New Jersey’s legal environment is one of the worst in the nation for a business defending itself against a tort lawsuit, and the climate can stunt a state’s job creation and economic growth, a trade group heard.
The claim was made at a New Brunswick forum organized by the Trenton-based New Jersey Lawsuit Reform Alliance, which seeks a reform of the state legal system.
Speaker Lawrence J. McQuillan, senior fellow at the San Francisco-based Pacific Research Institute, which promotes free-market solutions to problems, said New Jersey has some of the highest tort-related costs in the nation.
State courts awarded $8 billion in tort awards in 2006, the sixth highest in the country, he said. That gave New Jersey the second-highest awards total when the states were adjusted for population and level of economic activity, he said.
“Like everything else that New Jersey does to attract and retain businesses, our civil justice laws, our tort laws, need to be comparable with other states,” said Marcus Raynor, the alliance’s executive director, on Wednesday.
“They need to be unbiased and fair to both plaintiffs and defendants,” he said. “What Dr. McQuillan’s work shows is that New Jersey is definitely a place where businesses do not want to get sued, because our tort laws are unbalanced – they are too plaintiff-friendly.”
Still, McQuillan also said the state had the 12th-best tort rules, according to a report used by McQuillan at the forum Tuesday, which called the state’s rules “salvageable.”
He quoted consultant McKinsey & Co. saying that tort costs are second in importance only to the quality of the area workforce for companies looking for a place in which to expand.
McQuillan also said a good tort system makes a state’s economy and tax base more robust and resilient to economic downturns, and can help the earnings growth of the workforce.
“It’s a big issue” for businesses, said McQuillan. “Because it only takes one verdict against you from a crackpot jury that renders you bankrupt. I think it is constantly on the radar of businesses.”
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