Has Illinois become the "Land of Lawsuits"? The Washington, D.C.-based Institute for Legal Reform thinks it has.

For the fifth year in a row, the nonprofit organization funded by the U.S. Chamber of Commerce has placed Illinois near the bottom in its annual ranking of states' reputations for "legal fairness." This year, Illinois is No. 45 -- one notch higher than its 2005 ranking.

The report and others like it have fanned the flames of an ongoing -- and very public -- feud between trial lawyers and business groups over perceived shortcomings of Illinois' legal system.

"Their conclusions are self-serving statements in support of an agenda to take over the court system," Keith Hebeisen, president of the Illinois Trial Lawyers Association, said in response to the Institute's latest report, which it released in March. Hebeisen said the survey was not "intellectually honest" and that its conclusions were not grounded in fact.

Doug Whitley, president of the Illinois Chamber of Commerce, said the perception among corporations that certain states -- including Illinois -- are unfriendly to business could have harmful consequences for residents. Lawyers' actions and judges' rulings are to blame for the loss of thousands of jobs in Illinois, Whitley said, and have placed companies between a rock and a hard place: Do business in Illinois and risk being hit with costly and frivolous lawsuits.

"Illinois' business climate has backslid significantly in recent years,"

Whitley said. "It's a reflection of the cost of doing business that is absorbed by customers or shareholders when companies are faced with huge litigation expenses."

Both sides firmly believe they are right. Both point to facts and figures they feel bolster their arguments. And neither side appears to have much patience for the allegations of the other.

Findings

The Institute for Legal Reform's study is one of a trio of reports released within the past six months blasting Illinois' court system.

The Institute's 2006 "State Liability Systems Ranking Study," -- along with the American Tort Reform Association's "Judicial Hellhole" report from December, 2005, and the "U.S. Tort Liability Index," released in mid-May by the California-based Pacific Research Institute -- each contend that Illinois has among the worst legal climates in the country for tort litigation.

The reports comprise a concerted effort by the business community to nudge judges, lawyers, and lawmakers -- "the powers that be," Whitley calls them -- to acknowledge what businesses perceive to be rampant unfairness in Illinois' court system.

"We have a bad image that sends a signal that is negative for investment,"

Whitley said. "We didn't get this reputation overnight, and we're not going to get out of it overnight."

The Institute for Legal Reform, founded in 1998, polled a national sample of in-house and other corporate lawyers for their views on state legal systems.

Conducted by Harris Interactive, the poll asked lawyers who were "very or somewhat familiar" with the litigation environment in a given state to evaluate that state in a variety of areas. Those areas included:

• enforcement of "meaningful" venue requirements;
• overall treatment of tort and contract litigation;
• treatment of class action and mass consolidation suits;
• punitive damages;
• discovery;
• judicial impartiality and competence; and
• juries' predictability and fairness.

"It's a subjective kind of evaluation," Whitley acknowledged. "It's almost a public opinion poll of a particular class of American citizens who happen to be general counsel for large corporations."

Hebeisen was more blunt. "They're only surveying one side of the issue," he said. "The poll is a self-fulfilling prophecy, with huge corporations saying, `We don't like certain states because we're held accountable there.' What do you expect them to say?"

Illinois ranked in the bottom five in two areas -- for having and enforcing "meaningful" venue requirements, and for punitive damages -- and in the bottom 10 for all the others. Its highest ranking in any area was No. 43 -- for judicial competence.

The first year the Institute conducted the study, Illinois ranked 34th, and has slid lower in the rankings each year. Tom Donohue, president of the U.S.

Chamber of Commerce, attributed Illinois' small leap from 46th to 45th to "some good rulings by the state supreme court, as well as changes brought about by the business community's bright spotlight on the abuses in the legal system," he said in a statement.

The PRI index ranked Illinois 32nd nationwide for its tort system. The study ranked each state according to its score in five groups of variables, including monetary tort losses, monetary caps, and reform of substantive and procedural laws.

The report labeled Illinois one of five "sinners" in tort liability -- as opposed to being a "saint" or a "salvageable" -- and speculated that Illinois is "poised to fall in future rankings" because of its "relatively high monetary tort losses" and because it has enacted few "comprehensive" reforms, the report stated.

