The competition between the 50 states for every new job out there just got very interesting.
The governor of Texas has “upped the ante” in the effort to attract job providers to his state by proposing an idea for ending frivolous lawsuits. Some believe it could attract thousands of new jobs to the Lone Star state.
Governor Rick Perry’s plan is to create a “loser pays” system in the courts. It’s used throughout the world, but plaintiff lawyers have worked hard to keep it out of Texas and every other state in the nation. Under loser pays, plaintiffs who sue someone and lose have to pay the legal bills of their opponent. It would discourage nuisance lawsuits and put an end to the lottery approach to litigation in which plaintiffs have very little to lose but much to gain by filing frivolous lawsuits.
As the Wall Street Journal pointed out in this editorial, Governor Perry’s plan isn’t a pure loser pays system, but it’s designed to target the lawsuits everyone wants to eliminate in the first place – frivolous lawsuits, or, what they define as “groundless.”
The current system costs way too much. Meritless lawsuits can drive small companies out of business and have brought some families to the brink of bankruptcy – even when they “win” against the plaintiffs. Lucrative out-of-court settlements are often won by plaintiffs’ lawyers simply because individuals and businesses do the math and realize that simply defending themselves in court will cost tens of thousands of dollars or much, much more to prove their innocence.
At the same time, Governor Perry has proposed changes that would make the courts more accessible to Texans with legitimate claims without the high costs associated with a drawn out trial. Lawsuits with claims between $10,000 and $100,000 would have expedited trial settings and limited discovery in order to get litigants in and out of the court quickly and allow swifter recovery for damages.
Americans, in general, know we live in the most lawsuit-happy nation on earth, but few of us know just how much more we’re being forced to pay for everything from medical care to consumer goods than folks in other countries because of all these lawsuits. According to researchers at the Pacific Research Institute, the average American could save a whopping $1,962 each year if the number of lawsuits in the U.S. were just the same as other industrialized countries (see page 76 of the pdf at this link). A loser pays system would eliminate the meritless lawsuits that drive up costs and drive away jobs.
Of course, the personal injury lawyers who’ve made a fortune off the current system will spend whatever they believe it takes to defeat this plan. However, a few years ago, Texas Governor Rick Perry was able to enact bold reforms to reduce lawsuit abuse against medical professionals there, and it attracted waves of new doctors and improved health care. Perhaps the time is ripe for an American version of loser pays.
{ 3 comments… read them below or add one }
I like the idea BUT!!! How about the jury decides how much the loser pays. Say you have a good case and the jury knows it but you lose on a technicality? This could work in the big companies favor (loser pays the fee)… Say you get into an auto accident or house catches on fire and your insurance company doesn’t want to pay? You have to sue them to get the money… They say fine, sue us but we are going to use 100 lawyers to fight you and if you lose against us, you’ll have to pay our fees of $100,000. How many ordinary people would take that risk?
On the other hand, if the jury determines that it’s a frivolous lawsuit then, they could say that the person who sues has to pay everything.
One of the few things I have to agree with Perry on. Groundless lawsuits clog out legal system.
Hmmmm let’s see. The cup say’s hot coffee and your driving your car, hit a bump hot coffee in the lap…..ok let’s sue the state or city for putting a speed bump (how dare they while I drink coffee while I’m driving) and let’s sue McDonalds for not printing in really large letters “really Hot Coffee” and for not putting some sort of handle on the cup so I can hang onto with more of a grip while I’m driving and going over speed bumps…….Sounds pretty stupid eh, and courts are full of them. Allot of folks in this country have thrown common sense right out the window!!!!