Loser Pays

[stebo0728]

Ok, this should be a good topic for discussion. Something I have been advocating for a while, though its not my original idea. We need a loser pays system in our court rooms. What does that mean? Lets say someone decides to sue a company, or an individual, for some sort of liability claim. Certainly we have seen all ranges of things from the justifiable, to the absolutely ridiculous. But what happens when we have some of these completely asinine suits? Many times juries realize the completely ridiculous nature of the suit, but since the defendant company has liability insurance, they go ahead and award damages to the plaintiff. Or maybe sometimes they dont, maybe they just laugh and throw the bum out on their bum. Either way, the defendant has to incur at bare minimum, some legal fees, and worst case increased liability insurance premium increases, or I guess absolute worst case might be out of pocket damages when liability insurance is not there, or does not cover. What if instead, if a case is found for the defendant, all legal fees of both the plaintiff and defendant fall on the shoulders of the plaintiff? There are many aspects involved in this, and I know almost beyond a shadow of a doubt what points will come up in discussion, so lets get em going, and see where we stand.

[IBCoupe]

I like the way it is - Courts get discretion to determine who pays.

A loser-always-pays discourages all lawsuits, those with merit and those without alike. Being that legal fees are incurred while the case is going on, it's not like it's painless to bring a lawsuit. To bring a frivolous lawsuit on the hopes that you won't be fined by the court, assigned costs (and your lawyer reprimanded/disbarred) brings its own punishment even before the conclusion.

There's not a problem here that needs addressing.

[stebo0728]

I might be inclined to agree IF I had any confidence that

Courts get discretion to determine who pays.

or

fined by the court, assigned costs (and your lawyer reprimanded/disbarred)

happened with regularity when warranted, even when mom and pop are pitted against CocaCola Fortune 1000 companies with big wallets.

[IBCoupe]

What is it that you doubt? That Courts have discretion? That they act on it? That they issue fines? That they issue fines big enough?

(c) Sanctions.

(1) In General.
If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee.

(2) Motion for Sanctions.
A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b). The motion must be served under Rule 5, but it must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets. If warranted, the court may award to the prevailing party the reasonable expenses, including attorney's fees, incurred for the motion.

(3) On the Court's Initiative.
On its own, the court may order an attorney, law firm, or party to show cause why conduct specifically described in the order has not violated Rule 11(b).

(4) Nature of a Sanction.
A sanction imposed under this rule must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated. The sanction may include nonmonetary directives; an order to pay a penalty into court; or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney's fees and other expenses directly resulting from the violation.

(5) Limitations on Monetary Sanctions.
The court must not impose a monetary sanction:
(A) against a represented party for violating Rule 11(b)(2); or
(B) on its own, unless it issued the show-cause order under Rule 11(c)(3) before voluntary dismissal or settlement of the claims made by or against the party that is, or whose attorneys are, to be sanctioned.

http://www.law.cornell.edu/rules/frcp/Rule11.htm

[C-Kwik]

While I understand the sentiment of the OP, like IBC, said, it would discourage a lot of valid cases. Most cases are in fact valid. It usually comes down to a disagreement between parties on specific issues or perhaps dollar amounts. If the loser of a case were to have to pay all legal fees, it would cripple the system just because a handful of cases slip through the crack. Such a system would make it much easier to get away with very dishonest and unethical practices. The negatives would outweigh the positives big time. I'd love to see court reform that would virtually eliminate frivolous lawsuits and such, but its a difficult problem.

As for courts awarding legal fees against one of the parties, it does indeed occur. People who commit insurance fraud and are caught can be ordered to pay the insurance company's legal fees. And when an insurance company is aware of fraud, legal fees start to accrue early on in the case. So there could be such a judgement without the case ever going to court for the original case. These cases aren't typically going to be high profile enough to make the 10 O'clock news but they do happen quite often.

Our system is certainly not perfect. But its really good. Can it improve? I'd like to think so. But making improvements might sacrifice some of the good things and if that outweighs the improvements, then its not a practical improvement to be made.