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American Rule refers to the following:
1. The general policy that all litigants, even the prevailing one, must bear their own attorney fees. This rule is subject to bad faith and other statutory and contractual exceptions. For example, California follows this rule and it is codified in California Code of Civil Procedure § 1021. It says that “Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.” In California, the so-called American rule, as codified in CCP § 1021, requires both winners and losers of lawsuits to bear their own legal fees in the absence of agreement or statute to the contrary. [Covenant Mut. Ins. Co. v. Young, 179 Cal. App. 3d 318, 328 (Cal. App. 2d Dist. 1986)]
2. The doctrine that a witness cannot be questioned on cross-examination about any fact or circumstance not connected with the matters brought out in the direct examination.