1995/04/01 by James W. Hughes, Edward A. Snyder · 1 citation
Economics, Econometrics and Finance · Health Professions · Social Sciences · #Law, Economics, and Judicial Systems #Legal principles and applications #Medical Malpractice and Liability Issues
paper · doi:10.1086/467330
crossref issued 1995/04/01 · crossref published 1995/04/01 · crossref published-print 1995/04/01 · openalex publication_date 1995/04/01 · crossref created 2005/07/20 · crossref deposited 2018/04/07 · openalex created_date 2025/10/10 · crossref indexed 2026/07/29 · openalex updated_date 2026/07/30
In contrast to the American rule, whereby each party bears its own costs, the English rule requires losers at trial to pay the winner's legal fees, up to a reasonable limit. We develop six hypotheses regarding how these two cost-allocation rules might affect settlements and litigated outcomes through changes in (i) the selection of cases reaching the settle-versus-litigate stage and (ii) behavior thereafter. Using data from Florida, which applied the English rule to medical malpractice claims during the period 1980-85, we examine the rules' effects on the probability of plaintiffs' winning at trial, jury awards, and out-of-court settlements. The English rule increased plaintiff success rates at trial, average jury awards, and out-of-court settlements. Our interpretation of these findings emphasizes that the overall quality of the claims reaching the settle-versus-litigate stage must improve to generate the combination of effects observed.