In an effort to reduce frivolous claims and clear up crowded courts, Texas has adopted a modified version of the “loser pays” system common in European countries (see “Texas' 'Loser Pays' Law Mixed Bag for Business”).

The 2011 Omnibus Tort Reform Bill, which Governor Rick Perry signed into law on May 30, requires parties that are denied motion to dismiss their claims to pay the opposing parties' court costs and legal fees.

“What Texas adopted is pretty close to the Lawsuit Abuse Reduction Act,” says Shook, Hardy & Bacon Partner Victor Schwartz. “It's basically a frivolous claims sanction rule.”

Sean Wajert, a partner at Dechert, says although Texas' new law could be effective in reducing meritless suits, it is unlikely to spur a similar national law. “It would be such a sea change from the way things are done,” he says. “But one of the great things about our system is that the states can be laboratories for experiments, improvements and reforms that can then be a model on a national basis. If more states adopted 'loser pays' laws and they work as the proponents hoped, then to scale it up on a national basis would be much more viable.”