AJP Hails Pacific Research Institute's new 'U.S. Tort Liability Index'

WASHINGTON, May 11 /PRNewswire/ -- The American Justice Partnership hailed a new study that gives state policymakers and corporate executives a new tool to predict the future economic conditions of the states arising from the burden placed on their economies by their civil justice systems.

"This tort liability index measures which states have high tort costs, and which have enacted reforms to better position themselves for future economic growth," says Dan Pero, president of the American Justice Partnership (AJP), a coalition of more than 60 state and national organizations advocating legal reforms at the state level. "CEOs and site selection planners now have a new economic analysis to use in evaluating where to expand jobs and operations, along with complementary reports such as the U.S. Chamber Harris Poll on states' litigation environments and the American Tort Reform Association's 'Judicial Hellholes' reports identifying pro-plaintiff court jurisdictions."

The study -- "U.S. Tort Liability Index: 2006 Report" -- authored by Dr. Lawrence J. McQuillan and Hovannes Abramyan under the auspices of the California-based think tank, Pacific Research Institute (PRI) -- ranks the civil justice system of each state based on the economic inputs and outputs in 39 categories of empirical data.

These categories include: the extent of monetary tort losses in each state; the existence of caps on certain damage awards; the enactment of substantive legal reform efforts by state legislatures; the adoption of procedural and structural reforms to discourage lawsuit abuse; and a more general analysis of the litigiousness of each state.

The PRI study resulted in an index score for each state to arrive at an overall ranking for the states. The data reveals the previously hidden and obscure strengths and weaknesses of the civil justice system in each state.

"Underlying the simplicity of the PRI rankings, however, is a wealth of data that provides a new perspective on each state's civil justice system," Pero said. "It is this in-depth analysis that gives executives such a powerful tool with which to manage liability risks."

In the overall scoring, for example, Texas ranks number one out of 50 primarily because it has recently enacted more legal reforms than any other state. While Texas can be proud of its commitment to legal reform, Texas, along with many other states that have recently passed legal reforms, must now take steps to ensure that its lower courts apply these laws fairly in actual trial settings.

As illustrated by the results of the U.S. Chamber Harris Poll, defense attorneys managing cases in Texas report that the Texas lower courts continue to be unfair and biased in the way these courts apply the laws and procedural rules and thus create a pro-plaintiff environment. The American Tort Reform Association (ATRA) has recognized this problem by designating certain areas in Texas as Judicial Hellholes.

In the PRI study, Texas came in last in seven out of the 39 variables, including its rules relating to trial bar contingency fees, the lack of punitive damage caps, and the ATRA Hellhole designation.

These remaining serious problems in Texas help to explain how Merck could be hit with an outrageous $253 million Vioxx verdict in a Texas Hellhole even though overall, the state has made so much progress in legal reform. While Texas has taken dramatic strides, it still has urgent priorities in reforming its lower courts and eliminating the Hellholes. The PRI study recognizes these deficiencies in that Texas ranks 43rd in the PRI "Threats" category that focuses on the litigation environment.

Why do the PRI study rankings matter?

"A poor civil-justice system acts as a burdensome tax weighing down the standard of living for ordinary citizens," the authors conclude. "Meaningful legal reform, on the other hand, will pay future dividends in the form of stronger economic growth and higher personal income. The PRI study helps to predict which states will have slower growth."

Pero sees a far-reaching impact for this new PRI U.S. Tort Liability Index along with the other two studies.

"The PRI study folds in the work of many other scholars showing that a higher ranking leads to more jobs, wage increases and growth in a state's economy," Pero says. "PRI's analysis focuses attention on the previously obscure economic impacts of state civil justice systems that need immediate reform. The U.S. Chamber Harris Poll provides a complementary scorecard revealing the performance of courts in fairly and competently applying the law in each state. The ATRA Hellholes study highlights specific court jurisdictions that need to be cleaned up. These three studies together, showing both the economist's perspective and the litigator's perspective, provide a complete picture of what's right and wrong in each state, and how the state's future economy will perform given these strengths and weaknesses."

"We fully expect these three studies will help to guide CEOs in their investment and relocation decisions, prompt competitive reforms between states in the race for jobs, and put civil justice reform front and center as a jobs issue," said Pero. "We applaud these three studies for revealing the tremendous costs imposed on consumers and employers by the trial bar-dominated civil justice systems in many states."

Full PDF copies of the PRI and ATRA Hellholes reports are available on the AJP website, as is a 10 minute audio interview with Dr. Lawrence McQuillan and links to the authors' biographies and downloadable pictures. http://www.AmericanJusticePartnership.org.

Pacific Research Institute and ATRA are AJP Partners.

The U.S. Chamber Institute for Legal Reform Harris Poll report is available at http://www.instituteforlegalreform.com.

Source: American Justice Partnership

New Study Creates Tool to Predict Future State Economies Based on Impact of Civil Justice Systems PRI in the News 5.11.2006