Sen. Banks has introduced SB 324 which would require a court to order payment of legal fees by the losing party to litigation. (Current law permits a court to order such fees where the losing party’s claim was frivolous. As a practical matter, it’s fairly rare for courts to order payment of such fees.)
The legislation has an interesting drafting provision that (so far as I know) was not permissible when I was drafting at Legislative Services:
The legislative services agency shall prepare legislation for introduction in the 2012 regular session of the general assembly to organize and correct statutes affected by this act.
I don’t know the rationale in this particular case, but my understanding of this sort of provision is that it’s usually included where the concept of a bill is reasonably simple but its implementation is going to kill a lot of trees by requiring alteration of a lot of code citations. Just to make a frivolous example, let’s say someone wanted to propose changing the title of “governor” to “supreme overlord.” The concept is fairly simple, but a bill to make it happen would be thousands of pages long as you pulled every code citation with the word “governor,” and changed it to “supreme overlord.” Better to see if anyone is interested before preparing a document that long. In this case, however, I’m not sure what sort of conforming legislation would be necessary, and its inclusion makes it look a little like legislators are being asked to buy a pig in a poke. “We’ll tell you what you voted for later.”
But, back to the premise itself. I certainly understand the frustration that can come with defending yourself against a case that’s too weak to prevail, but too strong to get dismissed quickly. I have one case in particular right now that (in my mind) fits this description perfectly. I’d love to be able to get a legal fee award for my clients.
As a practical matter, however, I think it would create an environment in which only the very rich and the very poor would be inclined to pursue their legal claims. The very rich could afford to take the hit for legal fees if their claim was ultimately unsuccessful. The very poor could also afford the risk – if you’ve got nothin’, you got nothin’ to lose. It’s those in the middle who would have to let others roll over their legal rights rather than risk drawing a bad jury and adding the other guy’s legal fees to their injuries. If there is a solution, I think it would involve a more permissive test for judges to use when determining whether a legal claim was frivolous. And, if the “loser pays” bill were to pass, I’d probably suggest that attorneys make clear to their clients, that the client is the one obligated to pay the bill. If you can collect from the loser after the litigation, super, but I wouldn’t want my fee to depend on whether I could collect from the opposing party. (Though, I can foresee a whole new arena of collections law cropping up from this.)
Doug,
Would this mean all legal costs(essentially the defendant’s lawyer bills as well? I think loser paying for all court costs(essentially what the public would be required) could make sense, but to charge a defendant’s lawyers fees seems unfair.
Obviously the point of the legislation seems to be to discourage people from filing suit whether legitimate or not. I think making them pay a small fee like court costs or a determined portion of the defendant’s legal bill would be a fair alternative.
Yes, it’s the prevailing party’s attorney’s fees that have to get paid with this legislation. Current law already makes the loser pay, for example, the filing fee for the case. (Not very expensive – on the order of $150.)
We seldom agree completely, but it appears we do on this one. I’m even involved in one of those pesky “to weak to win, to strong to get kicked out” cases.
I’d like to see the Federal Summary Judgment standard in Indiana; if a reasonable jury couldn’t find for you, you lose summarily.
One good thing that I can see coming of this is that it would encourage more people to settle before the case goes to trial and thus helping to ease the burden on the courts. There isn’t much incentive to settling right now but if you knew that you would have to pay the legal bills of the other side if you did lose then you’d be much more likely to settle and take care of the problem.
Though this might also lead to more appeals. If I lose and am stuck with paying the other side’s legal bills I’d be much more likely to appeal and hope to get it overturned.
Overall they should just leave it alone.
Another big problem is that legal fees would balloon under this — there’s no incentive for an attorney to provide reasonable priced services, and plenty of incentive to pad the bill.
I agree with this, Doug. People who advance “loser pays” either don’t understand or don’t care what it would do to meritorious suits.
Jackson, I don’t agree with you that there isn’t currently an incentive to settle. The vast majority of civil cases resolve short of a jury trial. To the extent that civil courts are overworked and/or backlogged, it has more to do with motion practice and other pretrial filings, not necessarily a steady stream of jury trials.
Finally, Tipsy, I agree with you on summary judgment. It’s absurd that a Plaintiff without sufficient evidence to survive a motion for judgment on the evidence can push a matter to trial regardless, but that’s the state of things.
If “loser pays” legislation were to pass, it would significantly alter Indiana court procedure rules, contract law, UCC law, and comparative negligence. I dont see how it passes in its current form without a much more clearly drafted bill, and a comprehensive reworking of many other areas of law.
As for the effect on attorneys, Plaintiff’s firms would be less effected because; 1) they tend to be smaller and can alter their practice emphysis more easily; and 2) many Plaintiffs are in near bankruptcy situations before suit anyway, and could just walk away from an adverse fee judgment.
However, if I were a member of the Indiana insurance defense bar and this passed, I would be working on updating my resume. Most cases would settle pre-litigation. The few remaining cases would almost certainly go to trial, creating work for only a few top line defense trial attorneys.
The fact that a party loses a case does not establish that punishment is merited for the act of bringing their case before a court. Since the bill is arbitrary, unfair and wasteful, I predict that it will be signed into law.