When Courts Determine Fees in a System with a Loser Pays Norm: Fee Award Denials to Winning Plaintiffs and Defendants

Abstract

Unlike the English rule governing court fees and costs, under which the loser pays litigation costs, and the American rule, under which each party pays its own costs, Israel vests in judges full discretion to assess fees and costs. Given concerns about both the English and American rules, and the absence of empirical information about how either functions, an empirical study of judicial fee award practices should be of general interest. We report evidence that Israeli judges apply multiple de facto fee systems: a nearly one way fee-shifting system that dominates in tort cases, a loser pays system that operates when publicly owned corporations litigate, and a loser pays system with discretion to deny fees in other cases. Although a loser pays norm dominates in Israel, with fees awarded in 80% of cases, Israeli judges often exercised their discretion to protect losing litigants, especially individuals, by denying fees. For individual plaintiffs and defendants, the denial rate exceeded 30% for defendants who prevailed against individuals and was about one-quarter for plaintiffs who prevailed against individuals. Judges protected individual plaintiffs against fee awards more than corporations. In cases lost by individual plaintiffs, fees were denied to successful defendants 29.9% of the time compared to denials in 18.0% of cases lost by corporate plaintiffs and 16.7% of cases lost by governmental plaintiffs. In cases lost by individual defendants, fees were denied to successful plaintiffs 22.7% of the time compared to 9.8% denials in cases lost by corporate defendants and 28.6% denials in cases lost by government defendants. In addition to varying by whether plaintiffs or defendants prevailed and by party status, the fee denial pattern varied by case category and judicial district. Theorizing about optimal fee rules should account for the variety of fee outcomes observed in practice.