Survey Ranks over Half of All State Tort Systems as Bad for Business

January 24, 2002

A survey released this week by the United States Chamber of Commerce assessing the fairness of liability systems for all 50 states found that 57 percent of corporate general counsels and senior litigators rank America’s state court liability system as only “fair” or “poor.” The poll’s results should serve as a wake-up call to those states receiving the lowest rankings, according to the American Insurance Association (AIA), as 78 percent of respondents also reported that a state’s litigation environment could affect important business decisions.

“These findings provide yet another rationale for states to pay as much attention to the quality of their liability environment as they do to their state’s transportation infrastructure, tax structure and education system,” said David Snyder, AIA assistant general counsel. “American companies look carefully at a state’s legal climate when making decisions on where to build new facilities and hire employees.”

The top five states corporate counsel evaluated as doing the best job at creating a fair and reasonable litigation environment are: Delaware, Virginia, Washington, Kansas and Iowa. The worst perceived states are: Mississippi, West Virginia, Alabama, Louisiana and Texas.

The study also asked corporate attorneys what they thought was the most important issue state policy makers who care about economic development should focus on to improve their state’s litigation environment. The leading two issues named were tort reform (named by 18 percent) and punitive damages (17 percent).

“Anyone who follows developments in the country’s civil justice system is well aware that we are dealing with a litigation explosion at the state court level that is taking a devastating economic toll on the country, as billions of dollars are transferred from business and consumers into the pockets of trial lawyers,” said Snyder. “The results of this survey show that there are also indirect costs to those states with out-of-control tort systems: the potential loss of state revenues through reduced economic development and job creation.”

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