A "loser pays" system would make what we currently call "tort reform" unnecessary. Frivolous suits like that wouldn't go away completely because some nuts are rich enough that it wouldn't deter them, but 90% or more would evaporate because the claimants (and their lawyers) know they are without merit and will lose. One thing you can be absolutely sure of - hardly any lawyer throws good money after bad. The lawyers minting money off the system are spending tons of it to protect their gold mine, however. How I'd love to watch cable TV just one night without any of those "Have you or a loved one ever taken Vioxx?" commercials.
Cheers,
Daiwa