The fierce competition to be the home for Amazon’s second world headquarters shows the lengths some states go to attract new businesses. States know there are jobs on the line which can boost a state’s economy and increase the tax base to help pay for public services.
What some states fail to realize, however, is the importance of a state’s legal climate when companies think about expanding or relocating.
To drive home that point, for the last 15 years, the U.S. Chamber Institute for Legal Reform (ILR) has teamed up with Harris Interactive to survey senior business executives at major U.S. companies asking them to rank the 50 states from best to worst on things such as the fairness of the state’s judges, the juries and the laws on the state’s books. First unveiled in 2002, this survey has come to be known as the Lawsuit Climate Survey.
The survey has only gained importance over the years. The 2017 Lawsuit Climate Survey showed an all-time high 85 percent of respondents said a state’s lawsuit environment is likely to impact decisions about where to locate or expand their business. ILR even made a fun video, using an impersonator of celebrity chef Gordon Ramsey, to highlight some of the report’s findings
The Wall Street Journal has said ILR’s Lawsuit Climate Survey, “sheds a useful spotlight on runaway legal systems that are causing genuine economic harm in so many states.”
But the Wall Street Journal isn’t the only organization that has used the survey as a measuring stick for state lawsuit climates. The survey has been mentioned by hundreds of media outlets, including the Associated Press, USA Today, the Washington Post and more. State lawmakers have cited the survey as a measure of success for their state’s legislatures. The survey has served as a map for states that chart a course to a better legal system, with the average score across the states rising markedly since its inception.
Take West Virginia as an example. The Mountain State ranked as having the worst or second to worst legal climate for the last 15 years, but has been passing laws to bring its legal system more in line with other states. The state’s leadership most likely understands that tort reform is an ongoing process. As a result of a multi-year effort prioritizing reform, the state’s ranking has gone up five places in the most recent survey.
West Virginia appears to be part of a national trend. The most recent survey found 47 states improved their legal environments, with the highest overall scores since the survey began in 2002.
Governors have pointed specifically to the survey to spark legislative action. Illinois, for example, has been ranked among the five worst states for the last 10 years and Cook and Madison Counties as two of the nation’s worst jurisdictions. Illinois lacks many of the commonsense laws and safeguards adopted by other states that make for a fair and predictable legal climate.
In 2015, Gov. Bruce Rauner spoke at ILR’s survey release press conference, and cited Illinois’ abusive lawsuit environment as one of the main reasons why companies tell him they won’t do business in the state. “It is devastating to many employers,” he says.
That state still has more work to do, though. Despite Gov. Rauner’s effort to enact reforms, Illinois remains stuck in the mud.
In fact, competition for the best legal climate in the country has heated up and in 2017, Delaware, which had the highest ranking in the country in every survey to that point, was knocked off its perch by South Dakota. Delaware’s reputation was likely hurt by votes in the state legislature favoring plaintiffs’ lawyers over shareholders, but fell to 11th place also because other states have just kept getting better.
ILR’s Lawsuit Climate Survey is a constant reminder to state policymakers that one of the best ways of attracting businesses is to provide a level playing field in its legal system and that tort reform is indeed an ongoing process, one that should be prioritized year after year to ensure economic development progresses over time.
This year, ILR is celebrating 20 years of being the country’s most influential and successful advocate for civil justice reform. The survey will continue to play an important role in advocating for those reforms.