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loser pays

Now posted: a recent Federalist Society podcast of a discussion that includes me, Texas attorney E. Lee Parsley, Texas lawprof Ronen Avraham, Judge Dennis Jacobs as moderator and Dean Reuter of the Federalist Society introducing. Running time is an hour and you can listen directly here. More from me on the new Texas law here.

Overriding a veto from Gov. John Lynch, the New Hampshire legislature on June 27 enacted SB 406, establishing the nation’s first “early offer” system for medical malpractice claims. The law establishes incentives for defendants to make offers early in the litigation process that cover plaintiff’s economic losses such as medical bills and lost wages. The early-offer process is at claimants’ option only; claimants are free not to request such an offer. [Kevin Pho; supportive website; trial lawyers' opposition website]

Importantly, the new procedure also contains pioneering elements of loser-pays in both directions. If a claimant chooses to accept a defendant’s early offer of economic-loss expenses, the defendant will pay an additional sum to reflect a scheduled assessment of pain and suffering, plus the reasonable costs of attorney representation. However, if the claimant invokes the early-offer process but then turns down the offer as inadequate, there is a real risk of a fee shift in the opposite direction:

XII. A claimant who rejects an early offer and who does not prevail in an action for medical injury against the medical care provider by being awarded at least 125 percent of the early offer amount, shall be responsible for paying the medical care provider’s reasonable attorney’s fees and costs incurred in the proceedings under this chapter. The claimant shall certify to the court that bond or other suitable security for payment of the medical care provider’s reasonable attorney’s fees and costs has been posted before the court shall consider the case.

At TortsProf, Christopher Robinette explains in some detail (contrary to an error-filled screed in a Litigation Lobby outlet) why this adds up to a generally good deal for claimants (who, of course, are free not to trigger the process if they disagree) as well as making the system fairer. “Early-offer” proposals have been championed over the years by Jeffrey O’Connell, the distinguished University of Virginia torts scholar, and by Philip K. Howard of Common Good, among others. More on loser-pays here.

[Research assistance: Cato Institute intern Byron Crowe; cross-posted at Cato at Liberty]

More from John Steele Gordon at Commentary: “This looks like a big step in the right direction.”

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Competition through patent suits, circa 1857: I’ve got a new post at Cato on how loser-pays works to improve the general fairness of an inevitably imperfect litigation system.

April 25 roundup

by Walter Olson on April 25, 2012

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April 18 roundup

by Walter Olson on April 18, 2012

  • “MPAA: you can infringe copyright just by embedding a video” [Timothy Lee, Ars Technica]
  • NYC: fee for court-appointed fire department race-bias monitor is rather steep [Reuters]
  • Larry Schonbron on VW class action [Washington Times] Watch out, world: “U.S. class action lawyers look abroad” [Reuters] Deborah LaFetra, “Non-injury class actions don’t belong in federal court” [PLF]
  • Will animal rights groups have to pay hefty legal bill after losing Ringling Bros. suit? [BLT]
  • You shouldn’t need a lobbyist to build a house [Mead, Yglesias]
  • “Astorino and Westchester Win Against Obama’s HUD” [Brennan, NRO] My two cents [City Journal] Why not abolish HUD? [Kaus]
  • “Community organized breaking and entering,” Chicago style [Kevin Funnell; earlier, NYC]

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Universal be not proud

by Walter Olson on March 21, 2012

Veoh, like YouTube, pioneered the idea of enabling users to self-post video to the Internet. Then Universal, the entertainment company and owner of many copyrights, began a particularly aggressive campaign of litigation against it. Though Veoh Networks won a judicial decision in its favor, Universal appealed, having also taken the unusual step of suing three Veoh investors personally. In December the Ninth Circuit reaffirmed Veoh’s victory, but in the mean time Veoh had declared bankruptcy. Company founder Dmitry Shapiro recalls:

As you can imagine the lawsuit dramatically impacted our ability to operate the company. The financial drain of millions of dollars going to litigation took away our power to compete, countless hours of executive’s time was spent in dealing with various responsibilities of litigation, and employee morale was deeply impacted with a constant threat of shutdown. Trying to convince new employees to join the company in spite of this was extremely challenging.

By the end, “The company that we had built, that was once valued at over $130 million was gone,” writes Shapiro. Ron Coleman writes:

Under the American Rule, the cost of maintaining a meritorious defense to relentless litigation is prohibitive and what fee-shifting is available favors is applied with sickening asymmetry, virtually always favoring the party to which legal fees mean the least.

According to Eric Goldman, “This case’s real result is that Veoh is legal, but Veoh is dead – killed by rightsowner lawfare that bled it dry.” Mike Masnick points out that Universal is still pursuing its action.

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European roundup

by Walter Olson on February 2, 2012

  • Overseas press excoriates new FATCA tax-Americans’-foreign-earnings law; some foreign banks now turn away American customers [Dan Mitchell, Cato, Reason] “The Fatca story is really kind of insane.” [Caplin & Drysdale's H. David Rosenbloom, NYT via TaxProf] Will Congress back down? [Peter Spiro/OJ, more]
  • Important new book from James Maxeiner (University of Baltimore) and co-authors Gyooho Lee and Armin Weber on what the U.S. can learn from legal procedure overseas: “Failures of American Civil Justice in International Perspective” [TortsProf]
  • Don’t do it: British administration mulls further move away from loser-pays rule in search of — what exactly, a yet more Americanized litigation culture? [Guardian, Law Society]
  • Apparently in Norway it’s possible to lose one’s kids by feeding them by hand [Shikha Dalmia, Reason]
  • Financial transaction tax? Ask the Swedes how that worked out [Mike "Mish" Shedlock, Business Insider]
  • Notes from conference on globalization of class actions [Karlsgodt] Related: Adam Zimmerman;
  • “Another conviction in Europe for insulting religion” [Volokh; Polish pop star] Campus secularists’ speech under fire in the U.K. as “Jesus and Mo” controversy spreads to LSE [Popehat] British speech prosecution of soccer star [Suneal Bedi and William Marra, NRO]

In a new Cato post, I explain why I wish such an organization existed.

