“Loser Pays” Law Is Unfair to Consumers: Houston Chronicle

House Bill 274 Further Stacks the Legal Deck in Favor of Big-Money Defendants
— Houston Chronicle Editorial, May 14, 2011
The campaign by so-called tort reformers in Texas has long since moved beyond its avowed goal of preventing frivolous lawsuits and massive damage judgments. With the passage of HB 274 by the Texas House last weekend, it has graduated to an all-out assault on the ability of consumers and small business owners to seek legal redress in civil courts against powerful business interests. You might call the latest iteration “stealth tort reform.” The primary damage isn’t in what the bill adds to current law. The injustice is in what it eliminates.

The last major tort reform legislation passed in 2003 in Austin mandated that plaintiffs who spurn settlement offers and win a jury verdict must receive a judgment award of at least 80 percent of the offer. Otherwise, they are responsible for paying legal fees for the losing defendant from the date they refuse the settlement offer. However, those fees could not exceed the amount of the judgment, so at worst the winner went home empty-handed.

That existing provision is already a powerful weapon in the legal arsenal of deep-pocket defendants such as insurance companies and corporations, since plaintiffs would be tempted to accept low-ball settlements rather than risk receiving nothing. It’s not fair, because winning plaintiffs in most tort cases cannot seek reimbursement of their legal fees, only much smaller court costs. The playing field is already sharply tilted in favor of the defendants.

Not content with that advantage, the crafters of this bill have further stacked the deck. It removes limits on the legal fees a winning plaintiff could be forced to pay if they eschew a settlement offer and the judgment falls below that 80 percent margin. Rather than receive nothing, the winner could be tagged with the loser’s huge legal fees. As Houston personal injury lawyer Steve Waldman puts it, “The moral of the story being told by the advocates of this bill is this: If you have a claim against a big corporation, take whatever it offers, because if you dare to take them to a jury, you risk your economic life.”

Florida implemented similar provisions, and the ensuing public outcry forced legislators to repeal it five years ago. We agree with Alex Winslow, executive director of the citizen advocacy group Texas Watch, that HB 274 “is designed to force families and small businesses with valid claims to weigh the possibility of paying the legal costs of insurance companies and multinational corporations [and] is at best detrimental to public accountability and at worst unconstitutional.” The concept of making plaintiffs with valid cases potentially responsible for defendants’ legal fees is a feature of British law that our nation’s founders wisely rejected. It’s a legal concept that should have no place in Texas courtrooms.

It’s hard to believe this legislation was designated by Gov. Rick Perry as an “emergency” to facilitate its already inevitable passage by the House GOP super majority during a raucous, Mother’s Day eve session that ended in flaring tempers and abrupt adjournment. Perhaps the only emergency was the governor’s need to placate his backers at Texans for Lawsuit Reform, a major contributor to GOP state legislators.
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Under the original proposed new law, the victim of a drunk driver could have to pay the attorney’s fees of the drunk – even if the victim WINS at trial!

1. The so-called “Loser Pays” means that who ever ‘loses’ a lawsuit will have to repay the other side’s attorney’s fees and costs (each side pays its own now, but that is why we make insurance premium payments, to insure that those will be provided for).

2. However, only the insurance company will get to invoke this law. If you are the injured not at fault motorist and think the negligent driver/his insurance company should pay your legal fees and costs, too bad!

3. Assume a drunk driver rear ends you and your child causing serious injuries. Your medical bills and lost wages total $150,000, but the insurance company only offers $100,000 so you naturally file suit and go to trial. Unfortunately, your medical records state that you might already have had a little arthritis, your son had fallen off a swing set four years ago and bumped his head, and Cigna paid a lot of your medical bills. The other attorney is able to convince the jury the accident was somehow partially your fault and he also convinces the jury not to give you all of your lost wages because ‘you should have gone back to work sooner’ instead of taking care of your injured child at home. Still, even with all that, you win the case. However, the jury awards you $79,000.00. But you have LOST under this new law because you only won 79% of the insurance company’s settlement offer, less than the required 80%, so now you are on the hook for $$$ for their attorney’s fees, expert witness fees, deposition bills, court costs, etc.

Please call your state senator immediately and ask him or her not to vote for this horrible law.

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