The conduct of litigation in Ontario is, to a considerable degree, driven by considerations of the legal costs that will be incurred by the parties. The Rules of Civil Procedure contribute substantially to this by creating a "loser pays" system in which the losing party - in most cases - will be required to pay some portion of the winner's legal costs. The amount of the winner's costs that the loser will pay is determined in part by the operation of Rule 49, which effectively punishes a losing party for failing to accept pre-trial offers to settle. On the surface, this seems fair to most people - after all, if you lost at trial, isn't it clear you should have settled? However, experienced litigators will confirm that the outcome of a trial is always uncertain, no matter the apparent strengths of one position or the other. Viewed in this light, is it fair to punish a party for not settling before trial based solely on the perfection of hindsight? The benefits of a "loser pays" system include discouraging litigants from pursuing frivolous claims and protecting against the unhappy result of a plaintiff winning her claim but netting nothing after payment of her legal costs. One considerable drawback is that a "loser pays" model places a strategic advantage in the hands of litigants with deep pockets. After all, the risk of being faced with paying not one set of lawyers but two is far less daunting to a large business or financial institution than it is to an individual. As a result, litigants with less money will be more powerfully influenced by the fear of these costs consequences, causing them to settle for less than they deserve. There is no real consideration underway to replace the current "loser pays" model, although criticism of it does appear from time to time. For example, in his decision on costs in Walsh v. 1124660 Ontario Inc., Justice Lane of the Superior Court of Justice commented, with evident frustration: "If costs awards, to be paid by the losing party, reach the level, as they have done in Ontario, that they can bankrupt an ordinary person, never mind an impecunious one, there is a danger that confidence in the justice system will be undermined and it will increasingly be seen, and not without good reason, as a system for business and the wealthy, but not for the mass of people whose tax dollars fund the system. The loser-pay costs system can act as a serious barrier to justice, deterring deserving as well as frivolous cases. Many jurisdictions get along quite well without a "loser pay" system. Perhaps we should become one of them and deter frivolous cases and improper conduct in other ways. But that great a change in our system is not for me to create and I return to the real world". Living in the real world of lawsuits in Ontario means advising clients fully and frankly, from day one of the lawyer-client relationship, of the central role that legal costs plays in shaping the process and outcome of litigation.