The Art Newspaper takes up a trend we’ve noted before in this space:

In New York, the art lawyer Ronald Spencer, of Carter, Ledyard and Milburn, agrees with Sanig. “This is a very serious problem. Specialists are often academics earning $100,000 [or less] a year and they can’t afford litigation they are fearful of being a defendant in a lawsuit, even if they should win.” He admits that there are more of these cases in the US: “It’s a cliché, but we are more litigious here.” He says that the US system, whereby the plaintiff does not have to pay the legal fees of the successful defendant, encourages this.

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After we passed along a recent report that Beaumont, Texas lawyers had filed 59 lawsuits the day before the state’s new “loser-pays” package of litigation reforms was to take effect, Texas attorney Brooks Schuelke responded on Twitter as follows (re-formatted and edited for clarity), saying that the issue wasn’t the loser-pays provision, but a separate “responsible third party” provision that set a malpractice trap for lawyers that delayed: “The responsible third party provisions allowed a defendant to name a party, and then plaintiff could join them even if the statute of limitations had expired. The law was changed to remove the ability to sue regardless of the statute of limitations. But defendant can’t name a party not disclosed in discovery. The amendment means we have to file suit long before the statute of limitations expires to send discovery asking defendant to name who it might name. So many cases nearing the statute of limitations had to be filed before the effective date of the change or else they could be victim to the amendment.”

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I’m on record as noting that the Texas bill labeled as “loser pays” doesn’t do nearly as much to revamp litigation incentives as its name implies, but if lawyers rushed to beat the deadlines on its provisions, they must be expecting it to make at least some difference. [Chamber-affiliated Southeast Texas Record]

More: Texas attorney Brooks Schuelke offers a different explanation for the last-minute rush.

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A timeless legal remedy

by Walter Olson on October 11, 2011

Loser-pays in ancient Greece. [Pero]

It’s a welcome development, but as I told Reuters, by the time it got through the legislative process there was less there than the name had promised. More at Cato. [Reuters link keeps changing, fixed for the moment]

September 19 roundup

by Walter Olson on September 19, 2011

  • Educator: please don’t bring lawyers to parent-teacher meetings [Ron Clark, CNN] Steve Brill: what I found when I investigated NYC teacher “rubber rooms” [Reuters] “The Six Dumbest Things Schools Are Doing in the Name of Safety” [Cracked] School waterfall liability [Lincoln, Neb. Journal-Star]
  • As predicted: “Dodd-Frank Paperwork a Bonanza for Consultants and Lawyers” [NYT]
  • “Running out of common drugs” [Josh Bloom, NY Post] Pharmaceutical shortages: the role of Medicare price controls [Richard Epstein, Hoover; earlier here, here, etc.]
  • DoT insists on exposing private flight plans online. Yoo-hoo, privacy advocates? [Steve Chapman]
  • New class action law in Mexico includes loser-pays provision [WSJ]
  • Newt Gingrich candidacy revives memories of his 1995 call for death penalty (with “mass executions”) for drug smuggling [NYT archive via Josh Barro; see also @timothy_watson "Sounds kinda like Shariah Law to me.")
  • "Cy pres slush fund in Georgia under ethics investigation" [PoL]

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September 7 roundup

by Walter Olson on September 7, 2011

  • Truth through intimidation? U.K.: “Chronic fatigue syndrome researchers face death threats from militants” [Guardian] Nanotechnologists are target of Unabomber copycat [Chronicle of Higher Education]
  • Blogger (and frequent Overlawyered commenter) Amy Alkon criticizes intrusive TSA agent by name, agent threatens $500K libel suit [Mike Masnick/TechDirt, Mark Bennett]
  • NYT fans “pill mill” hysteria, heedless of the costs [Sullum]
  • Patent litigant “pursued baseless infringement allegations in bad faith and for an improper purpose.” More loser-pays, please [NLJ, PoL]
  • Great moments in link solicitation [Scott Greenfield] Quality bar at feminist lawprof blog may not be set terribly high [Popehat]
  • “Wow, this photo got over 475 views from being reposted on Overlawyered” [Erik Magraken]
  • “Popular Comic Strip Has Fun With Wacky Warnings” [Bob Dorigo Jones]

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August 4 roundup

by Walter Olson on August 4, 2011

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July 29 roundup

by Walter Olson on July 29, 2011

  • Don’t: “Lawyer Disbarred for Verbal Aggression to Pay $9.8M Fine for Hiding Cash Overseas” [Weiss, ABA Journal]
  • Loser-pays might help: “Dropped malpractice lawsuits cost legal system time and money” [Liz Kowalczyk, Boston Globe]
  • “Kim Kardashian and the Problem With ‘Celebrity Likeness’ Lawsuits” [Atlantic Wire]
  • Kim Strassel on the Franken-spun Jamie Leigh Jones case [WSJ]
  • Peggy Little interviews Prof. Lester Brickman (Lawyer Barons) on new Federalist Society podcast;
  • Worse than Wisconsin? “Weaponizing” recusal at the Michigan Supreme Court [Jeff Hadden, Detroit News]
  • New York legislature requires warning labels for sippy cups [NYDN]

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May 31 roundup

by Walter Olson on May 31, 2011

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