Still wouldn't work. The loser wouldn't pay until the case is closed, and the company could go bankrupt in the meantime. Case in point, Gawker is widely expected to have their damages reduced on appeal, but it's already too late.
Legal fees are incredibly high right now partly because of frivolous lawsuits. Loser pays would drive down costs making bankruptcy a lot less likely. Besides, if this had been a pure 1st Amendment case, deep pockets like the ACLU could act like an insurance policy and pick up some of the day-to-day expenses, but the savings from not continuously defending yourself against frivolous lawsuits and getting reimbursed when you win would reduce the need for outside assistance.
Nothing is capped. Because of the potential for paying twice as much to sue someone, only cases where the plaintiff has a good chance of winning make it to court, thereby putting less demand on legal services. Gawker was not bankrupted by their own legal fees, but by the damages they were ordered to pay out of their own pockets, so nothing is justifying a cap on what the loser must pay in terms of legal fees here. The main point of bringing up loser pays is to reduce the chance that a lawsuit with no chance of winning can bankrupt someone such as Mother Jones.
