Our View: Assessing 'loser pays'

The “loser pays” bill that the Texas Legislature passed and then-Gov. Rick Perry signed into law four years ago allows winning parties to recover litigation costs in dismissed cases without contractual agreements for attorneys’ fees.

“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,” Perry predicted at the time.

House Bill 274 passed 89-12, with 47 members “absent.” Democrats walked out en masse to protest the inevitable passage of the popular proposal .

The law took effect in 2013 and has been on the books for two years. In a recent issue of Texas Lawyer, Austin attorney David Chamberlain commented on the impact made by the bill he helped author.

“Rule 91a motions to dismiss are appropriate for attacking claims that have no basis in law or fact,” Chamberlain affirmed. “Frequency of use has been the big surprise of HB 274. Those of us who were involved in the HB 274 legislative process did not think this procedure would be utilized much, mainly because the trial court is mandated by the statute and rule to award attorney fees to the prevailing party on the motion. We just didn't think many defendants would risk having to pay fees, particularly when there is always a summary judgment motion available that doesn't carry that fee-shifting risk.”

Chamberlain acknowledged the “potential for abuse” in motions to dismiss. “It adds another, potentially expensive step to pretrial litigation (and appeals), and we don't need much more of that.”

Given that caveat, the law thus far seems to be having a positive effect.

“Used properly, I think it is certainly appropriate to knock out a truly baseless claim,” Chamberlain said, “that saves time and expense for everyone involved. And I do believe more specific pleading, if not overdone, can be helpful to moving the case forward and ultimately getting it resolved.”

“Loser pays” appears to be a winner.