Alerts
Texas Governor Rick Perry Proposes "Loser Pays" Tort Reform, But Does Anyone Win?
by Andrew Pearce
December 17, 2010
Following his recent re-election, Texas Governor Rick Perry is apparently proposing a British-style "loser pays" rule. Currently, only plaintiffs can recover litigation costs, and only in limited circumstances. Under the "loser pays" rule, a plaintiff could be required to pick up the costs of the defendant if the plaintiff loses the lawsuit.
Not surprisingly, arguments are being made both for and against such a rule depending on the politics. Some argue that there are too many frivolous lawsuits filed; others assert that a "loser pays" system would have the effect of closing the courthouse doors to ordinary citizens.
An opinion from the Wall Street Journal claims that the "loser pays" rule - which would only apply to claims defined as "groundless" (in other words, any case that is lost) - would provide an extra disincentive for the tort industry to bring such groundless claims. And in doing so, Texas would arguably build on reforms in 2003 and 2005 that have vastly improved the state's legal climate.
However, an argument from legalaffairs.org provides that the "loser pays" system can actually have the opposite effect because plaintiffs are encouraged to file potentially strong cases involving trivial amounts without worrying about the expense. Further, parties are less likely to settle because the motivation to avoid the expense of protracted litigation is lessened when a party believes it will recover the costs at trial.
Time will tell whether Governor Perry intends to aggressively pursue a "loser pays" system in Texas. And, as with most things, the consequences of such a system are equally unclear.
To read more about the Wall Street Journal Opinion, visit: http://online.wsj.com/article/SB10001424052748703514904575602762974652860.html
The legalaffairs.org Argument can be read here: http://www.legalaffairs.org/issues/November-December-2005/argument_kritzer_novdec05.msp
When an In-House Counsel's Bar Membership Goes Inactive, the Attorney-Client Privilege May Go With It
by Andrew Pearce
October 20, 2010
A New York magistrate judge recently ruled that an in-house counsel's inactive status in his state bar association resulted in the loss of the attorney-client privilege and therefore exposed his client communications to discovery by the opposing party. Gucci America, Inc. v. Guess?, Inc., No. 09 Civ. 4373 (SAS)(JL), 2010 WL 2720079 (S.D.N.Y. June 29, 2010).
In Gucci America, Inc. v. Guess?, Inc., Gucci sued Guess and others, asserting trademark infringement and related claims arising out of the defendants' use of certain trademarks, logos and designs. During the course of discovery, Gucci submitted a privilege log that included e-mail communications of its in-house counsel. Gucci's in-house counsel subsequently testified during his deposition that he was an inactive member of the California Bar and had been so for years.
Guess demanded that Gucci produce the in-house counsel's communications, arguing that they were not covered by the attorney-client privilege because, given his inactive bar status, the in-house counsel was not an attorney to whom the privilege would apply.
A New York federal court agreed with Guess, holding that the attorney-client privilege contemplates that the client communicate with an individual who is not simply trained in the law, but is actually authorized to engage in the practice of law. Because the in-house counsel did not possess the type of bar membership that authorized him to engage in the practice of law, Gucci's communications with him did not satisfy any standard of the attorney-client privilege.
Further, even though there was "strong evidence" that Gucci believed its in-house counsel was a licensed attorney, the court found that such a belief was not reasonable. In fact, the court held that although Gucci was plainly in a position to confirm the extent of its in-house counsel's qualifications as a legal professional, it failed to do so even though a simple search of the California State Bar website would have revealed that the in-house counsel had been an inactive member since 1996. Thus, the court concluded, Gucci itself bore responsibility for allowing its counsel to represent its interests without ensuring that he was authorized to do so.
|
