The State of Texas will soon be facing changes in litigation related to reforming certain remedies and procedures in civil actions. The 82nd Texas Legislature has approved House Bill 274 and Governor Rick Perry has signed the bill, also known as “Loser Pays”. Loser Pays is an attempt by the State of Texas to avoid frivolous lawsuits. According to a statement released by Governor Perry on May 09, 2011 in regards to House Bill 274, the Governor stated, “loser pays system will help expedite legitimate legal claims and crack down on junk lawsuits”.
The system is adopting rules for which the non-prevailing party may be required to pay the winner’s legal fees in certain cases and even in cases dismissed early. However, House Bill 274 orders the court to adopt rules to promote prompt, efficient, and cost effective resolution in civil actions in specific courts where the amount in controversy does not exceed $100,000 for all costs. The costs allocated to the losing party are all recoverable litigation costs including court costs, attorney’s fees, fees for up to two testifying expert eye witnesses, and deposition costs.
This attempt to avoid frivolous lawsuits may cause some Texans to lose their rights to get compensated for their damages. The heightened costs become a huge barrier for small businesses and average citizen to litigate matters to protect their rights. Many small business owners and citizens will think twice about exercising their rights to the legal system when injustice occurs. The monetary risks of Loser Pays will keep them out of the court and protect the larger corporations.
Loser Pays law has good intentions however, the likely result is embedding fear in the everyday citizen and helping big corporations and companies feel more secure in racking up legal fees. Also, this destroys the notions of good faith settlement for larger companies since their risks have decreased.
On the other hand, as the law intends this could keep frivolous claims out of courts or from it being filed in the first place. Fewer lawsuits for corporations means less attorney fees and less paid out settlements on smaller claims. This strategy in the long run could improve the economy by increasing the growth of the corporate world which results to higher employment. Corporations no longer have waste money on frivolous lawsuits, and could use that asset in the long term to create more job opportunities and increase economic growth.
House Bill 274 is Effective September 01, 2011.
At the Law Offices of Sean Chalaki, our goal is to provide our clients with the most up to date laws to ensure that their rights is protected at all times. For more information regarding Loser Pays laws and House Bill 274, call our office at 972-793-8500 to schedule a free case evaluation.
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