March 2011


According to a story on the Legalnewsline.com, two congressmen have introduced a new tort reform bill in Washington.  Representative Lamar Smith, R-Texas and Senator Chuck Grassley, R-Iowa, have introduced the so-called “Lawsuit Abuse Reduction Act of 2011”.  As reported in the previous article, there are no studies showing that there is a lawsuit abuse (ie. frivolous lawsuit) problem, but that has not stopped these two Congressmen from charging forward with their bill.

Smith was quoted as saying, “(l)awsuit abuse has become too common in American society, partly because the lawyers who bring these cases have everything to gain and nothing to lose”.  That statement is wrong, lawyers fund lawsuits for plaintiffs and do not fund lawsuits that are frivolous, because they will not get their money back.  Smith goes on to say that, “(p)laintiffs lawyers can file frivolous suits, no matter how absurd the claims, without any penalty”.  As I said, the penalty is the lawyer loses the money he put into the lawsuit.  Getting a lawsuit off the ground can be a substantial endevor, and taking a case to trial costs serious money.  If lawyers take frivolous cases they will go broke.  Smith continues, “(m)eanwhile, defendants are faced with the choice of years of litigation, high court costs and attorneys fees or a settlement. Our legal system encourages frivolous lawsuits while defendants are left paying the price even when they are innocent”.  

The bill would require mandatory sanctions, under the Federal Rules, for lawyers who file lawsuits with no basis in Federal Court.  According to the article, the proposal “reinstates mandatory sanctions for attorneys who file meritless suits and forces them to pay the defendant’s attorneys fees and court costs. It also reverses a 1993 amendment that allowed parties and their attorneys to avoid sanctions for making frivolous claims by withdrawing them within 21 days after a motion for sanctions has been served”.  Similar to the bill in Texas, reported below, the measure does not require sanctions for defendants who pursue meritless defenses.  The bill appears to be another solution to a non-problem.

According to a story in the Houston Chronical (also reported on in the New York Times), Texas tort reformers are at it again.  On the horizon in the Texas Legislature this year are several bad and unneeded “reforms”.  One law being proposed is called “loser pays”.  It is an old idea with a deceiving moniker.  The law, as proposed in a draft by Governor Perry, would make the person who brings the lawsuit pay for the expenses and attorney fees of the other party if they ultimately lose their lawsuit.  That might sound fair to some, but the law is one-sided.  The only time the loser pays is when the loser is the plaintiff.  If the loser is the defendant, which is the case in a majority of lawsuits filed, the defendant is not required to pay expenses and not required to pay the winner’s attorney fees.  Not anyone’s idea of fair.  But fairness is not the point.   

The law is being proposed as a measure to stop frivolous lawsuits.  In the Times article, a professor at the UT School of Law said no serious studies on frivolous lawsuits have found that frivolous lawsuits are a real problem.  If the law is a solution to a non-existent problem, why are taxpayer dollars being wasted on this issue.  It is time for the politicians to get back to work and quit raising the lawsuit boogeyman promoted by insurance and business interest.  These special interest groups raise this issue every couple of years to promote their goal of limiting their personal liability and ultimately to shirk their personal responsibility to average citizens.

“Loser pays” is a measure designed to put fear in the heart of the average person who wants to assert their right to seek justice and make a claim.  Any attorney the claimant consults with will be required to tell the claimant that if there is an unjust outcome and they lose the case, they will owe the defendant their attorneys fees.  Even when someone feels they are right, they will be reluctant to bring a suit, out of fear that an already bad situation could possibly be made worse.  This is the response business and insurance lobbyists are looking for in this measure.  But business and insurance interests will never have that same fear, because the proposal does not ask them to pay costs if the person who brings the suit is successful.

Texas is also looking at regulating attorney fees.  We all know that big businesses and insurance companies can hire any lawyer they want.  In fact many insurance companies have lawyers on their payroll.  A regular person sometimes can’t afford to hire an attorney.  Contingency fees make it possible for the little guy to get legal representation on par with what big businesses can afford. 

Texas legislators want to cap contingency fees at a low-level.  Free enterprise is the cry of every legislator who would push this kind of bill and no one is suggesting a cap on what insurers and big businesses pay their lawyers.  But it is ok to limit what kind of representation the little guy can receive, while encouraging the deep pockets that would obstruct access to the system.  Think what would happen if the NBA decreed that half of the teams can pay as much as they want for their players and put a cap on what the other teams could pay.  Not a fair system.  But fairness (justice) is not the goal.