FTFM As Lord Justice Jackson reviews proposals to reform costs in the UK’s civil justice system by abolishing the “loser pays” rule in collective lawsuits, a current case before the US Supreme Court may provide a useful caution. Jones v. Harris Associates L.P., which will be argued this week, clearly demonstrates that lowering the “loser pays” barrier could have serious consequences.
In the US, each side in a collective action pays its own costs regardless of outcome. Plaintiffs – or, more accurately, plaintiffs’ attorneys – can often extract a settlement that covers their costs (plus a bit), even if the case would lose at trial. Settlement costs from class-action securities lawsuits in the US have exploded from $150m (£90.6m, €101m) to $3.5bn in less than a decade, from 1995 to 2004.
