‘Loser-Pays’ in Texas: a ‘Triumph of Packaging’

The latest round of litigation reform in Texas drew big national attention because of its “loser pays” label. But in reality, as I told Reuters reporter Moira Herbst in her new story, by the time the bill reached enactment the label wasn’t really deserved.

Texas courts will apply the loser-pays principle to only a small fraction of unsuccessful actions. The package also includes new rules shifting costs in some cases where litigants turn down a settlement offer and then do less well at trial; that’s welcome, but doesn’t venture much beyond what other states have tried with success in their legal systems. As before, Alaska (which has had its rule since territorial days) is the only state to enjoy the benefits of a comprehensive loser-pays principle.

For more background on loser-pays, see my Maryland Law Review article with co-author David Bernstein, or this more popular Reason piece. For more on the recent Texas enactment, see links at Overlawyered here, here, here, etc.