Question

The parties to a suit may dispute the fact and extent of liability. Disputes over whether the defendant was liable often have no scope for compromise, whereas disputes over the magnitude of damages have scope for compromise. Explain why the rule of "loser pays all" may cause parties to resolve most disputes over the extent of liability but not the fact of liability.

Answer 1

The 'loser pays all' rule in civil disputes dissuades parties from taking the risk of incurring all legal fees, pushing them to settle on the extent of damages. However, this is less effective for disputes over the fact of liability, where definitive proof is needed and less room for compromise exists.

Step-by-step explanation:

In the context of an adversarial judicial system, parties involved in civil disputes often engage over the issue of liability and the extent of damages. When discussing the "loser pays all" rule, it applies a significant financial risk to the losing party in a lawsuit, potentially covering all legal fees and court costs. This rule may incentivize parties to settle disputes over the magnitude of damages since there's inherent uncertainty and room for negotiation in assessing the monetary value of harm. In contrast, disputes over the fact of liability are usually more definitive and based on proving or disproving whether a defendant's actions legally constitute harm or violation. This black-and-white nature of establishing liability provides less flexibility and therefore makes settling less likely when the parties are diametrically opposed on the fundamental issue of responsibility.