Tort Reform

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The controversial Omnibus Tort Bill HB 274, known as the "loser pays" bill passed in the Texas House on Saturday. The bill went to vote on Saturday after Texas Governor Rick Perry added it to his list of "emergency items".

HOUSTON, Texas (LAL) - The bill, well-intended as it may be to limit unreasonable lawsuits brought against Texas businesses, will make it harder for individual citizens to bring lawsuits against corporations for serious injuries or other wrongdoing. Under the legislation, the losing party in a lawsuit will be required to pay court costs and the legal expenses of the prevailing party. The idea is that the risk of a costly loss will prevent unnecessary or frivolous lawsuits. And it may, but there is a dark other side of the story that sharply limits options of ordinary citizens to seek redress from others who have legitimately harmed them.

For example, under current legislation, the family of an individual who is seriously injured or killed in an accident caused by negligence on the part of a Texas business can reasonably expect to claim redress in court from those responsible. Taking on a large corporation in court would be unthinkable for most average citizens due to the high costs of litigation. Fortunately, citizens have advocates in the form of plaintiff's lawyers who work on a contingent fee basis, meaning that their fees will be taken from any award given to the plaintiff if they prevail in court. Under such a scenario, the victim pays nothing unless they win.

Critics will say that such a model leads to frivolous and unfair lawsuits brought by shysters hoping to make a quick buck on the backs of innocent corporations. This may unfortunately be true at times, but a benefit of due process is that our judicial system along with the judges and juries who hear cases can judge each on its merit or lack thereof and act accordingly. But passing legislation that seeks to discourage lawsuits even before they are heard in court, could prevent even legitimate lawsuits of some deserving victims from ever seeing the inside of a courtroom.

The reason this legislation may prevent perfectly legitimate lawsuits is simple. In the case of contingent fee cases brought in the manner previously described, plaintiff's lawyers must carefully weigh the risks of trying each case. As it is, most lawyers who work on a contingent fee basis don't want lawsuits that lack merit-- they want lawsuits they can win. If a lawyer invests a half a million dollars or more to try a case and loses, they lose all that money. And they don't always win, which means they must carefully consider the merits of any case they take on. That's how it works already.

Under the "loser pays" legislation, the risk of losing means not only will a lawyer working on a contingent fee basis have their own investment at stake, but they also risk having to pay all the defendant's legal expenses in the even the defendant prevails. Corporations have an instinct born from a fiscal responsibility to aggressively defend against the risk of financial losses, whatever the cause. This means that most will aggressively defend cases brought against them, even when they are guilty. Armed with a cadre of corporate lawyers, and backed by the deep pockets of their similarly motivated insurance companies, corporations represent a formidable foe in court. The risk of having to pay for that costly defense may be enough to dissuade even the most fervent victims' advocates from taking them on in court. And without means to take on corporations, individual Texans effectively lose their right to claim redress when a corporation has injured them.

Problems with "loser pays" are foreign to many Texans who, never having been victims of serious injury caused by corporate negligence, can't imagine any impact on their own lives. But plaintiff's lawsuits brought against negligent corporations by the people they have injured actually can and often do benefit everyone. Lawsuits against product manufacturers can, for example, lead to design improvements in products that make them safer. They can lead to better training for workers and safer working conditions, reducing work-related injuries and deaths. And, if nothing else, the risk of paying monetary damages to injured victims will make even the greediest corporations think twice about the safety of their workers and people who use the products they create.

The bottom line... with "loser pays", the 'losers' are the individual Texans whose rights will be limited for the benefit of Texas corporations. From here, HB 274 must still go to the Senate where it is expected to pass easily with a vote of the Republican majority.

In the words of Alex Winslow, executive director of the citizen advocacy group Texas Watch, “This is a sad state of affairs. Rick Perry is so transparently kowtowing to the special interest lobbyists who want even more immunity protections for polluters, insurance companies, and other big corporate wrongdoers. Texas has plenty of emergencies to deal with. Immunizing needless death, injury, or financial devastation caused by corporate wrongdoers is not one of them.”