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Business Litigation Alert: "Win, Lose, or Pay"

Tort Reform Sweeps Into Texas

The old saying, “It’s not whether you win or lose,” may be a thing of the past in Texas, as the new tort reform law goes into effect on September 1st, bringing with it the much-debated loser pays system.

What does this bill actually mean for Texas? According to Governor Perry, it will “help make Texas more attractive to employers seeking to expand or relocate from countries all over the world,” as well as provide “defendants and judges with a variety of tools that will cut down on frivolous claims in Texas.”

Below is a breakdown of the key elements of the new law:

  • Trial courts now have the ability to immediately dismiss “frivolous” lawsuits, i.e. lawsuits with no basis in law or fact.
  • The bill brings to life the “loser pays” system – allowing the winning party to recover litigation costs in the case of frivolous lawsuits.
  • The discovery process (exchanging relevant documents and information) for claims between $500 and $100,000 will be expedited.
  • A defendant may recover attorney’s fees if it makes a settlement offer that is rejected, and the jury then finds for the plaintiff but awards less than 80% of the original offer. (This provision has caused some to dub the bill the “loser pays and sometimes the winner pays, too” bill).
  • The law only applies to lawsuits filed on or after September 1, 2011.

As the law sweeps through the Texas legal system, only time will tell if Governor Perry’s predictions will ring true. But, many Texas business owners are hoping this could finally bring a drastic reduction in the number of frivolous lawsuits filed in the state.


 Jeff Elkin is a partner in the litigation section of Porter Hedges LLP.
He can be reached at 713.226.6617 or jelkin@porterhedges.com.

This information is made available for educational purposes only and does not offer specific legal advice or create an attorney-client relationship with the Firm. Do not use this information as a substitute for specific legal advice. Attorney advertising

 


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