March 29, 2019

Lone Star Lawmakers Take Lead in Tackling Trio of Troubling Lawsuit Abuses

At a Judiciary Committee hearing this week, the Texas House of Representatives debated a trio of bills that address key issues facing the civil justice system today: The growing problem of lawsuits by cities and counties, harmful trial lawyer advertising misleading seniors into stopping their medications, and big finance firms investing in lawsuits.

Action on municipality litigation would make the Lone Star State the nation’s first to tackle the growing phenomenon of private plaintiffs’ attorneys pitching lawsuits to local governments. These lawyers, as discussed in a new U.S. Chamber Institute for Legal Reform (ILR) research paper, approach local governments with promises of big settlements in exchange for contingency fees. In the consolidated opioid litigation, for example, the paper found that there are now more than 1,200 local government lawsuits, plus another 500 that are not consolidated in that case. Signing so many municipalities up for these lawsuits doesn’t just make achieving a final settlement much harder, it also threatens to undermine states’ ability to represent their citizens.

This bill would require localities to follow the same open and transparent contracting rules as state agencies, and it would also allow the state’s attorney general to review these contracts. This would protect municipalities from pay-to-play hiring of private lawyers while also ensuring that a statewide-elected official helps guide the state through major legal issues.

The committee also discussed a bill that would prohibit misleading and deceptive adverting by trial lawyers. FDA data and ILR research have both shown that these ads, often presented under the guise of a “medical alert” or public service announcement, can drive consumers to discontinue medications without consulting their doctor, sometimes with severe health consequences.

Another proposal would require the disclosure of any third-party litigation funding (TPLF) arrangement without a discovery request. TPLF essentially allows hedge funds to invest in lawsuits, increasing the likelihood that the litigation will grow lengthier and more complex. After all, an executive at one of the top litigation funding firms admitted last year that they “make it harder and more expensive to settle cases.” Requiring disclosure so all parties are aware of the arrangement and that no third parties can exert influence over the litigation is a major step towards a legal system that is fairer, faster, and more efficient.

Texas has long been a leader in combatting out-of-control civil lawsuits. Action on these issues would solidify Texas’s position as a state that’s ahead of the curve when it comes to abusive litigation.

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