State Legal Climates: Where the Law is Reasonable

By July 18, 2007Briefly Legal

Business needs to take a broader view of the cost of litigation when making key decisions, argues Steven B. Hantler in a new report on states’ legal climates.

Corporations were complacent when years ago the impact of litigation was confined to paying legal fees and enduring the occasional adverse verdict. Corporations could survive this competitive disadvantage against the trial bar. That is no longer true. Today, verdicts reflect an antibusiness sentiment and many juries have a lottery mentality when doling out awards. Now, a company’s share value, brand equity, and even its very solvency are at risk. That’s why successful companies must study the trial bar’s new business model, and develop sound, effective, and preemptive opposition strategies.

Hantler is chairman of the American Justice Partnership, a close ally of the National Association of Manufacturers. This week he’s been shouldering blog duties at a favorite site, Overlawyered.com, where he brings attention to his analysis in the latest Directorship magazine, “Risky Business –The annual boardroom guide to litigation in the 50 states.”

Hantler, whose day job is as Chrysler’s assistant general counsel for government and regulation, created his state rankings based on two well-known studies, the Pacific Research Institute’s 2006 Tort Liability Index and the U.S. Chamber’s Institute for Legal Reform survey, “Lawsuit Climate 2007: Ranking the States.” Hantler then added his own calculations, giving additional weight to such factors as states that have “rule of law” supreme courts and reasonable limits on damage awards. (The Hantler Weighted Variable, or HWV.)

The top five states: Nebraska, Virginia, North Dakota, Kansas and Utah. The worst? West Virginia. Now that’s not a surprise.

Hantler makes the clear case that business needs to respond politically to the already politically powerful and astute trial bar, getting involved in campaigns and the legislative process of tort reform. The 50-state rankings is a tool to see where action is most needed.

The profiles indicate that there are vast differences in liability climates from state to state—differences that should contribute to strategic decisions about where to do business. This should also stimulate business leaders to demand that state officials are held to task for allowing their states to become hostile legal environments, while at the same time courting business through economic development programs.

So get to work!

The survey’s full results are available here in a chart format. And again, the link to the article in Directorship magazine is here.

Join the discussion One Comment

  • Tom says:

    As a result of living & traveling all over the world I’ve observed that America has a 1st class economy with a legal system of a banana republic. When will Americans wake up?

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