February 27, 2008
Loser Pays Rule?
On Valentine's Day Rep. Jeb Hensarling re-introduced a bill that Rep. Richard Baker has been pushing for at least two years--the Securities Litigation Attorney Accountability and Transparency Act. Inter alia, the bill states that "(A) DETERMINATION REQUIRED- If the court in any private action arising under this title enters a final judgment against a plaintiff on the basis of a motion to dismiss, motion for summary judgment, or a trial on the merits, the court shall, upon motion by the defendant, determine whether--
`(i) the position of the plaintiff was not substantially justified;
`(ii) imposing fees and expenses on the plaintiff's attorney would be just; and
`(iii) the cost of such fees and expenses to the defendant is substantially burdensome or unjust.
`(B) AWARD- If the court makes the determinations described in clauses (i), (ii), and (iii) of subparagraph (A), the court shall award the defendant reasonable fees and other expenses incurred by the defendant and impose such fees and expenses on the plaintiff's attorney."
Inter alia, the bill would also require each plaintiff and plaintiff's attorney in a private action to provide sworn certifications, filed with the complaint, that identify any conflict of interest, including any direct or indirect payment, between the attorney and the plaintiff.
The bill has never gotten out of committee, and although I am inclined to favor the objectives (if not the method) of the legislation, one might think that in the current economic environment this bill has zero chance of getting out of committee this time around. The "loser pays" rule is, of course, the difficulty here; the conflicts portion could probably survive on its own.
Posted by: Paul Rose
February 27, 2008 | Permalink
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