Legal Fees: A comparison of the American and English Rules

Abstract

[Introduction] This note is intended to explore some of the issues raised l)y Avery Katz's provocative paper. The question posed in his paper is whether the English rule or the American rule generates more legal fees. Katz uses game theoretic motivation for the elasticity measures that are central to his analysis. However, the analysis proceeds in terms of elasticity models so the implications of the underlying game theory remain rather obscure. The approach taken here is to analyze a game-theoretic model directly to discover where the basic principles of the theory lead. The basic approach is similar to other papers and the contribution here is to work out the details of an easy-to-follow example.