At the close of its latest session, the Texas legislature passed a loser pay law. Essentially, if you bring a lawsuit in Texas and the jury finds against you, you pay the other side’s costs (and attorney’s fees I assume). If you bring a law suit and win, the defense pays your costs. The goal is to end frivolous lawsuits, and encourage more people to settle short of trial. Both are excellent goals IMO.

I have never supported a loser pays law because I think it will result in a shift of the burden from the negligent party to the tax payer. If an injured plaintiff loses his case, or doesn’t bring one, out of fear of losing and thus being forced to pay, his alternative is to collect welfare from the taxpayer.

There is no guarantee that a jury will make the proper decision. I’ve witnessed cases where there was no doubt of the defendant’s liability or the plaintiff’s damages but the jury found for the defendant presumably because he liked him more, or didn’t like the plaintiff or even the plaintiff lawyer. That stuff happens.

My solution has always been to limit attorney’s fees. If there is a maximum amount a lawyer can earn on a case, he will get to the settlement table quickly, which is a better solution for everyone. In a loser pays situation defense counsel would be paid his hourly rate if victorious, but presumably plaintiff’s counsel would be awarded his contingency fee from the verdict, which is more than likely covered by insurance. So the law punishes plaintiffs and insurance companies while defense lawyers escape unscathed, and plaintiff lawyers assume the same risk as always.

In addition, you can’t take someone’s ability to sue away from them, so a plaintiff who loses who has no money would probably never pay. Essentially Texas is substituting the government for the negligent party in cases where the risk seems to be too great.

We will see if it works.