Gov. Rick Perry and the Texas state legislature want the rest of the country to hear this message loud and clear: The Lone Star State is open for business.
In a unanimous vote last week, the Texas senate adopted ‘loser pays’ tort-reform legislation, which says that a plaintiff must pay the winning party’s legal fees if their complaint is judged to be groundless. On Wednesday, the Texas house concurred. Governor Perry, who had championed the legislation from its inception, signed it Monday night.
The Wall Street Journal editorialized, “This Texas upgrade will build on reforms in 2003 and 2005 that have vastly improved the legal climate in what has not coincidentally become the country’s best state for job creation. Texas rewrote everything from class-action certification to product liability” — and I would add the state’s medical-malpractice reforms to that list.
No wonder the nation’s CEOs list Texas as the best state for business.
The success of ‘loser pays’ is destined to be viewed as a key victory for the Republican legislature over a group that once enjoyed almost limitless influence in the state: the Texas Trial Lawyers Association, which lobbied aggressively against the law. Prior to the reforms instituted in 2003 and 2005, Texas was an ambulance chaser’s paradise. Nowadays, even the $13 million the trial lawyers spent to defeat Perry and other pro-tort-reform Republicans in the 2010 election had little impact. In a stunning rebuke, Lt. Gov. David Dewhurst stared down the trial lawyer lobby and shepherded the measure through to a 31–0 vote in the Senate.
Perry is blazing an important trail for other governors such as South Carolina’s Nikki Haley, Pennsylvania’s Tom Corbett, Florida’s Rick Scott, Oklahoma’s Mary Fallin, and Alabama’s Robert Bentley, all of who ran and won while proposing similar legal-reform ideas.
Why are these types of reforms so important?
The cost of tort litigation is strangling the U.S. and small businesses in particular. According to Marie Gryphon of the Manhattan Institute, the cost of tort litigation topped $247 billion in 2006. The National Federation of Independent Business estimates that tort litigation costs small businesses over $105 billion annually, $35 billion of which comes out of their pockets, not insurance.
‘Loser pays’ reform will result in fewer frivolous lawsuits, lower litigation costs, and more expedient justice for legitimate claims. Just as important, the passage of loser pays is yet another example of how Texas has taken the national lead in job creation and the fostering of a strong business climate. Immediately following Perry’s earlier reforms, the number of physicians applying to practice rose by 60 percent, filling a increasing need across the state, according to the Journal. Likewise, by tossing off the threatening shroud of frivolous lawsuits, Texas is removing yet another barrier to small business expansion and job growth.
In a country groping in the darkness for ways to create more good-paying jobs, the nation’s governors should look to the aggressive reform agenda in Texas to light their path.
— Stephen DeMaura is the president of Americans for Job Security.
I'm sure at the end of the day, this law will be found to be unconstitutional and/or the Obama administration will level huge sanctions against Texas until this goes away.
Because of course, anything that can change America for the good, must be destroyed - at least that's the hope of the left.
Reply to this commentLinkReport Abusebandmom
Reply to this commentLinkReport AbuseHmm, you sound bitter. I know plenty of people from the left side of the political spectrum that do great things for America. What do you do?
DrPalinIpresume: Anyone that does "great things for America" is not on the left-side of the political spectrum. Understand that the Left's core principles are: 1) rule of man (tyranny), 2) collectivism (misery), and 3) moral relativism (evil on earth), and there is no redeeming value in anything from the Left. Until Americans stop talking past one another regarding what is left and right, "confused conservatives" will continue to vote against their own best interests.
Reply to this commentLinkReport AbuseThis was a case in which the system worked. The original bill, a true "Loser Pays" approach in which people who lost a trial would be on the hook for the defendant's costs, was a step too far. The compromise to make it so that judges can throw out cases and the plaintiffs who take to court cases that are deemed without merit are the ones who will have to pay makes more sense as it helps business avoid these type of court cases while not making people with valid cases second guess their lawsuits.
Reply to this commentLinkReport AbuseI wish people would stop clamoring for Perry to run for president! He's doing just fine here in Texas. While he has his critics, he has been the force behind all those reforms and other measures making Texas business friendly. What is usually overlooked is that individual liberty through less government is what makes a place "business friendly". Hopefully, more states will learn from our example, if we can just keep Washington off our backs. Compare Perry's brand of federalism to Mitt Romney's. Which would you like your state to imitate?
