ABSTRACT
This chapter examines the Learned Hand rule. It considers the choice between settlement and litigation, in a case where there is a single plaintiff and a single defendant. Mechanisms for “pre-trial discovery” will influence the decision of the parties whether to settle or litigate. The purpose of many procedural rules is to increase the productivity of resources used in litigation, or alternatively, to reduce the expected costs of error for a given expenditure of resources in litigation. Individuals who have a small claim often would not find it worth while to bring a lawsuit, since the fixed costs of doing so may often exceed the amount to be recovered. One important issue is how the rule of indemnity, which is often called the English rule, compares to American practice in terms of its effect on the parties’ decision whether to settle the case or litigate.
