Legal Costs, Driving Out Economic Growth

By March 11, 2008Briefly Legal

The Pacific Research Institute has just released its latest study on the civil litigation climates in each of the states, “U.S. Tort Liability Index: 2008 Report.” Indexwise, good news for North Dakota, bad news for Florida.

The study takes a twofold approach toward assessing a state’s tort climate — its tort costs, hard numbers about monetary tort losses and litigation risks; and tort laws, that is, the element that reduce tort risks and costs.

Lawrence J. McQuillen, co-author of the report, explains why it matters: “In the competition for jobs and capital investment among the states, those states that suffer from high tort costs and litigiousness will continue to lose jobs and businesses to states with superior tort systems.”

How do the states stack up?

Saints: States that have relatively low tort costs and/or few litigation risks and relatively strong tort rules on the books. These states are well positioned to contain their tort liability costs in the future if the rules are implemented as written. These states include Alaska, Mississippi, Ohio, Tennessee, and Utah.

Sinners: States that have relatively high tort costs and/or high litigation risks and relatively weak tort rules on the books. The sinners are likely to face high and rising tort liability costs in the future if lawsuit abuse continues unchecked. These states include Alabama, Arizona, Arkansas, California, Illinois, Maryland, Massachusetts, New York, Oregon, Pennsylvania, Rhode Island, Washington, West Virginia, and Wisconsin.

Suckers: States that have weak tort rules on the books because they currently have relatively low tort costs and/or few litigation risks and, therefore, foolishly believe that they are not vulnerable and reform is not needed. These states include Hawaii, Iowa, New Mexico, North Carolina, North Dakota, and Virginia.

Salvageables: States that have moderate to high relative tort costs and/or moderate to high litigation risks, yet have moderate to strong tort rules, probably as a result of recent reforms. These states include Colorado, Florida, Georgia, Indiana, Louisiana, Michigan, Missouri, Nevada, New Jersey, South Carolina, and Texas.

To read the full report and more, please click here.

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