We Don’t Need New Lawsuit Abuse Reduction Act

Lawyer handing motion to the court

Tomorrow’s Attempt To Intimidate Plaintiffs, Help Big Businesses and Drive Up Costs

The U.S. House is voting Thursday on the deceptively named Lawsuit Abuse Reduction Act. LARA purports to prevent the “frivolous lawsuits” that multi-billion dollar corporations  would have you believe are commonplace in our federal courts by imposing mandatory, not discretionary, sanctions.

But in reality, the law is an attempt to close  the doors to parties who have the right to be in court that is afforded by the Constitution in Article III, Section II.

Under the current federal law, if a party violates Rule 11, the judge has the discretion to impose sanctions. In Texas state courts, our comparable Rule 13 of the Texas Rules of Civil Procedure makes the imposition of sanctions mandatory, but there are restrictions and caveats, and sanctions are rare.

The current federal rule requires that all filings have “the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery.” While this may set the bar high for one judge, it may be ill-defined to another.

For example, if a witness cannot testify because he cannot be located, moves, refuses to attend a deposition or trial, or dies the judge under the new rule must impose harsh monetary sanctions. The injured party would then be held financially for the defendant’s attorney’s fees, expenses and compensatory costs which could easily be thousands of dollars.The new law would also drive up Rule 11 filings and add to an already overburdened docket, potentially resulting in greater lawsuit abuses. The Rule 11 battles that would ensue would unnecessarily take the court’s time and the parties’ money.

Who Supports The New Law?

Plaintiffs’ attorneys have no incentive to file frivolous lawsuits because our cases are handled on contingency; there are no attorneys fees and litigation expenses are forfeited if the plaintiff recovers no money. While there are a few of these filings, in my experience they are rare.

But not surprisingly, U.S. Chamber of Commerce and the other major business trade groups have lobbied strongly in favor of LARA because the law would benefit its large corporate members. 

On the other hand, the American Bar Association (ABA) — not a plaintiffs bar organization —  as well as the Consumers Union, Environmental Working Group, National Employment Lawyers Association and the American Association for Justice oppose the bill, recognizing that the proposed law is unnecessary and unjust.

The Myth of Frivolous Lawsuits

Statistics show that, despite popular opinion, we do not have a problem with frivolous lawsuits. According to the respected Rand Institute for Civil Justice:

   — only 10 percent of injured people seek compensation

   —  only 2 percent of them file lawsuits

   — Injury case are only six percent of all cases filed since 1991

   — injury lawsuits have declinced by 52 percent from 1992 to 2005

   — Most Texas judges (86%) said there was no need to limit lawsuits


Note: The Act passed the House with almost all Republicans voting in favor and all Democrats voting against it. The bill now heads to the Senate.

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