Texas House passes ‘loser pays’ tort reform

“Loser pays” has passed in the Texas House of Representatives, but on the Senate side, still remains in committee.  As Gov. Rick Perry has deemed tort reform a priority of this 82nd legislative session, expect him to sign any such bill reaching his desk.

Here’s perspective from Pajamas Media Editor Bryan Preston on the opposition to “loser pays”:

The past couple of weeks, airwaves around the state capital in Austin have been saturated with TV ads decrying an “assault” on liberties. The “assault” was actually a strong tort reform bill that discourages frivolous lawsuits by making plaintiffs pay defendant’s expenses if they lose a lawsuit. The ads were paid for by the Mostyn law firm out of Houston. That name might be familiar to PJM readers and has certainly become familiar to everyone who watches Texas politics. Over the past couple of years, trial lawyer Steve Mostyn has reaped millions from lawsuits in the aftermath of hurricanes (and mold lawsuits prior to that), lawsuits that all but emptied the state’s windstorm insurance fund. Mostyn has used some of those millions to set himself up as a Texas version of George Soros, funding a “shadow party” on behalf of far left Democrats all over the state. His latest ad campaign defended the status quo, in which there is no early opt out for frivolous lawsuits in Texas, and which allows trial lawyers to sue on contingency knowing that the worst that can happen to them is they won’t collect; meanwhile, those they sue will be out expenses for defending themselves. That environment encourages frivolous lawsuits, and has made lawyers like Mostyn and fellow Democrat Jim Dunnam very wealthy men. And, it has made insurance more and more expensive for everyday Texans.

Well, the GOP controlled Texas House handed Mostyn and the trial lawyers a major defeat on Saturday. They moved forward on HB 274, which would create a “loser pays” tort system similar to the one already prevalent in Britain. The purpose is to choke off frivolous lawsuits by making contingency fee trial lawyers themselves subject to expense recovery if they lose a case, improving the legal and employment climate in the state according to Gov. Rick Perry. Given the importance of trial lawyers to the Texas Democratic Party, the House session was every bit as contentious as might be expected, but at least the Democrats didn’t run off to Oklahoma this time. Even if they had it wouldn’t have mattered much, since the GOP enjoys a massive majority in the House.

The bill will be up for final House passage on Monday. The Senate version, SB 13, is still in committee. Gov. Perry has made tort reform one of his priorities for the 2011 legislative session and specifically supports “loser pays”; if the bill passes the Senate and gets to his desk, he will sign it.

“Loser pays” has long been an Estate of Denial™ topic of interest.  This column was posted with the release of a 2008 Manhattan Institute report.  Whether it would apply to probate cases remains to be seen.  We’ve asked several parties knowledgeable of the “loser pays” issue and they have been unable to provide a definitive answer.

Regardless, we support tort reform measures and agree with the theory of “loser pays.”  Real effectiveness as a protection for legal consumers, however, will only be achieved upon courtroom environments demanding ethical judges who function as impartial arbiters of the law instead of as de facto extensions of the legal industry bent on serving the interests of their legal industry brethren.

Without increased judicial standards and a meaningful (non-worthless) disciplinary recourse process, “loser pays” could become a new means of punishment as lawyers continue “weaponizing” the legal system against an unsuspecting public.