Reply to this commentLinkReport AbuseIs there a difference between "losing" and having your case judged "groundless"? Let's say a person is of modest means and honestly believes they have been injured according to the law. Let's also say they have a roughly 50% chance of winning. Do they need to consider the fact that there is a 50% chance they'll have to pay attorney's fees? If so, couldn't that act as a disincentive even if one had a 75% or 90% chance of winning? Or, is there a separate "your case is absurd, pay their legal bills" determination?
Reply to this commentLinkReport Abuse50% is not the basis for determining a case to be groundless.
Reply to this commentLinkReport Abuse@Mitch Baker
Yes, there is a difference between losing a case and bringing a case that is groundless. This law will be a disincentive to lawyers who otherwise risk little by bringing frivolous suits in hopes of blackmailing businesses into settling out of court.
Mom and Pop Plaintiff aren't at much risk. If an attorney was foolish enough to make a business out of counseling "little guy" plaintiffs to bring frivolous suits under the new regime, it would not be long before complaints and/or legal malpractice suits against that attorney lead to disciplinary action and/or disbarment.
Reply to this commentLinkReport AbuseSo, the law only kicks in if the suit is "groundless"?
Is that the word in the statute? This statute won't force every losing plaintiff to pay the legal fees of the other party?
It shouldn't. There are a plethora of meritorious lawsuits that ultimately fail, and if every losing plaintiff had to pay all of the legal fees, many meritorious lawsiuts would never be brought.
A great example is Med mal. Good luck finding an expert witness from the medical profession to testify against a doctor that made costly errors. The doctor wall of silence is thicker than in police forces.
While high-profile cases tend to highlight the egregious lawsuits, most med mal cases have merit and fail because there is no expert testimony to combat the doctor's. That plaintiff should both not be chilled away from the Court house door, nor have to pay the other side's legal fees.
I'm sure Linda Tetuan never would have sued AH Robbins for her septic abortion caused by her Dalcon Shield if she was faced with the prospect of paying their legal fees.
If this statute only applies to "groundless" lawsuits, then its biggest influence will be on reducing the number of suits filed by a very small fraction of a percentage. Most lawsuits are not without any merit at all.
I strongly favor an open-door policy to the Court house. Not only does it ripen access to redress for grievances, but the prospect of a lawsuit must be factored in by nefarious people.
Reply to this commentLinkReport Abuse@madisonian
I believe the Bill was changed in the House and then Senate to make it so only meritless law suits (and, in certain cases, people who turn down settlements but win less money) have to pay.
Here's a good article on it: External Link
Reply to this commentLinkReport Abuse"A great example is Med mal. Good luck finding an expert witness from the medical profession to testify against a doctor that made costly errors. The doctor wall of silence is thicker than in police forces."
If that is the case, why is the price of medical malpractise insurance so high?
Reply to this commentLinkReport Abusemadisonian writes: "If this statute only applies to "groundless" lawsuits, then its biggest influence will be on reducing the number of suits filed by a very small fraction of a percentage. Most lawsuits are not without any merit at all."
Perhaps. But what this legislation should prevent is blood suckers using the threat of a lawsuit, and the attending costs, to get a quick, evil pay day. This should dramatically reduce payments to the unscrupulous scam artists. This level of reduction would also have an effect on insurance premiums, where many carriers settle immediately, simply to reduce costs.
Reply to this commentLinkReport AbuseIf Alaska had this law, would Palin still be governor?
Just a thought....
madisonian, the loser doesn't always pay. I agree, there are valid lawsuits where the loser shouldn't have to pay. And they won't. But ambulance-chasing lawyers better have a reasonably good case. Because if the case is dismissed, the defendant can ask the court to apply this law and be reimbursed for attorney fees.
Reply to this commentLinkReport AbuseAs a litigator, I'm somewhat troubled by this law. I worry that it will create tremendous incentives for evidence destruction. In many cases, for example, in employment law, evidence to prove a claim is only in the hands of a defendant. If destroying that evidence will result in not only the defendant getting off, but having its legal fees paid as well, I fear a lot of key evidence going into the shredder.
