On Monday I wrote about the Republicans’ “loser pays” legislation in Mississippi. Republican sponsored “loser pays” legislation is also on the table in Tennessee, as reported in the Tennessean (a Gannett Company). Critics of the Tennessee bill state that the bill is unfair to regular folks:

Daniel Clayton, a medical malpractice lawyer in Nashville, said working-class Tennesseans and small businesses, on the other hand, might be too scared to file a lawsuit that has merit because the outcome of litigation is uncertain and they could get stuck paying the litigation fees of a company with an army of lawyers.

“If loser pays passes, it gives incredible power to insurance companies and big business because they can intimidate people and bankrupt people to make it very difficult for a family or small business to hold a corporation or insurance company accountable for wrongdoing,” Clayton said.

But unlike Republican Gary Chism’s Mississippi bill, the Tennessee bill actually has provisions that go both ways:

Another bill would require a plaintiff to pay the litigation costs of a defendant if the plaintiff refused a settlement offer from the defendant only to win less than 75 percent of the settlement offer at trial. Such payments would be taken out of, and capped at, a plaintiff’s award at trial. The law would similarly punish defendants who refuse a settlement offer if the plaintiff wins more than 125 percent of their settlement offer at trial.

The Tennessee bill does favor large corporations. But at least Tennessee legislators felt like they needed to add provisions that made it at least look fair on the surface. Mississippi Republicans feel no such pressure. But are we really surprised? 

No. No. And No.

  • CM

    This appears to be modeled after Florida’s Offer of Judgment/Proposal for Settlement Rule, which works pretty well. Moreover, I don’t view this as “business friendly.” Instead it provided both parties with a mechanism to make the other side evaluate the claims and defenses in a good faith manner.
    Chism’s proposal, on the other hand, it atrocious.

  • The Tennessee legislation will come up for a vote and will probably pass in the next couple weeks. While the legislation is not a bad as Mississippi’s, it will be a game-changer for lawyers and their clients. You are correct to point out that defense lawyers also have a lot to lose here, not only because it will decrease litigation but also because a defense lawyer whose client or insurer gets hit for post-judgment fees may well be determined to have not evaluated the case properly and get fired and / or sued.