Even if the poor person has a legitimate claim, there is a small probability that the rich person will win with their superior lawyers and the poor person will be bankrupted by the legal fees. Since they will know that from the beginning, they won't sue in the first place.
Almost every country except the United States uses this system.
Not directly related, but personal bankruptcies aren't a thing here. If a debt can't be paid, it goes to recovery proceedings, and will stay like that until it expires in (generally) 15-25 years.
Almost every country except the US uses agencies of their executive branch of government to enforce most labor, housing, discrimination, harassment, and civil rights laws. In the United States the enforcement of such laws is often split, with only very serious violations being handled by an executive agency and the more common violations simply creating a cause of action for a civil suit.
Even if the amount a loser has to pay is limited to what they themselves paid for their own attorneys it would still greatly discourage many people from bringing suits over labor, housing, discrimination, harassment, and civil rights against anyone who has significantly more resources than they do. If they spend a lot to get a top attorney and lose then they have to pay a lot. If they spend little on an attorney to limit the maximum they might have to pay then they have to worry that the other side will out lawyer them.
The point about potentially discouraging lawsuits has a grain of truth in it, but not more than a grain. In the US you'd have to pay $X regardless of whether you win, and with the loser pays system you pay $0 if you win and $2X if you lose. It is at most a factor of two. The reality is that most people who can't afford $2X also can't afford $X. Consider what you get in return: (1) if you're quite sure you can win, you can sue at no cost (2) big companies can't just bully people into a settlement (like they attempted in this story). The net effect is that poor people who are clearly in the right gain the ability to sue, and rich entities who are clearly in the wrong lose the ability to extort settlements from poor people, but poor people who can afford $X but can't afford $2X lose the ability to sue if they aren't sure they can win. A very good trade-off if you ask me.
That just gives financial unsupervised power to the judge, without any clear definition of involved terms. Which doesn't really sound like a good idea.
What I don't see is how anyone who is inherently subject to popular opinion can possibly rule impartially in the interests of justice, but that's a different question.
But it still doesn't solve the idea that the "Law is more equal the more money you have." .
If you lose and your suit was 100% without merrit, you can be sued for lawyer fees.
From what I understand, the problem is the bar for meritless is very very very high. Not sure how you legislate that. I think most lawsuits are meritless. A lawyer may have a very different opinion.
A lawyer's salary depends on him not having the opinion that most lawsuits are meritless.
In theory, I like the idea that the winner's legal fees are just another item in play when the judge decides how to award damages. Maybe it's just a matter of calibrating that judicial sense properly. Or maybe that's just a cop-out on my part to push the thinking onto somebody else.
In effect, this is exactly what happens in most loser-pays systems. Loser-pays usually doesn't mean literally that the winner automatically gets all of their fees paid, no matter how abusive their practices during the case or how disproportionate their expenses. More often it means that the judge can award those fees and there is some sort of presumption in favour of the winner of the case not losing out financially.
I don't really have an opinion either way, those are just the common arguments against it.