Bills to curb storm-chasing lawyers seeing 'strong response' from Texas businesses, individuals

By Sara McCleary | Mar 21, 2017

HOUSTON – Texans for Lawsuit Reform (TLR), a nonpartisan group whose self-proclaimed objective is to “restore litigation to its traditional and appropriate role in our society,” is making headway in its efforts to curb “storm-chasing” lawyers.

HOUSTON – Texans for Lawsuit Reform (TLR), a nonpartisan group whose self-proclaimed objective is to “restore litigation to its traditional and appropriate role in our society,” is making headway in its efforts to curb “storm-chasing” lawyers.

The group is promoting bills SB 10 and HB 1774, which will help stop Texas lawyers from following their mass-litigation efforts they’ve recently been using.

According to TLR, litigation over hailstorms has risen by 1,400 percent in recent years due to door-to-door solicitation and mass marketing efforts by these storm-chasing lawyers. Because hailstorms are localized to an identifiable geographic location and cause damage, these lawyers know where to go and whom to contact to encourage the filing of lawsuits. And it seems to be a relatively small group responsible for most of these cases.

“Our 2016 data shows that the 10 most-active law firms have filed more than half of the cases, and they are joined by several other copy-cat law firms,” Lucy Nashed, TLR’s communications director told The Record.

It’s easy to see why these chasers landed on hailstorms as their lawsuit of choice.

“Texas law makes these cases incredibly lucrative and easy for these lawyers to exploit,” said Nashed. “It provides that an insurance company is liable for a penalty and for paying the insured’s attorney’s fees if a claim is paid late… If a claim is underpaid by a single dollar or paid a single day late, that means the claim was not paid timely as required by law, which triggers liability for attorney’s fees and the penalty for the insurer.”

These attorneys will often allege that even if the insurance company paid for their client’s roof claim, the company didn’t identify and offer payment for additional damage, such as to a fence. If a lawyer can prove such claims, the insurance company can be found to have violated the law and will owe interest and the client’s attorney’s fees.

But TLR is fighting against these lawyers by promoting SB 10 and HB 1774, which will do a number of things to curb such lawsuits.

“First, the bills require a plaintiff to provide a pre-suit notice 60 days before filing a lawsuit, stating the facts giving rise to the claim, the specific amount owed to the policyholder under the insurance policy, and the amount of attorney’s fees incurred to that date,” explained Nashed. “This gives the insurance company the opportunity to resolve the claim before a lawsuit is filed… Requiring the pre-suit notice also interrupts the storm-chasing lawyers’ mass-production model. If this notice is not provided, the attorney’s fees may be limited.”

The bills further limit attorney’s fees if their initial financial demand is excessively high.

“If they recover 80 percent or more of their initial demand, they are entitled to all of their fees. If they recover less than 20 percent of their original demand, they cannot recover fees. Anything in between is prorated,” said Nashed.

A third major aspect of the bills is “to stop the storm chasing lawyers from suing individuals and small businesses who have no real liability. Today, about 14,000 individuals and small businesses have been sued by the storm-chasing lawyers, for strategic reasons - in order to ratchet up the cost of the litigation, to entice settlements by the insurance companies and manipulate the jurisdiction of the cases,” explained Nashed.

The bills are being well-received by most.

“We’ve received a strong response to our efforts because Texans from across the state overwhelmingly support the common-sense reforms in these bills. This includes everyone from major business groups to average citizens from all political affiliations. HB 1774 has 80 co-signers in the House, SB 10 has been named one of the lieutenant governor’s top 10 legislative priorities for the session, and the governor mentioned stopping weather-related lawsuit abuse as a priority during his State of the State address,” affirmed Nashed.

The implications of these lawsuits continuing are potentially very costly.

“Texas already has some of the highest property insurance rates in the nation because of our severe weather,” Nashed explained. “If this lawsuit abuse isn’t stopped soon, we can all expect to see higher premiums and deductibles or reduced or lost coverage. In the worst case, insurers will stop writing hail coverage or make Texans pay for hail coverage as an additional part of their insurance, at a steep price. Insurance companies are businesses. They will pass the cost of this litigation through to consumers, all while storm-chasing lawyers are getting rich.”

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