Cross-posted by Forbes.com at On the Docket
The possibility that a state will buck the prevailing civil justice system trends in America and adopt a “loser pays” rule for litigation costs and attorneys’ fees is enough to excite any proponent of legal reform. Efforts to that end also constitute fighting words for the plaintiffs’ bar and their legislative allies. Not surprisingly, when the forum for loser pays legislation is Texas, the battles are bigger and louder. What is surprising, however, is that in the end, the eventual changes to Texas law may not merit all the sturm und drang that surrounded the debate.
The proposal as originally introduced in the Texas House allowed a prevailing party to seek attorneys’ fees from the losing party in certain, enumerated actions (involving “rendered services, performed labor, lost freight, injured stock, oral or written contract,” etc.) Prevailing parties could also elect to pursue litigation costs from the losing party, and if the defendant prevailed, and the court determined that the suit was an “abusive civil action,” the defendant could seek litigation costs from the plaintiff’s attorney.
After legislators opposing loser pays stalled the bill with parliamentary tactics, Governor Rick Perry declared the bill an “emergency.” During the ensuing debate on May 7, a legislator hurled a rule book into the air and most of the bill’s opponents stormed out. Final debate on May 9 was far less contentious, and perhaps here’s why: the bill as passed is quite different from the original proposal.
Under the bill as passed, attorneys’ fees can still be pursued from the losing party in the same enumerated civil actions as in the original bill. But the ability to seek litigation costs from the plaintiff’s attorney was omitted, and a new section was added covering, one assumes, all civil actions other than those involving “rendered services, performed labor,” etc. Under this section, a judge may award the prevailing party fees and costs if the court dismisses the case as a matter of law prior to evidence being presented. Sounds good, but here’s the problem: Texas doesn’t allow cases to be dismissed prior to the presentation of evidence. The bill thus directs the Texas courts to create such a procedure.
The Texas Senate now takes up the bill, with hearings scheduled for today. The bill passed in the House has garnered praise from some legal reform supporters including the star of Walker, Texas Ranger himself, Chuck Norris. It will be interesting to see if the Senate adopts the House bill as is, or makes changes to it which moves it back toward a more traditional, definitive application of the loser pays principle.