> bankruptcy due to legal fees.
Don't the legal fees get paid by the losing side?
The reasoning behind this is that to require the loser to pay all fees would discourage "good" lawsuits. (e.g., an individual with a decent case against a big company, may be discouraged from filing because of the potentially catastrophic costs if he doesn't win.)
I know this isn't your idea @bdowling, and it's actually interesting to hear the reason, but I couldn't resist /s posting.
It can be worse though. In some jurisdictions and for certain types of claims (e.g., employer-employee wage/hour suits in California), statutes provide for "one-way fee shifting". One-way fee-shifting means that if the plaintiff wins, the defendant pays the plaintiff's legal fees, but if the plaintiff loses, the plaintiff does not pay the defendant's legal fees. Predictably, this leads to some law firms specializing in these types of cases, taking cases on contingency, discouraging the plaintiff from settling, and racking up huge legal fees that will be paid by the defendant if they win. And the law supports this. I read one article about the California Court of Appeals upholding a $250,000 fee award in a case over $20,000 in unpaid wages.
Well, a judge could rule how much of a company's costs are fit for compensation, also considering the material situation of the plaintiff.
