Whenever health care reform comes up, lawsuit reform follows. For good reason: doctors and hospitals pay a lot of money for lawsuit insurance, costs that have to be passed on to us. And to avoid lawsuits, they perform far more tests than are medically necessary and mote expensive tests than are medically necessary. Those costs are also passed directly to us, or are passed to us by way of increased health insurance premiums.

“Loser pays” is a common solution. It tries to discourage lawsuits by mandating that the loser in any lawsuit pay the legal costs of the other party. The theory is that this discourages people from bringing lawsuits they might lose, and encourage defendants to settle when they’re sued and they might lose.

Our legal system is complex and unpredictable; that results in much more expensive health care costs. Something needs to be done. But I’m not convinced that loser pays is one of those things.

Loser pays tries to fix a complex, unpredictable legal system by adding further complexity and making costs less predictable.

I’d have to see the actual law, of course, but I’m generally frightened by “loser pays” rules. Given our incredibly complex and byzantine legal system, they seem to me as though they would be just another bludgeon used by people who can afford lawyers against people who can’t.

So much of court cases nowadays seem to trigger on process instead of guilt or innocence, and the process is so complex it can easily be gamed by whoever can afford the most lawyers.

The amount of money that I can spend on a lawyer is chicken feed for (to take one litigious organization) the RIAA. If they end up losing, they can afford the cost of my lawyer. But if I lose, I’m broke forever. I can’t afford to pay for the twenty lawyers they’ll put on every case. The fact that I know I’m innocent isn’t going to figure into my decision to fight or give up as much as the potentially massive legal fees.

Likewise, if I’m genuinely injured by a negligent organization—or by someone with a big organization behind them—I’ll be less able to stand up for myself if I know that a trick of the legal system could end up costing me more than I’ll make in my entire life.

Several years ago, I was bicycling by the side of University Avenue here in San Diego and a woman in a truck came barreling by me, clipping my elbow and my mirror on the side of her truck. When the police came, she complained that I should have been bicycling on the sidewalk and who was going to pay for the scratches on her truck? Fortunately she also told him that she’d seen me doing this dangerous thing (bicycling by the side of the road instead of on the sidewalk) from two blocks away.

I went to the hospital, discovered that I had a radial fracture in the elbow, and got a cast; and my hope was that that was it. I’m not a huge fan of the court system; I just let it go. Given her statement to the cop, I expected her insurance company to just let it go, too. But then about a week later I got what seemed to me to be a threatening call from her lawyers that echoed the same things she had said. So I decided to get my own lawyer. They handled it; everything worked out.¹

If my lawyer had had to say to me, “if we lose, you’ll have to pay Geico’s lawyers, too” I might well have acquiesced and paid for the damage my elbow did to her truck’s paint job. The legal system is too unpredictable for me to stake that much money on it.

If we do implement “loser pays”, I’d suggest the cap be the amount the loser paid for their own attorney fees. But that’s too simple a restriction for most people who want “loser pays”. The “solution” I most often see to unreasonable attorney fees is adding even more complexity to the system of loser pays and having the state decide what are and are not reasonable attorney fees.

The more complex a system is, the easier it is to game the system, especially by people with more money and more time to spend. Making the system even more complex won’t help. It will just provide even more opportunities to steamroll people with fewer resources.

I think it’s more important to simplify the legal process rather than make it even more complex. Every level of complexity is another barrier to justice. The best reform we can make to the system is to make it comprehensible. I can’t see how, in the United States, “loser pays” will not end up just another set of rules that we’ll need to pay lawyers to navigate for us.