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I wonder here if a "loser pays" rule, where the loser pays the other party's legal bill in part or in full, would have encouraged the author to pursue his defense longer.

I'm guessing he did pay.

He settled, and he did so because of his rising legal costs, which is to say even if he won he would still pay those large legal costs. Under loser-pays rules, if he'd pressed on and won, he would not have paid his legal costs, the other guy would have covered them.

No. Once his own costs reached a limit where he had to settle, the other side would have had similar if not greater legal costs racked up. Continuing at that point is a double or nothing bet, which might make sense if the odds are in your favour (i.e. you think you'll win) and you can diversify over many such bets. But for a single individual in a single case, it's a huge risk.

The other side was rich. The defendant was not. Don't you think that makes a difference? They weren't on equal footing, that's the whole point.

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