Of course, parties are entitled to a host of discovery sanctions for this, but I question just how effective those will be, when plaintiffs will be deterred from aggressively litigating discovery disputes by a fear of growing costs.
I think all this puts lawyers in increasingly difficult positions. I know many people believe lawyers are scum of the earth, not deserving of any sympathy, but many of them actually are good people, serving their clients well. I can't imagine how difficult this is going to make their jobs - on both sides.
Reply to this commentLinkReport AbuseWhat is to stop them from destroying evidence now?
While it may not affect as many of the cases making it to court, it will be interesting to see how it affects out of court settlements where I suspect there is a lot more bluffing doing on. Often that is a good gamble to make by a trail lawyer and a no-win situation for the defense. I see it as rebalancing the law and justice.
Reply to this commentLinkReport AbuseI was of the impression that the position of governor in Texas was of no consequence. I heard and read that a few thousand times from 1999-2008ish so it must be true.
Reply to this commentLinkReport AbuseThe bill was significantly watered down from its original version. If TTLA was on board with the compromise language that came out of the senate, then that should tell you something. This is a far cry from "loser" pays, so the governor has an issue to crow about while those of us who defend businesses against civil litigation claims in Texas can see that the ball hasn't been moved all that much.
Reply to this commentLinkReport AbuseBased on the article link provided by SoulHonky, it seems Texas is trying to limit the truly groundless cases. Of course, what's "groundless" is all a matter of interpretation, but lawyers who take cases on contingency will evaluate each claim brought before them.
Every one of us knows of cases where tort law claims were treated as free lottery tickets. An attorney takes a case on contingency and a plaintiff invests some time to get the defendant to settle just to avoid going to court. This has always been a form of legal terrorism. Now, there are consequences to the plaintiff's actions. Legal costs can mount quickly. When word gets out that a few plaintiffs were financially devastated, hopefully the rest will think before they sue.
Reply to this commentLinkReport AbuseAny experienced lawyer, no matter his/her greed, will know what will and won't pass muster with their local judges re. frivilosity (is that a word? It should be!) In fact, they know NOW when they file cases knowing no judge will ever see them once "cooler heads" knuckle under and pay the settlement price of their blackmail...or their insurance companies do.
I was once in an auto accident where the insurance-company-chosen-and-hired lawyer defending me told me after the depositions that I had a "99% Chance" of winning. The insurance company settled the case (and of course my and every other company clients' rates went up to pay that settlement) anyhow, and when I asked their execs (after a long phone fight to get to the right guy responsible) just HOW GOOD a case they needed to go fight, I was told "Honestly, Sir? Unless the other side is asking for an impossible sum to make a deal, we NEVER fight because settlement is cheaper." And of course the "other side" knows where that line is and walks up to, but not over it. A huge machine of people, offices, sectretaries, computers, etc. etc. keeps oiled and operating thanks to OUR hard-earned money, and the dance goes on....but not in Texas anymore.
The simple financial truth of the current tort system in most of America is that the financial cost threat isn't from laws like these, it is the threat of a long, costly trial with all the preliminary evididenciary excavation inhibits defending good cases and encourages settlement blackmail. In the law as I read it (and I am, thank you God, not an attorney) this is about cases that actually do get in front of judges who deem them frivolous and throw the bums out. If it causes fewer cases to start and get that far because defendants who KNOW they are being railroaded will say "Hey, let's go see the judge!" and dare the crooks to dance the dance, it will save us all billions of dollars nationwide if adopted by the other states once the "50-state laboratory" results show the cuts in expense--not jut court costs and legal fees, but insurance and other related expenses (not to mention the cost to taxpayers of maintaining the system to deal with the flood of bad cases that are filed and pursued which then don't go to trial thanks to financially-threatened settlements.)
Don't Mess With Texas Jurisprudence is a cumbersome motto compared to the simpler original, but one all justice-loving Americans can endorse.
Reply to this commentLinkReport AbuseBravo for Perry.
Reply to this commentLinkReport AbuseLet's take a hopeful wait and see approach with this. The poorest most pathetic state in the USA for many years was also the home of jackpot justice: Mississippi. Now it seems even they have cleaned up their act.
I look forward to comparisons between Texas and states which have so far not enacted this into law.