Among the 50 states, Illinois has the worst litigation climate for business and the highest risk for lawsuits, according to a non-profit business coalition.
The rankings for best and worst states were produced by the American Justice Partnership Foundation (AJP), in collaboration with the Directorship publication.
According to the group’s “Annual Boardroom Guide to State Litigation Climates,” Tennessee is the best state for doing business.
Steven B. Hantler, AJP chairman, wrote a Directorship article listing the 10 worst states for litigation, the 10 best states, five declining states and five improving states.
He warned that companies doing business in states with positive litigation reputations should not become complacent about reforming civil litigation. Mr. Hantler pointed to the fact that 10 of the 18 states in this year’s guide with positive liability climates are trending downward at a time when tort costs continue to rise.
“To make matters worse, the American Tort Reform Association, an AJP partner, reports a surge in anti-business and pro-plaintiff legislation being introduced in most states in the country,” he wrote.
“The AJP has mobilized in key states to defeat these legislative proposals, but in view of changes in the composition of state legislatures as a result of the 2006 elections, some of this legislation will almost certainly pass,” according to Mr. Hantler.
“The plaintiffs’ bar counts on being able to take company CEOs and directors by surprise when they file major lawsuits that are based on expanded or previously overlooked state liability laws,” wrote Mr. Hantler.
“These plaintiffs’ lawyers try to create the ‘perfect storm’ by filing lawsuits with unwarranted high demands, while encouraging the news media to publicize sensational allegations of wrongdoing,” he said. “Their goal is to create severe pressure in the marketplace and thus extort companies into agreeing to settle the claims for outrageous amounts.”
The “solution,” he suggested, “is for CEOs and directors to understand the plaintiff lawyers’ playbook and how to beat them before there is a litigation crisis.”
AJP found some encouraging notes on this year’s findings. It said savvy directors and business executives should take second looks at Indiana, Ohio, Nebraska, Tennessee, Texas, Utah and Virginia, which have among the best litigation climates for business.
Illinois ’ liability climate ranks lowest, according to Mr. Hantler, because “despite successful efforts by the reform community to fend off legislative proposals favoring the plaintiffs’ bar, insurance loss ratios and monetary tort losses rank in the bottom 10 among states.”
According to the article, Illinois has been identified as the highest at-risk state for new lawsuits. It noted that ATRA has designated two “judicial hellholes” in the state: Cook County (Chicago) and St. Clair County.
Madison County was recently downgraded from “hellhole” status based on appellate court elections and the increasing frequency of rule-of law-judicial challengers in key appellate races.
Liability reform advocates have taken advantage of disarray in legislative leadership to prevent passage of two anti-reform measures. One would have reduced the degree of liability required under the state’s joint liability standard. The other would have reduced the effect of Illinois’ collateral-source disclosure rule, the article reported.
Listed as worst states were:
- West Virginia
- Rhode Island
- New York
Listed as best states were:
- North Dakota
- North Carolina
- South Dakota
Listed as improving were:
- South Carolina
Listed as declining were:
The AJP litigation risk analysis, it was explained, is intended for board directors and their advisers as they make strategic business decisions, such as where to open an office or plant.
Findings are based on AJP Foundation expertise, combined with the results of two national research indices: the Pacific Research Institute’s 2008 U.S. Tort Liability Index, and the 2008 ILR/Harris State Liability Systems Ranking.
The AJP describes itself as a national nonprofit coalition of leading corporations, think tanks, foundations, trade associations, individuals and organizations advocating for liability reform at the state level.
The group said that working with its partner organizations, AJP implements research and education initiatives in key states in support of liability reform campaigns that “have a realistic chance of success.”