The Hayride

This week, the U.S. Chamber of Commerce’s Institute for Legal Reform put out a survey ranking the states as to their legal climate as it relates to doing business. And as you might imagine, Louisiana didn’t fare well.

As it happens, only West Virginia ranks worse than the Sportsman’s Paradise in our legal system’s inhospitability toward business, according to the study. The study, done by Harris Interactive for the Chamber, polled just under 1,500 corporate attorneys for the study and rated the states on their overall treatment of tort, contract, and class action litigation. Among other elements, respondents also ranked states for the impartiality and competence of its judges and the fairness of its juries.

Louisiana ranked poorly in every one of the survey’s categories, but particularly dismally with respect to impartiality of our judges, damages and treatment of class action suits. The survey did not take into consideration the fact that personal-injury lawyers in our state will go on television and ask people to put their cell phone numbers on speed dial - it’s entirely possible that the state’s ranking could have been worse if it had.

Two-thirds, or 67%, of those questioned said a state’s lawsuit environment is likely to impact important business decisions at their company, such as where to locate or expand their business—up 10% from just three years ago.
 
“A state’s poor legal climate negatively impacts its economic environment, discourages business expansion and slows the creation of new jobs,” said Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform. “At a time when state leaders are working to spur economic development, they must remember that Louisiana needs more jobs, not more lawsuits.”

And locally, Melissa Landry of the citizen-led legal watchdog group Louisiana Lawsuit Abuse Watch (LLAW) says it’s just one more example of how the state needs a thorough overhaul of how it handles lawsuits. “Clearly, Louisiana’s negative legal climate needs to get back on track,” she said.  “We should follow the lead of our neighbors in Texas (36th) and Mississippi (48th) and demand that our Legislature pass comprehensive reforms that will help restore fairness to our legal system.”

Texas, in particular, is a success story of note where legal reform is concerned. A recent study by The Perryman Group found that legal reforms have strengthened Texas’ economy and created jobs, with approximately 8.5 percent of Texas’ economic growth since 1995 resulting from lawsuit reforms.  Texas currently ranks as the top state in the nation for doing business, with four of the top five job markets in the country as ranked last fall (Baton Rouge, surprisingly, was the other city in the top five), with its business-friendly reforms playing a big part in that performance. And while the Lone Star State ranks just 36th in the nation in the study, they’re making significant improvement after ranking as low as 44th in 2007.

The release of this year’s rankings comes just one week before the start of the Louisiana legislative session. Landry says three proposed minor reforms in advance of the session would benefit the legal climate:

• HB 317 by Rep. Neil Abramson- Venue for Latent Exposure Cases
Currently, plaintiffs suing for asbestos exposure are able to file suit in any jurisdiction, which overwhelms court dockets in so-called “favorable” jurisdictions.  House Bill 317 by Rep. Abramson requires proper venue in cases of latent disease, including asbestos and silica exposure, to be established only in the parish where the plaintiff has resided for no less than one year or in the parish where the plaintiff alleges substantial exposure occurred. If substantial exposure is alleged in multiple parishes, the district court is able to transfer the case to the parish determined appropriate.

• HB 358 by Rep. Neil Abramson- Disclosure for Asbestos and Silica Claims
Currently, plaintiffs are not required to disclose if they have filed claims against a trust, so they may recover twice – or “double dip” – for the same injury, which depletes the resources for compensating true victims.   House Bill 358 by Rep. Abramson requires a plaintiff in a claim for injury, death or disease related to asbestos or silica exposure, to disclose at least 180 days before trial all existing or potential claims against a trust or a fund.

• HB 572 by Rep. Tim Burns- Petition in Latent Exposure Cases
Louisiana’s court system continues to see an increase in the amount of frivolous lawsuits, which sometimes includes unsupported claims.  House Bill 572 by Rep. Burns requires petitions involving latent diseases to include basic information such as the time period, location and types of products for each alleged exposure.

But while the bills by Abramson and Burns might help create a stronger environment in some cases, there are others which most definitely do not.

For example, SB547, authored by Rob Marionneaux (D-Livonia), would bring back punitive damages in civil cases; Louisiana did away with those in the 1990′s outside of a few very special circumstances. HB673, authored by Barbara Norton (D-Shreveport), styles itself the Equal Pay For Women Act, is tailor-made to blow open the doors to a flood of civil suits alleging sex discrimination in wages. And in the midst of alarming inflation in health care driven in part by tort suits and the rising cost of medical malpractice insurance, HB175, authored by trial lawyer and House Democrat Caucus chair John Bel Edwards (D-Amite), would raise the cap on medical malpractice suits from $500,000 in damages to $750,000.

None of those abovementioned bills would appear to have much of a shot at getting past Gov. Bobby Jindal’s desk. Norton’s bill, however, did make it to the House floor last year and it’s now back for another turn in the limelight.

What is true at present, though, is that despite a desperately poor ranking for its legal climate amid a bad national economy, Jindal and his legislative supporters don’t seem to have much planned for the current session to make the state’s businesses safe from rapacious plaintiff lawyers. Without doing something to improve the legal situation, the governor’s efforts to build a better business environment are going to face strong headwinds – headwinds which could be even stronger in the event Marionneaux, Norton or Edwards see their bills be enacted.

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Filed under: Business, Economy, Legislature