone from stealing thousands from you if there was a small chance at you owing them millions?
How do they avoid disincentivizing small parties from suing larger ones in this system? Let's say I have a strong case (say 90% chance of winning) to sue an insurance company for, say, $50k. But the cost of their legal team/experts/discovery to defend it is, ~$500k, then things look a bit more bleak.
Are there caps? Is one side prohibited from charging substantially more than the other?
I believe it's at the judges discretion. There was recently a case against a journalist who paid bribes on behalf of a news corporation in which the judge outright stated that if the corporation had been paying costs he would have ruled for a much larger costs settlement then he did when it emerged the journalist himself was going to have to pay. The remainder gets picked up by the taxpayer, so whatever happens the winning party isn't expected to pay the loser's costs.
Standard disclaimer: you should consult an actual solicitor!
I think it would somewhat depend on the judge's assessment of the situation, but I would think so long as you're acting in good faith they'd likely rule for you to pay whatever costs you can afford, and the rest would be covered by public finances.
It wouldn't surprise me to hear of judges deciding that the defence's legal team is grossly excessive and telling them they're not claiming for everything either, at least in the UK judges have quite a lot of leeway in what they can do in their own court room.
Well, if you want to sue them for $50k, and the cost of defense is $500k and your case is 90% chance to be lost, then the solution is quite simple - settle the case for 50k.
Limit the cost to reasonable costs. What is reasonable? Well, limiting the expense to the lower of the two parties' legal costs would strongly discourage the larger party from spending $500k on the case. And if they do it anyway, they pay for it themselves.
This does not solve it. Consider little guy suing mega corp. Little guy's costs may be covered if he wins, but with only 50K to spend, he still could lose because mega corp can drop 5M on the case. This could even make it worse, because without the ability to recover costs, little guy has a small chance at victory and losing the 50k and a large chance at losing the 50k with nothing. With the loser having to pay, it changes to little guy having a small chance at victory and losing nothing and a large chance at losing 5M + 50K.
But even then you propbably will get reimbursed only what an average lawyer would have been costing you. Not what the specialized high profile Lawyer normaly asks for.
In which case the problem isn't solved as the rich can still spend money to win (but they don't get it back). It makes the legal system pay to win and once again allows trolling. Maybe not as much, but still a lot.
This would only boost behavior that takes advantage of massive numbers of weaker individuals because in the rare case of one of them winning, you are only going to get a minor fee.
If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices.
> If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices.
This isn't a complete economic argument in favor of companies behaving poorly. Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior.
Japan, for instance, prohibits punitive damages. Is there any suggestion on your part that companies there are somehow more "predatory" than ones here in the US?
>Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior.
That fully depends upon how you simulate humans in one's argument. For a generally rational generally well informed human this is likely true (note I'm not even going with the 'fully rational fully informed'). But for the majority of consumers, there is less cost and there are ways to reduce the cost further. There will be some impact when the news breaks (if it breaks, the story being publicly available is a world of difference from the story being CNN/Fox New's headline of the day), but people will quickly lose interest or otherwise stop caring. While punitive damages may not be enough to fix the issue, I think there is an issue and I think the issue would be worse without them.
