Jessica Karmasek Sep. 10, 2015, 7:46am


WASHINGTON (Legal Newsline) - West Virginia, Louisiana, Illinois, California and Alabama have the five worst legal climates in the country for businesses, according to a survey released by the U.S. Chamber Institute for Legal Reform.

Rounding out the bottom are: New Mexico at No. 45, Florida at No. 44, Mississippi at No. 43, Missouri at No. 42 and Arkansas at No. 41.

At the top, with the best legal climate for businesses, is Delaware, followed by Vermont, Nebraska, Iowa, New Hampshire, Idaho, North Carolina, Wyoming, South Dakota and Utah.

“More business leaders than ever have identified a state’s lawsuit climate as a significant factor in determining their growth and expansion plans,” ILR President Lisa A. Rickard said in a statement.

“States ought to take notice that a good lawsuit climate is vital to their continued job growth.”

On Thursday, ILR released its 2015 Lawsuit Climate Survey: Ranking the States. ILR owns Legal Newsline.

This year’s survey is the 10th fielding of the report and builds on previous studies, the first of which was initiated in 2002.

“Prior to these rankings, information regarding the attitudes of the business community toward the legal systems in each of the states had been largely anecdotal,” the survey states.

“The 2015 Lawsuit Climate Survey aims to quantify how corporate attorneys, as significant participants in state courts, view the state systems by measuring and synthesizing their perceptions of key elements of each state’s liability system into a 1-50 ranking.”

Participants in the survey were comprised of a national sample of 1,203 in-house general counsel, senior litigators or attorneys, and other senior executives at companies with at least $100 million in annual revenues who indicated they: (1) are knowledgeable about litigation matters; and (2) have recent litigation experience in each state they evaluate.

The respondents were asked to evaluate the state as a whole, so it is possible that some states received low grades due to the negative reputation of one or more of their counties or jurisdiction, the survey noted.

However, this year’s survey shows that attorneys see the litigation environment improving generally: 50 percent of the respondents viewed the fairness and reasonableness of state court liability systems in the U.S. as “excellent” or “pretty good,” up from 49 percent in 2012 and 44 percent in 2010.

Still, three-quarters, or 75 percent, of the respondents said a state’s litigation environment is key and is likely to impact “important” business decisions at their companies, such as where to locate or do business.

That number is a significant increase from 70 percent in 2012 and 67 percent in 2010.

West Virginia, according to the survey, ranked 50th in overall treatment of tort and contract litigation; 47th for its treatment of class action lawsuits and mass consolidation lawsuits; 47th for damages; 49th for judges’ impartiality; 49th for judges’ competence; and 47th for juries’ fairness.

Louisiana, which the survey found has the second worst legal climate overall, ranked 49th in overall treatment of tort and contract litigation; 48th for its treatment of class action lawsuits and mass consolidation lawsuits; 49th for damages; 50th for judges’ impartiality; 50th for judges’ competence; and 50th for juries’ fairness.

Illinois, one of the larger states found to have a poor legal climate for businesses, ranked 48th in overall treatment of tort and contract litigation; 48th for its treatment of class action lawsuits and mass consolidation lawsuits; 48th for damages; 48th for judges’ impartiality; 48th for judges’ competence; and 48th for juries’ fairness.

California, the largest of the states in the bottom 10 and home to technology giant Google Inc., ranked 47th in overall treatment of tort and contract litigation; 50th for its treatment of class action lawsuits and mass consolidation lawsuits; 50th for damages; 46th for judges’ competence; and 49th for juries’ fairness.

Alabama ranked 46th for damages and juries’ fairness.

The ILR survey also asked counsel to weigh in on the worst local jurisdictions. East Texas led with 26 percent; then Chicago or Cook County, Ill., with 20 percent; Los Angeles and Madison County, Ill., both with 16 percent; and New Orleans or Orleans Parish, La., with 15 percent.

Others named: New York City, San Francisco, Miami or Dade County in Florida, Philadelphia, St. Louis, Detroit and Washington, D.C.

The respondents agreed that the best way to improve the litigation environment in states is by eliminating unnecessary lawsuits.

Other ways: placing reasonable limits on discovery; limiting punitive or other types of damages; increasing the effectiveness of judicial case management; ensuring timely court decisions; assuring that liability is properly allocated among defendants; and addressing e-discovery.

Global polling firm Harris Poll conducted the survey through telephone and online interviews between March 9 and June 24.

Phone interviews, with a total of 560 respondents, averaged 26 minutes in length.

Online interviews using the same questionnaire averaged 14 minutes in length and were conducted with 643 respondents.

The respondents had an average of 19 years of relevant legal experience, including in their current position, and had been involved in or familiar with litigation at their current companies for an average of 10 years.

The most common industry sector represented was manufacturing, followed by services and finance.

The American Association for Justice, formerly the Association of Trial Lawyers of America, called the ILR survey “meaningless” and “self-serving” in a statement Thursday.

“It should be no surprise that the executives and lawyers for the nation’s largest companies don’t want to be accountable for the products they make and that they prefer jurisdictions where they think they’re most likely to get away with evading responsibility,” AAJ President Larry A. Tawwater said. “Regrettably, the Institute for Legal Reform has as its mission to make it harder for consumers and injured people to hold these large companies accountable. The promise of ‘tort reform’ remains a sham.

“West Virginia has passed plenty of tort reform and ranks dead last in the ILR survey. Texas, a state with tort reform, and extolled by ILR as a model for the country, is 40th out of 50.”

Tawwater continued, “The ILR’s poll is as meaningless as it is self-serving. Perhaps their next poll can be of members of the NFL asking if they like playing football.”

Tawwater said the only way for consumers to have a chance of “leveling the playing field” and holding companies accountable is the civil justice system itself.

“It is shameful, but not surprising, these large corporations want to harm that system and give themselves the advantage,” he said.

For the entire 50-state list and to read a full copy of the 2015 Lawsuit Climate Survey, click here.

In tandem with its survey, ILR on Thursday also released 101 Ways to Improve State Legal Systems, listing key legal reforms that states can adopt to improve their lawsuit climates.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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