In an emergency session on Saturday, the Texas House of Representatives passed a "loser pays" bill that could change who pays legal fees in certain civil lawsuits.
House Bill 274, authored by state Rep. Brandon Creighton, a Republican from Conroe, allows the winning party to recover the costs of litigation in breach of contract suits or cases in which a judge has granted a motion to dismiss if there is no contractual attorneys' fees agreement.
On Friday, Gov. Rick Perry declared tort reform an emergency issue, allowing the measure to go ahead of all other bills in the House on Saturday.
"I applaud the House and Rep. Brandon Creighton's leadership for moving Texas one step closer to implementing a loser pays system that will help expedite legitimate legal claims and crack down on junk lawsuits," Perry said in a prepared statement on Monday.
"This legislation will also protect Texas jobs and stimulate economic opportunity by relieving Texans and employers of the costs and burdens created by frivolous and drawn-out lawsuits. I encourage the Senate to quickly take action on this important legislation."
Supporters say the bill would encourage parties to settle, would make it easier to dismiss frivolous lawsuits and would expedite cases, improve court efficiency and decrease court costs,
"We congratulate the House on passing this important legislation which is critical to establishing a fair, efficient and predictable civil justice system in Texas," said Richard Trabulsi Jr., president of Texans for Lawsuit Reform, in a statement.
"HB 274 will increase the efficiency of our courts by instituting less costly and time consuming court procedures. It also provides incentives for fair and early settlements and imposes risk on those who pursue meritless or abusive lawsuits."
Trabulsi also lauded Gov. Perry's leadership and commitment to tort reform. He called the passing of HB 274 another reason "why Rick Perry remains the most effective tort reform governor in the nation."
Citizens Against Lawsuit Abuse supported the bill as well.
"We appreciate that Texas lawmakers, as evidenced this week, are committed to keeping Texas at the forefront of the effort to ensure local courts are used for justice, not greed," said Chip Hough of CALA of Central Texas.
"In passing HB 274 out of the Texas House of Representatives, Texas lawmakers have again shown that they are committed to ensuring consumers remain able to access our legal system while maintaining the Texas commitment to ending frivolous and abusive lawsuits that cost Texas jobs and hurt Texas families. This measure is pro-consumer and pro-business and deserves the support of the Texas State Senate."
Although the measure has been supported by tort reformer groups and House Republicans, Democrats have objected to some of the bill's provisions dealing with attorneys' fees.
HB 274 would allow attorneys' fees to be awarded to defendants whose offer to settle the suit is rejected. If the case then continues to trial and the jury awards the plaintiff damages that are less than 80 percent of the original settlement offer, then the defendant is allowed to collect litigation costs from the plaintiff.
Currently, defendants can recover the legal fees but only up to the amount the plaintiff actually wins in court.
The bill also requires the Texas Supreme Court to adopt new rules for the dismissal of lawsuits as a matter of law and without evidence.
Saturday's emergency session was so contentious that most of the Democrats had walked out by the time the measure came to vote. It passed 89 – 12, with 47 members absent.
The Senate has not yet acted on the measure. The legislative session ends on Memorial Day.