1. No Limited Liability for Corporations

Don't panic, I'm not talking about eliminating limited liability completely. Instead, I think that only natural persons should be eligible for limited liability. For instance, if Corporation A owns 30% of Corporation B, and Corporation B goes out of business with debts of $100 million, then Corporation A is responsible for $30 million. The reasoning behind this is to prevent corporations from creating under-capitalized sub-corporations in order to avoid liability. As an exception, Corporation A would not be held responsible for Corporation B's bonds (those are priced on the basis of Corporation B's credit). Corporation A would be responsible for a portion (dependent on ownership share) of Corporation B's legal judgements, contract payments, government fines, and other liabilities.

As an exception, mutual funds and other investment vehicles would retain limited liability. However, liability would pass through to any corporation that owns shares in the mutual fund or vehicle. This way, a corporation cannot create a an investment vehicle to retain the old liability rules. If a mutual fund owns 40% of Corporation B, and Corporation A owns 10% of the mutual fund's shares, then Corporation A is liable for 4% of Corporation B's debts.

Again, natural persons who own stock would not be subject to any of these rules, and would retain limited liability as before.

2. Plaintiff may not offer settlement

Plaintiffs should not be permitted to offer a settlement of less than the amount they intend to pursue in court. A defendant may make such an offer, and the plaintiff may accept the offer, but the plaintiff may not communicate how much they are willing to accept. This is to combat a tactic used regularly by copyright trolls such as the RIAA, MPAA, and Las Vegas Review-Journal. The troll threatens to sue under the Copyright Act (which provides excessive statutory damages, as much as $150,000 per infraction) but offers a quick settlement, as little as $5000 to cover all past infractions. In addition to the high statutory fees, this tactic relies on the fact that a lawyer would likely cost the defendant more than $5000. If the troll were not permitted to offer a settlement, then their lawsuits would go to court far more often. The troll's case is often weak (as demonstrated recently by the Las Vegas Review-Journals hired gun, Rightshaven, and demonstrated numerous times by the RIAA) and so forcing them to prove their case in court would likely stop many of these lawsuits before they even began.

3. Loser Pays All (English Rule)

In lawsuits, the loser should pay all of the court expenses of the winner. This means when a plaintiff brings a case they take on a significant risk that they will be forced to pay the defendant's legal fees. Likewise, if a defendant chooses to fight a case rather than settle, they take on the risk of costly litigation fees for the plaintiff's lawyers, as well as their own. In the U.S., we currently have a dumbed-down version of this rule, in that a judge may order these payments if the case is found to be baseless, but this is relatively rare. It's still very possible to end up paying more in legal fees than one wins from the defendant. Let's say a contractor manages to do $20,000 in damages to your house, well over the limit for small claims court. Recovering those damages could be very difficult. If the contractor refuses to make the payment immediately, you'll need to hire a lawyer, which will likely take a good chunk of the damages you're entitled to. Even though the case may be clear-cut, the contractor knows that the cost of the lawyer is high enough that you're unlikely to sue. Under the English rule, with such a case (a good chance of victory for the plaintiff) the contractor knows he will have to pay for your lawyer if he doesn't pay for the damages immediately.