Survey Ranks California’s Lawsuit Climate Among Worst in the Nation

March 22, 2010

A new national survey finds that California’s lawsuit climate is among the worst in the country and on par with states including Alabama, Louisiana, and West Virginia. Among local jurisdictions, Los Angeles’ courts were mentioned as the second worst in the nation for legal fairness after Chicago, Illinois. San Francisco’s courts were named as the sixth worst.

The findings from “Lawsuit Climate 2010: Ranking the States” were released by the U.S. Chamber Institute for Legal Reform (ILR). The survey, conducted by Harris Interactive by telephone and online from October 2009 to January 2010, ranks the worst five states for legal fairness as: California (46th), Alabama (47th), Mississippi (48th), Louisiana (49th), and West Virginia (50th). Two-thirds, or 67 percent, of the 1,482 corporate lawyers contacted for the survey say 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 percent from just three years ago.

“California needs more jobs, not more lawsuits,” said Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform. “With one of the highest unemployment rates in the country, California’s legal climate is discouraging new businesses and new jobs at a time when the state needs them most.”

This year’s survey is the eighth such ranking of the 50 state lawsuit climates since 2002. Respondents — general counsels and senior attorneys or executives in companies with annual revenues of at least $100 million — give California especially low rankings for its treatment of class action lawsuits, tort or personal injury lawsuits, damages, and contract litigation.

Some facts about California’s legal system account for its low ranking. For example:

  • More than four class action lawsuits are filed every day that California superior courts are in session. California judges (especially in Los Angeles and San Francisco) are willing to certify class actions that are not certifiable in other states.
  • In recent years, out-of-state law firms have opened offices in California to file asbestos claims that would have been barred in their home states.

Rickard said that the state’s legal climate affects all businesses, but small businesses can be particularly hard hit. “Most small businesses operate on small profit margins. In an economic downturn, a single lawsuit against a small business may mean the difference between survival and closing its doors,” said Rickard.

ILR also announced a new national advertising campaign called “Jobs Not Lawsuits,” which will include movie trailers to be shown on more than 250 movie screens in California this spring. It will be the first time that movie trailers have been used for issue advertising in California.

The two-minute trailers feature the stories of California small businesses that were the subject of costly lawsuits that had a material impact on their companies. In one story, an after-school youth basketball facility in Sacramento called Basketball Town was forced to close after the company’s finances were drained by legal bills from fighting a lawsuit.

“Los Angeles is the movie capital of the world and the silver screen is the perfect place to tell these true stories of businesses that have been victimized by a dysfunctional legal system,” Rickard said. “We want people to see the real life consequences of these lawsuits.”

ILR seeks to promote civil justice reform through legislative, political, judicial, and educational activities at the national, state and local levels. The U.S. Chamber of Commerce is a business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

Was this article valuable?

Here are more articles you may enjoy.