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Loser Pays Legislation Signed Into Law In Texas

scales of justice.jpgTexas Governor Rick Perry signed into law a measure that will further limit the filing of frivolous lawsuits by making the party who filed the lawsuit pay the other party’s court costs. Under the loser pays model, if the party filing the lawsuit, usually referred to as the “plaintiff,” loses the case, then the defendant can ask the judge make the plaintiff pay the defendant’s court costs. Likewise, if the plaintiff wins the case, then the plaintiff can make the defendant pay their court costs. Court costs often run into the thousands and tens of thousands of dollars in bigger cases.

Most lawyers would agree that a fair definition of a “frivolous lawsuit” is one that has absolutely no merit and would eventually either be dismissed by the judge or ruled against by a jury.

North Carolina has long followed a form of the “loser pays” model of limiting frivolous lawsuits. In North Carolina, a defendant can file what is called an “offer of judgment,” offering to pay the plaintiff an amount the defendant believes is reasonable, and if the plaintiff fails to accept the offer of judgment and goes forward to trial and recovers an amount that is less than the offer of judgment, then the defendant can ask the judge to make the plaintiff pay all of the defendant’s court costs.

While this model may deter the filing of some lawsuits by plaintiff’s who have legitimate claims but are too afraid of the possibility of having to pay the defendant’s court costs, the reality is that lawyers who represent plaintiffs can not afford to file frivolous lawsuits, in that, most of the time, it is the plaintiff’s lawyer who is funding the litigation. Not only is the plaintiff’s lawyer paying all of the costs of litigation as the case moves toward the court house, but the plaintiff’s lawyer is also spending a significant amount of his professional time on each case he agrees to handle. If plaintiff’s lawyers filed frivolous lawsuits, then they would not stay in business very long because they would basically be throwing away their own money and time litigating cases that would produce no recovery.

The reality is that the vast majority of plaintiff’s lawyers very carefully screen their cases to make sure they are meritorious before agreeing to represent a new client.

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