I am not a lawyer, but its clear to me why your #1 is flawed.
Consider this somewhat common scenario:

Small guy gets screwed by big corporation, intentionally or not, and sues.

Big corporation buries him under a mountain of paperwork, discovery, and legal motions.

Even though small guy and his small time attorney have a fairly reasonable case, they end up losing, perhaps on something as small as a technicality.

Now I ask you... is it really justice that the small guy is on the hook for all the legal fees of Mega-Corp and their army of attorneys? It would personally bankrupt him, even if he had a fairly reasonable claim to begin with!

That does not seem like justice to me. I want to know that I could bring a reasonable case, and even risk losing in court, without destroying my entire financial future.