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Perry designated the "loser pays" bill a top priority of the legislative session, saying Texas needs to crack down on junk lawsuits.
Some plaintiffs who sue and lose will be required to pay the court costs and attorney fees of those they are suing. The law also creates expedited civil actions for cases less than $100,000. It goes into effect Sept. 1.
Perry said the legislation "provides defendants and judges with a variety of tools to expedite justice for those deserving."
"Employers will spend less time in court and more time creating jobs," he said.
The law will encourage timely settlements by penalizing parties who turn down reasonable settlement offers to try to get more than they should.
Perry said the changes reduce the cost of litigation while still allowing legitimate cases to proceed. Supporters say the state's business climate will improve because the reforms will make Texas more attractive to employers looking to expand or relocate.
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