Tort Reform: Make The Loser Pay!


Money

Money (Photo credit: 401(K) 2013)

I break from my party a bit on Tort Reform, as I don’t believe that we should limit the amount that someone sues for, just like I don’t think we should have blanket statements in the criminal justice field that says there should be no death penalty.  Bad things happen when you make rules like this…Suddenly, some guy in Norway comes around and kills 77 children, but since you limited the court’s options, he will only serve 21 years in jail…As soon as we limit the amount someone can sue for, ten cases will pop up where everyone in the country agrees they should have been allowed to sue for more, and the law will fall apart (because our Congress will fold like a piece of laundry).

I am a big fan of tackling the problem, not a side-effect of the problem, so let’s figure out what the actual problem is in this situation:

If someone brings a lawsuit against a doctor today, he could spend hundreds of thousands of dollars defending himself.  Unfortunately, when the Doctor finally prevails, he is still out hundreds of thousands of dollars.  This is one of the main reasons that Healthcare costs so much in this country.  The Insurance premiums are outrageous because of how expensive it is when Doctors get sued.  Lawyers make a killing on fees, and the Doctors still lose all of this money…EVEN WHEN THEY WIN!

Now, what would be even more effective than limiting the amount that someone sues for?  How about this interesting idea…

Make The Loser Pay!

By making the loser pay for all of the fees of the winner, many things get accomplished.

First, there will be far less frivolous lawsuits.  People are unlikely to put their hard-earned money on the line to sue someone who really didn’t do anything wrong, whereas today they can sue with no consequences whatsoever.

Second, Class Action lawsuits would be reduced, and only the ones with the most merit will go forward.  Today, there are tons of Class Action Lawyers who comb the news online every day just looking for major companies that they can convince 10,000 people to sue at once.  They sue the company, convince the company to settle for $10 Million.  In this case, each person would get just under $700, the company would lose $10 Million, and the lawyers would get $3 Million!  Is this fair?  Should a lawyer really get over 4,000 times as much as the person who was actually harmed in the lawsuit?  By Making The Loser Pay, the lawyers would have to ensure that they had a good case because companies would be more inclined to fight cases that they thought they could win.

Lastly, it will lighten the load on today’s court system.  You will get called for jury duty less often, the government will spend less money, and companies can invest the millions of dollars that they set aside each year for court cases back into the economy.  The money those businesses save will be invested back into the innovative solutions that will help save our economy from the Great Recession.

Please share this article with your friends and family, and let them know that there are innovative solutions out there if we care enough to push for them.  Thanks!

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About Todd Hagopian (@ToddHagopian)

Todd Hagopian received his BA from Eastern Michigan University with a major in Political Science. After graduation, he worked as a Financial Advisor and a Bank Manager before returning to school. He attended Michigan State University, where he completed an MBA with a double-major in Finance and Marketing. Todd is now a Senior Product Development Manager for a Fortune 500 company. He frequently writes about business issues, social media strategy, and political issues that he finds important. Enjoy the blog!

Posted on September 5, 2012, in Politics and tagged , , , , , , , , , , , , . Bookmark the permalink. 3 Comments.

  1. From personal experience, the need to sue is important and a limitation on the damages is an arbitrary solution. I don’t disagree that cost on an innocent party is a good solution. However, I more strongly feel that what is allowed to constitute a suit it at the heart of the problem. Too many baseless suits get to court or even to some type of arbitration.

    I can’t pretend to say I have a wholesale solution but minimum standards of acceptable criteria are not universal. What constitutes fault? A focus on fewer suits will do much in limiting the number of false claims. How to do that remains the greater challenge.

  2. Interesting point RWJ. One of the byproducts of the loser-pays idea would be that people would be less likely to sue if they were going to have to pay the court costs of the winner, and lawyers would be less likely to file frivolous lawsuits for the same reason. Do you think that this rule would not have the intended effect? How would you propose limiting the number of lawsuits? I am very interested in your point of view, let me know what you are thinking. Thanks for commenting!

  1. Pingback: President Obama has NOT created 4.5 Million new jobs – Get The Facts Here! « toddhagopian

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