Working paper

The Effect of Fee Shifting On Litigation: Evidence from a Policy Innovation in Intermediate Cost Shifting

Christian Helmers, Yassine Lefouili, Brian Love, and Luke McDonagh

Abstract

We study the effect of fee shifting rules on litigation. First, we build a model to study the theoretical effect that a change in cost-recovery rules has on case filings, (post-filing) settlement, win rates, and plaintiffs’ average litigation expenditures. We then undertake an empirical analysis of the introduction of an intermediate cost shifting rule that falls between the English and American Rules: a reform that limits the size of fee awards to successful litigants in cases decided by the Intellectual Property Enterprise Court (IPEC), one of two venues where IP cases may be filed in England and Wales. Our empirical analysis takes advantage of heterogeneity among case types and compares IPEC cases with intellectual property cases litigated at the High Court of England andWales, which was not subject to this reform. We find that the cap on recoverable costs increased the number of patent cases filed, decreased the plaintiff win rate, and decreased plaintiffs’ average litigation expenditures.

Keywords

Litigation; Fee Shifting; Intellectual Property; Court Reform; U; K;

JEL codes

  • K41: Litigation Process
  • O34: Intellectual Property and Intellectual Capital

Reference

Christian Helmers, Yassine Lefouili, Brian Love, and Luke McDonagh, The Effect of Fee Shifting On Litigation: Evidence from a Policy Innovation in Intermediate Cost Shifting, TSE Working Paper, n. 16-740, December 2016, revised February 2020.

See also

Published in

TSE Working Paper, n. 16-740, December 2016, revised February 2020