The Impacts of the European Rule for Fee-Shifting on Litigation Behavior

Abstract:     
In honor of the international range and sophistication of Peter Hay's scholarship, this essay examines the impact of an important procedural rule that differs in Europe and the United States: shifting of attorneys fees in litigation. Existing studies suggest that, compared to a regime of no fee-shifting as in the United States, fee-shifting will have an ambiguous affect on the amount of litigation. In contrast, my analysis suggests that fee-shifting as actually practiced in many European countries will tend unambiguously to reduce the amount of litigation. It appears that actual experience in European courts confirms this theoretical prediction.

Keywords: Litigation, legal fees, fee-shifting

JEL Classifications: K10, K40, K41

Accepted Paper Series