'No Win, No Fee', Cost-Shifting and the Costs of Civil Litigation: A Natural Experiment

Fenn, Paul; Grembi, Veronica; Rickman, Neil

doi:10.2139/ssrn.2398295

Cited by 1 publication

(5 citation statements)

References 24 publications

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“…Yet, we find a statistically significant effect for large plaintiffs suggesting that large plaintiffs reduce their litigation expenses, i.e., employ smaller law firms post-reform. These results are in line with the theoretical prediction in Proposition 4, as well as with Fenn et al (2017), who find that plaintiffs' litigation expenses increased following a cost allocation transition (in the opposite direction of the one which we study) from a weaker to a stronger form of the English Rule. However, in contrast to Snyder and Hughes (1990) and Hughes and Snyder (1995), we do not find any significant effects on defense expenditures.…”

Section: Litigation Expenses and Outcomessupporting

confidence: 92%

“…Our data focus on England & Wales where the overwhelming majority of cases occur. 7 Prior to October 2013, the IPEC was known as the Patents County Court (see Online Appendix B). The change was made to clarify that the court may hear a range of IP cases, not just those relating to patents.…”

Section: Discussionmentioning

confidence: 99%

“…Indeed, much of the available empirical evidence focuses on litigation in two idiosyncratic U.S. states: Alaska, the only state that routinely awards attorneys' fees to prevailing parties, (Di Pietro et al, 1995;Rennie, 2012) and Florida, which applied the English Rule in medical malpractice cases between 1980 and 1985 (Snyder and Hughes, 1990; Hughes and Snyder, 1995;Helland and Yoon, 2017). Most other studies have been limited to contributing experimental results (Anderson and Rowe, 1995;Rowe and Anderson, 1996;Inglis et al, 2005;Massenot et al, 2015), survey data (Kritzer, 1984;Pfennigstorf, 1984;Genn, 1987;Shapard, 1995), or examinations of similar, but distinct, cost-recovery rules such as one-way fee shifting provisions available in certain types of U.S. cases (Schwab and Eisenberg, 1988), offer-of-judgment statutes enacted in some U.S. jurisdictions (Yoon and Baker, 2006), the shifting of 'success fees' owed pursuant to conditional fee arrangements (Fenn et al, 2017), or the cumulative effect of multiple heterogeneous fee shifting regimes aggregated across causes of action and jurisdictions (Williams, 2001;Fournier and Zuehlke, 1989).…”

Section: Introductionmentioning

confidence: 99%

“…Next, we take an empirical look at the impact of a 2010 court reform implemented in the UK. 6 The reform introduced a £50,000 cap on the total amount of costs that a victorious litigant may recover in an intellectual property (IP) suit decided by the IP Enterprise Court (IPEC), 7 one of just two venues for litigating IP disputes in England and Wales. 8 Post-reform, litigants in IP suits assigned to the other court -the High Court of England and Wales (PHC) 9 -may continue to pursue full recovery of their litigation expenses without restriction, while parties in cases assigned to the IPEC can hope to recover at most £50,000 (and in practice generally much less) and thus commonly must bear a portion of their own expenses despite winning.…”

Section: Introductionmentioning

confidence: 99%

“…Post r e f or m t + β 3 Pat+ + β 4 I P EC × Post r e f or m t + β 5 I P EC × Pat + β 6 Pat × Post r e f or m t + + β 7 I P EC × Pat × Post r e f or m t + δ t + t(7) …”

mentioning

confidence: 99%

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The Effect of Fee Shifting on Litigation: Evidence from a Policy Innovation in Intermediate Cost Shifting

Helmers

Lefouili

Love

et al. 2021

American Law and Economics Review

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We study the effect of fee shifting rules on litigation. First, we build a model to study the theoretical effect of a change in cost-recovery rules on case filings, (postfiling) settlement, win rates, and plaintiffs’ average litigation expenditures. We then undertake an empirical analysis of the introduction of an intermediate cost shifting rule that falls between the English and American Rules: a reform that limits the size of fee awards to successful litigants in cases decided by the Intellectual Property Enterprise Court (IPEC), one of two venues where IP cases may be filed in England and Wales. Our empirical analysis takes advantage of heterogeneity among case types and compares IPEC cases with intellectual property cases litigated at the PHC of England and Wales, which was not subject to this reform. We find that patent case filings increased following the IPEC’s shift from a pure English Rule to a rule that caps costs awards. Consistent with our model’s predictions, we also find evidence that smaller plaintiffs both won less often and settled more often postreform, as well as evidence that larger plaintiffs spent less on litigation postreform.

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Section: Litigation Expenses and Outcomessupporting

confidence: 92%

Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

“…Post r e f or m t + β 3 Pat+ + β 4 I P EC × Post r e f or m t + β 5 I P EC × Pat + β 6 Pat × Post r e f or m t + + β 7 I P EC × Pat × Post r e f or m t + δ t + t(7) …”

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confidence: 99%

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