Making the courtroom odds equal to the risk
If you've ever played poker without money, or for really low stakes, you know that it just doesn't work.
That's because betting and bluffing are crucial elements of the game. With no stakes or low stakes, there's no risk to staying in every hand, so no one ever drops out and bluffing is not possible.
Stakes have to pose an equivalent risk for each gambler. Penny-ante players cannot compete against high rollers who can drive the little guys out just by betting beyond their means.
Lawsuits are similar to poker in many ways. Without the option of hiring an attorney on a contingency-fee basis, most individuals would be unable to bring suit against a large corporation, knowing that they lack equivalent resources to sustain the action.
On the other hand, when plaintiffs and contingency-fee attorneys risk nothing but their time, it's the big corporation that finds itself in a no-win situation. The cost of a prolonged trial, even one that results in a favorable judgment, can be prohibitive. Thus a win ends up a loss.
Defendants are encouraged to settle cases they could win because the legal costs are too high. Plaintiffs often are encouraged by lawyers to file such cases in hopes of a quick settlement.
In an equitable judicial system, the odds should not favor one contestant over the other. But in Texas today, they do. The plaintiffs have the advantage, but Gov. Rick Perry has a plan to level the odds.
Perry is proposing a "loser pays" system in which unsuccessful plaintiffs would pay the defendant's legal expenses. Lawyers filing groundless lawsuits would have to pay a penalty.
The legislature seems likely to approve this reform and if it happens, plaintiffs and their attorneys would have to reconsider strategies. Bluffing would carry real risk, and settlements would not be an economic necessity for defendants who now avoid trying the merits of many claims because it costs more to win than to settle.