PintoYou know what the phrase "legal costs" refers to, right? It means the amount that a plaintiff spends to achieve a recovery by way of pressing a lawsuit? US Airways, Inc. v. McCutchen, 133 S. Ct. 1537, 1550-51 (2013) (treating "legal costs" as a party's "costs of recovery").

You would never equate "legal costs" with damages – payment for actual harm — would you? No, of course you wouldn't.  

 But you should know that The Wall Street Journal begs to differ with you. Blawgletter knows because of recent WSJ headlines, which include these:

"Legal Costs to Put RBS in the Red"

"Investors Punish Citi's Legal Costs, Look Past Morgan Stanley's"

"Backdating Scandal Carried Steep Legal Costs"

What does the WSJ mean by "legal costs"? Just this (with our emphasis in the RBS article):

[T]he new provisions include setting aside an extra £1.9 billion to cover litigation and other claims around mortgage-backed securities sold before the financial crisis. It added £465 million to its funds to repay customers who bought payment protection insurance on credit cards and loans, bringing its total PPI provisions to £3.1 billion, and said it would take a further £500 million in provisions to make payments to small businesses that bought interest-rate hedging products on loans. The bank also warned of around £200 million of extra provisions for various conduct related and legal expenses at its "bad bank" unit.

Add in the fact that the item on that "Backdating Scandal" includes a claim that "settlements cost companies and their executives, auditors and advisers a combined $7.3 billion." "Legal costs" in the WSJ sense therefore include all the damages money that the "settlements cost" for the companies that engaged in the unlawful backdating.

Which leaves the question of whether the WSJ's depiction of harm to customers as a kind of "legal cost" matters.

Blawgletter believes that it does.

The characterization implies a belief that damages are no more regrettable than other sorts of business expenses.

The Ford Pinto case – which exposed Ford executives for calculating that hurting and killing people with defective cars would cost less than fixing the defect – springs to mind.

Legal costs properly consist of legal fees and expenses of litigation. They do not include damages, actual or punitive.

The WSJ should know better.