It's holiday season, so, like you, I'm spending more time at get-togethers with people like the guy who was lecturing other party-goers the other night about the evils of our court system. He's being sued and is upset about the fact that each party in a lawsuit usually pays its own legal fees.
This is so unique to our legal system that it's called the "American Rule." The reasoning behind it is that it helps poor people access the court system because it doesn't discourage them from filing a lawsuit if, for some reason, their claim is unsuccessful. The rich, they say, are better insulated from financial losses associated with lawsuits and can afford to lose. Poor folks can't.
The other thing is that, once you're in a lawsuit, rich people and corporations have such an overwhelming advantage (they can afford better lawyers, spend more money on expenses, and generally spend more time dragging things out for years), that any help poor people can get levels the playing field.
Well, this guy was still mad and fiercely advocating for a so-called "loser pays" system where, as it says, the loser pays the other side's legal bills. The entire reason we haven't adopted this rule, he said, is because the "plaintiff's bar has a lot of money" and shoots it down every time it's proposed.
But here's the funny thing. Plaintiffs lawyers like me would freakin' love loser pays. It'd be gosh-dang Christmas. And the real people who don't want it are the rich people and corporations who get sued.
My clients are usually poor folks who don't have enough money to pay me. So we make an arrangement—called a contingency fee—that gives me a financial stake in their lawsuit. That means, if I don't win, I don't get paid. And my pay (usually 40%) comes directly out of my client's winnings. They get less, so I get paid.
This also means that, when I file a lawsuit, I make dang sure I'm going to win. If I don't think that's going to happen, I don't take the case or I drop it. I wouldn't be in business if I didn't.
But rich people and companies have enough money to pay their lawyers by the hour. Their lawyers don't care about getting paid at the end of the case (because they're getting paid every month). Their only concern is keeping their rich clients happy—taking them to fancy dinners, golfing, box seats at ballgames, that sort of thing (I know, because I used to take clients to big fancy dinners at a big Houston law firm. We even had a billing code for it: "Client Development"). The other way big firms keep clients happy is to bluster about how they're going to win their case and file every motion imaginable to make the other side miserable (oh, and make the law firm a lot of money).
In a loser pays system, all of that would go out the window.
I'd still pick and win my cases. But, at the end of the case, my poor client wouldn't get stuck with the bill. They'd get their attorneys fees and costs paid by the rich person or corporation they sued. My client would get reimbursed for 100% of her damages instead of having to pay me 40%. It would be beautiful.
But guess who doesn't think that would be so beautiful? Yup, the rich people and corporations who would pay my bills.
Want proof? Texas actually tried this a few years ago. With great fanfare, Gov. Rick Perry (of DWTS fame), signed what he called a "loser pays" law that let courts award attorneys fees and costs against a plaintiff who brought a lawsuit with "no basis in law or fact." But it was only one-sided. Yes, you heard that right, it didn't apply to defendants if they lost. It was like saying: "The winner of the Texas-Texas A&M game wins, unless it's Texas A&M."
Not surprisingly, the law is seldom used because (surprise!) not many plaintiffs lawyers like me are filing lawsuits with "no basis in law or fact" (remember, we don't get paid if we don't win). And the loser still pays.