Texas “Loser Pays” Bill

On May 25, 2011, the Texas Legislature passed H.B. No. 274 (a.k.a. “Loser Pays” Bill).  The law went into effect on September 1, 2011, and applies to civil suits filed after that date.  Despite its name, the “loser” of a suit only pays if it “loses” at an early stage of the litigation process.  Specifically, the law requires parties who lose a motion to dismiss their claims to pay the other sides’ court costs and attorneys’ fees. The law does not require an unsuccessful plaintiff to pay the defendant’s attorneys’ fees if after a trial the court/jury finds in favor of the defendant.

The law made several other substantive changes intended to make the legal process more efficient, including the following:

  • Requiring the Texas Supreme Court to adopt rules for dismissal of a baseless cause of action;
  • Requiring the Texas Supreme Court to adopt rules to expedite civil trials;
  • Permitting appeals of otherwise unappealable orders if they involve a controlling question of law and may materially advance the termination of the litigation;
  • Attempting to make it easier for defendants to obtain litigation costs if they make a qualifying settlement offer, the plaintiff rejects the offer, and the final award is less than the qualifying offer; and
  • Prohibiting defendants from designating responsible third parties after the applicable limitations period.

Special thanks to Shane Johnson for his research and preparation of this post.

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