“Loser pays” legislation forces plaintiffs to pay defendant’s legal fees if suit deemed groundless

Texas is rapidly becoming a beacon for sensible government planning and practices. One such area is its reasonable legal climate, as the National Review has documented.

The Texas Senate, in a unanimous vote, passed tort-reform to make a plaintiff pay the winning party’s legal fees if their suit is deemed without merit. This “loser-pays” legislation was quickly approved by the house and signed into law by Gov. Rick Perry.

“Loser pays” laws will severely hamper the will of parties to engage in baseless, cash-grabbing lawsuits. Such suits take a significant toll on companies and small businesses, as well as municipal governments, which often choose settlements rather than engage in a costly trial, no matter how unjustified the lawsuit is.

The article notes that Texas’ legal climate, heralded even by the New York Times, until fairly recently was an “ambulance-chaser’s paradise.” However, by beating back the demands of the lobbyists and the Texas Trial Lawyers Association, Texas has demonstrated once more why many industries have begun to view it as the best business climate in the nation.

Louisiana can observe Texas’ successes and implement reforms of its own. The group Louisiana Lawsuit Abuse Watch, in an extensive study, determined that from 2006-09, $52 million was spent on lawsuits against local governments in eight municipalities alone. Furthermore, a national survey of companies and attorneys found Louisiana to have the second worst legal climate in the entire nation.

Fortuitously, Louisiana appears to be taking cues from its neighborhood. As Robert Ross of the Pelican Institute reports, a bill currently in the state Senate would mirror medical malpractice reform in Texas which has helped make the Lone Star State so popular with the medical industry.

It goes without saying that a favorable climate for businesses is good for the state’s economy, and in a state which is struggling mightily to create a balanced budget, our elected officials should take every possible precaution to create such a climate. Emulating the triumphs of Texas is an obvious start, and correcting our legal culture through legislation such as “loser pays” laws should be a logical step.