Whitley's group claims to have an "aggressive, multifaceted approach" to tackle its problems with Illinois' court system.

He ticked off a list of tactics: "Public opinion, outreach through communications, advertising, judicial electioneering, trying to change the state 's laws and a public awareness campaign. But more than anything else, we're trying to get the members of the legal community -- whether they be judges or lawyers -- to recognize that their fraternity has problems," he said.

Lawyers respond

Not surprisingly, the findings of the reports do not sit well with some trial lawyers and judges.

Part of ATRA's "Judicial Hellhole" label for Cook County stemmed from an alleged failure to transfer cases to the appropriate jurisdiction when necessary.

But the allegation that Cook County is a destination for "litigation tourism" -- a catchy phrase the organization uses to describe forum-shopping by plaintiff attorneys for jurisdictions they think will be sympathetic to their claims -- rankled Cook County Circuit Judge William Maddux, the presiding judge of the Law Division.

So he went to the numbers.

Based on figures from the Clerk of the Court's Office, Maddux found that in2005 alone, judges granted 63 percent of the motions to transfer under the doctrine of forum non conveniens. The average percentage of motions granted since 2000 was 54 percent, according to figures Maddux compiled.

"You go right to their statistics, and the things they think are true are not supported by facts," Maddux said of the tort reform groups' methodologies.

Also noting the "Judicial Hellhole" report's accusation that Cook County is unfriendly to corporate parties in jury verdicts, Maddux found that in 2005, verdicts were split 50-50 between plaintiffs and defendants. The average from 2000 to 2005 was 55 percent in favor of plaintiffs.

Maddux said he hopes to take his fact-finding one step further this summer, when he plans to hire externs to research the court systems of the states ranked highest by the Institute: Delaware, Nebraska, Virginia, Iowa, and Connecticut.

The implication that Illinois courts are clogged with frivolous lawsuits also bothers Maddux. "If they are truly frivolous, virtually all of them are gone before very long," he said. "Nobody ever [collects] the statistics about frivolous cases and their dismissal....There is the publicity of the filing, and then you never hear anything after that."

Lawsuits and jobs

According to the Institute for Legal Reform, 70 percent of the lawyers polled in its survey said the litigation environment in a state could affect "important business decisions" at their companies, such as where to locate or do business.

"That statistic does not bode well for Illinois, a state in which nearly 200,000 manufacturing jobs have been lost in the last five years," the report stated.

"Nobody buys that argument," Hebeisen said, refuting the claim that expensive litigation costs Illinois jobs. "Everybody knows the reason why we have a loss of manufacturing jobs is not because companies are moving to Indiana or Wisconsin or Ohio. These companies are going to Mexico, China, and India, because in those countries those corporations can pay pennies on the dollar for what they pay people here."

Whitley acknowledged that he was not aware of any direct link between Illinois' court system and job losses in Illinois. "I don't think I've seen anything that directly relates litigation to job loss," he said. "But I would acknowledge it as being one of the components that increases the cost of doing business."

In February, several Republican state lawmakers invoked a similar argument when they introduced six bills collectively known as the "Civil Justice Reform Package." The proposals are designed to "restore fairness and promote job creation in Illinois" and end "lawsuit abuse," according to a statement released by the General Assembly when the bills were introduced.

The bills would:

• place limitations on where a civil action may be filed;
• restrict class-action lawsuits to the court within the county where the defendant's principal place of business is located, where a plurality of plaintiffs live, or where the cause of action occurred;
• make each defendant responsible for the percentage of the total damage award;
• allow a defendant in a jury trial to request a two-part trial in any case where punitive damages are possible;
• establish new criteria for expert witnesses; and
• in asbestos cases, allow defense lawyers to present evidence of other sources of asbestos the plaintiff was exposed to.

All of the bills are still pending in committee.

Frederick Krebs, who is president of the American Corporate Counsel Association, said Illinois lawyers and jurists would do well to heed the warnings of the various reports. "These kinds of surveys do have an impact," said Krebs, who used to work at the U.S. Chamber of Commerce many years ago.

"Jurisdictions ignore this sort of thing at their peril," Krebs continued.

"You can't ignore it if you get to the point where it's perceived that you are extreme....In the long run, it will cause you problems."