Would it apply to the people who did not initiate the case? E.g. if someone is sued and loses, do they have to pay the winner's legal fees in addition to the fines they already likely have to pay? If so, that seems to be rather unbalanced...
Why is this necessarily unbalanced? I can think of several instances I've personally witnessed in the past few years where "legal fees" would probably dwarf the damages awarded. (Somebody totals your car and his insurance seriously undervalues it when they compensate you. A company reneges on a warranty and you have to pay for a repair. A company reneges on a contract, after you paid them.) It's simply not worth it in time/costs to sue somebody to recover one or two thousand dollars, even if your case is bullet-proof.
Having the "loser" pay when he is the plaintiff discourages frivolous lawsuits (and lessens their negative impact on the defendant). This guards against people being taken advantage of in the courtroom
. Having the "loser" pay when he is the defendant lowers barriers (increases accessibility) for a plaintiff to make a legitimate lawsuit. This guards against people being taken advantage of outside the courtroom
. Doesn't it say something about the state of our legal system, when preventing our legal system from causing injustice seems a bigger deal than helping our legal system fix injustice?
Of course the loser pay rule assumes that American law/jurisprudence is clear enough for there to be an objective winner and loser in any civil dispute. And that our judicial system will consistently/correctly identify the winners and losers. Both of which are questionable (which is a far bigger deal than who pays for legal fees).