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Pence 'loser pays' tort-reform bill withdrawn from Senate

Associated Press
January 31, 2013
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A tort reform proposal sought by Gov. Mike Pence was withdrawn Thursday by its Senate author amid the threat of defeat in a key committee.

Sen. Mike Delph, R-Carmel, withdrew a plan that would have required the loser in a lawsuit to pay all legal fees after Senate Judiciary Chairman Brent Steele, R-Bedford, told him it was unlikely to pass.

"I talked to Sen. Steele and I felt the best course of action would be to withdraw it so we wouldn't have to put the Senate through an additional issue with all of the other issues that we're dealing with this session," he said.

Pence's team asked Delph earlier this month to shepherd the tort reform bill and a plan to cut the personal income tax by 10 percent, two pieces of a first-year agenda that is being mulled over by lawmakers. But Delph said the administration was fine with his rationale for dropping the proposal.

"They supported my decision to withdraw it, the top priority for the governor this session is to try to get the tax cut passed and that's certainly going to be my top priority: to help the governor do it," he said. "This became somewhat of a distraction to that goal."

A Pence spokeswoman did not return requests for comment Thursday. Pence has declined to comment on the proposal in a handful of interviews in the last month, and some Statehouse veterans say it caught them by surprise when he sought the measure because it had not been included in his campaign policy "roadmap."

The "loser pays" proposal would force the loser of a lawsuit to pay all the court costs. It has been sought frequently by conservative lawmakers, but has gained little traction in the Statehouse because of broad opposition from lawyers and various industry groups.

"Good," said Micki Wilson, executive director of the Indiana Trial Lawyers Association, when told of Delph's decision.

Steele said Thursday he knew the problems with the proposal well because he introduced the same "loser pays" measure as a freshman House member two decades ago. Forcing the loser of a lawsuit to pay the legal fees may sound simple, he said, but would create many problems.

He offered a hypothetical case in which a victim of a car accident goes to court seeking $40,000 to cover medical costs, the insurance company offers to settle for $20,000 and the victim declines and wins $30,000 in a court decision. It would be almost impossible, he said, to determine who lost the suit and was responsible for the fees.

"I've been here close to 20 years and no one's ever been smart enough to fix that one," he said of that and other potential quandaries.

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  • The Issues
    As a defense attorney, I have watched too many plaintiffs bring claims of little to no validity to blackmail an insurance company with the threat of how much it will cost to take the case to trial. ("My claim has no merit, but it will cost you $75,000 to defend the case through trial....it would be far cheaper to pay me $15,000.") Theoretically, if you have a legitimate claim, you will still file your suit. 95% of cases resolve without a trial. Most are settled (in which case neither side would have to pay the other's attorneys' fees), and the next largest category of that 95% are resolved by dispositive motion (meaning that the case is so illegitimate that the judge throws it out without letting it get to a jury.) In those types of cases, the defendant SHOULD be able to get their attorneys' fees repaid. As a practical matter, the "little guy" will never actually pay a dime, as little guys will either not be pursued or will file bankruptcy. What will happen, however, is that the little guy with an illegitimate claim will not file suit. Plaintiff's attorneys will be unwilling to accept illegitimate claims because doing so would put their clients at substantial risk of liability for attorneys' fees, and the clients will turn around and sue the lawyer for not explaining to them how bad their case was. All of that said, this law is bad for defense attorneys too. Less litigation means less work. If you know anything about the legal job market, you know that there are already far too many lawyers for the amount of work there is. (Thank you Indiana Tech for opening another law school to add to this problem). Passing a bill that reduces the amount of litigation, while good in my mind from a societal perspective, is not good for me personally. Consequently, the people who care most about this issue - lawyers - all have a vested interest in seeing this type of bill fail.
  • Ah..the milk of human kindness overflows from the commenters today
    Yes, we have far too much litigation in this country, and too much cost passed on to consumers for the sea of layers employed by the "producers" as Mordant would call them...and yet we have two commenters who would lock the person who has a legitimate claim out of court...you might say that if a person has a legitmate claim they should have no fear of proceeding under this law...but if I had a legitimate complaint for which I could only get satisfaction by suit, I would fear to proceed...why? Because perhaps the jury of my peers may include Mordant and Trey, who have already made up their minds that the producers are never at fault for anything, and that all attorneys are ambulance chasers (and that the gap between the producers and a "bag lady" can never be wide enough. Gov. Pence is trying to endear himself to wealthy campaign donors (for which I don't necessarily fault him) and Rep. Steele, who seems to be a pretty knowledgeable and reasonable guy with somesurprisingly progressive ideas, has provided the logic for why you don't go there...it is not as simple as it sounds, and sometimes those with deep pockets should be held accountable, and court is the only place to do it...and sometimes the people who have been wronged are of little means. Good call from a legislative body that has not gotten a lot right in the last few years...they seem to be on a better track this year...produce jobs, stimulate the economy, stay off of the social agenda...Mordant...please tell us you were joking. Trey...your comment was funny, but I work at a courhouse...I know a bunch of lawyers...maybe 2 of them qualify as "ambulance chasers". It is a stereotype I have indulged in myself, but by and large, not true.
  • www
    Ah,I see the slip and fall and ambulance chasing attorneys have called in their political chits. Heaven forbid that they would have to weigh whether or not they had a legitimate case.
  • What a Shame
    This is just another brutal and unjustified attack on the successful. We must stop punishing the producers in this society. And just to be clear: To those who ask whether the gap between the rewards our system has enabled Bill Gates and others like him to receive, and those enjoyed by a bag lady, is large enough, I answer with a resounding "No!"
  • Would Unquestionably Have Kept Justice from Being Done
    That was the point! Mega-rich people don't want to be held accountable when their "business decisions" maim or kill their customers, employees, or vendors--any law that locks the little guy out of the courtroom (for fear of being slapped with an enormous, bankrupting judgement to pay 800 lb gorilla's legal bills if you lose.) Every once in a while the Indiana legislature gets on right, and this is one of those times.

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