[fiatmoney]

This already happens, routinely. Some libertarians play up the advantages of a "loser pays" system in ameliorating that problem, but AFAICT it just raises the stakes, again to the detriment of the party with less tolerance for losses.

[hguant]

Well, yes and no. It makes it less onerous to defend against certain types of lawsuits (patent trolls come to mind). How many times do we hear stories of some "little guy" who is in the right who gets screwed over because s/he was facing years of litigation that would have bankrupted them even if they won the case?

The other major benefit to a loser pays system is that it does raise the stakes - for frivolous lawsuits. Legal action is, in some ways, very cheap in the United States. Making the loser foot the bill is a good way to make corporations and their ilk take a second glance litigation as a tool.