Texas Lawyer, May 15, 2006

Gov. Rick Perry, flanked by lawmakers and tort reform leaders at a May 15 news conference in the state Capitol, touted a new national study that ranks Texas' civil justice system as No. 1 in the nation as a result of reforms enacted in 2003 and 2005.

To determine the rankings for the "U.S. Tort Liability Index 2006 Report," the Pacific Research Institute of San Francisco compared each state with the other 49 states on 39 variables grouped into five categories: monetary tort losses; threats; caps on appeal bonds and damages; substantive-law rules and reforms; and procedural or structural rules and reforms.

"Texas has definitely led the nation in terms of legal reforms in so many different areas," said Lawrence McQuillan, director of business and economic studies at the institute and a co-author of the report. The institute is a nonprofit, nonpartisan organization supported by private contributions.

The report also links tort reforms with the health of a state's economy. Perry told reporters that the institute's report "is the best evidence yet that lawsuit reform in Texas is improving health care, it's protecting jobs and it is strengthening our economy."

But McQuillan warned that Texas has not finished the job of tort reform. Texas ranks 50th on seven of the variables considered in the study, he said.

The report noted that the American Tort Reform Association declared two areas of Texas -- the Rio Grande Valley and Gulf Coast region -- as "judicial hellholes" in 2005. "Judicial hellholes are defined as regions where personal-injury lawyers specifically seek to have trials conducted because they expect an excessive verdict or excessive settlement, a favorable precedent or both," according to the report.

The institute also tracked whether a state has limits on attorneys' contingent fees, a reform that Texas has not enacted. As noted in the report, Illinois limits contingent fees by using a sliding scale ranging from one-third to one-fifth of an award, depending on the total recovery, while Oklahoma strictly limits contingent fees to 50 percent of a plaintiff's recovery.

During a question-and-answer session, Perry said that it's too early to talk about whether a cap on contingent fees would be proposed in the 2007 session of the Texas Legislature. However, Perry did not rule out such a proposal.

"We certainly would not take it off the table as a legitimate issue of debate," the governor said.

State Sen. Robert Duncan, R-Lubbock, who played a key role in past tort reform efforts in the Legislature, says in an interview that he thinks legislation will be introduced in the next session to limit lawyers' contingent fees. But Duncan, a partner in Crenshaw, Dupree & Milam, predicts that such a measure would not gain momentum in the Legislature.

"Putting price controls in the legal system probably isn't warranted," Duncan says.

In a news release, Texas Watch contends that it's not surprising Texas topped the Pacific Research Institute's list for protecting special interests because the institute receives a major portion of its funding from oil companies, drug companies and the tobacco industry.

"If you believe corporate accountability is a quaint notion best exploited for a marketing campaign, then come on down," Alex Winslow, a spokesman for Texas Watch, says in the release.