Legal reform in the Lone Star State; How it works and why Louisiana needs it
It is hard to imagine, but not very long ago, Texas was described by the Wall Street Journal as the "lawsuit capital of the world."
Frivolous lawsuits and settlements were out of control. Plaintiff-friendly laws, judges and juries made it virtually impossible for defendants to get a fair trial. Meanwhile, businesses, doctors, and most importantly, jobs were leaving the state in droves.
Fast-forward from 1994 to today, and we see Texas employment numbers that paint a very different picture. According to Richard Fisher, president of the Federal Reserve Bank of Dallas, four of every 10 new jobs created in the U.S. since the recession ended are in the Lone Star State. That's a massive share of America's job growth when you consider that Texas only accounts for about 8% of the nation's economy.
What's even more impressive is data from the U.S. Bureau of Labor Statistics that shows Texas has added 732,000 private sector jobs over the past 10 years. That's seven times more than any other state. And for the seventh year in a row, Texas was ranked by CEO Magazine as the best state in the nation for business.
This transformation happened so fast it may seem like a "Texas miracle," but in reality it is much more than that.
Over the past two decades, lawmakers in the Lone Star State have made lawsuit reform a top priority—and this is the main reason cited by Fisher for the Texas turnaround. Working together to put payrolls before payouts, they enacted common sense laws to reign in excessive punitive damages for arbitrary claims such as "pain and suffering."
They brought fairness back to their courts by implementing sanctions against greedy personal injury lawyers who file frivolous suits.
They put new rules in place to prevent venue shopping for friendly judges.
And under new offer-of-settlement or "loser-pay" legislation recently passed in the 2011 session, Texas litigants will be forced to consider the practicality of their complaints before taking legal action because they now face the threat of paying for the other party's attorney fees if their case is found to be groundless.
Because of these and many other legal reforms, Texas has become a jobs machine. As Governor Rick Perry recently noted, employers in the Lone Star state "spend less time in court and more time creating jobs." This has become especially important in the aftermath of the Great Recession.
While the nation is struggling to put nearly 14 million people back to work, Texas is thriving. Unemployment is down, new job creation is up, and businesses are open. This is a model from which Louisiana could learn a lot.
Long known for its lax laws and plaintiff-friendly courtrooms, Louisiana seems to be attracting more personal injury trial lawyers than jobs these days. With nearly 18,000 attorneys now living and working in the state, Louisiana has one lawyer for every 256.3 residents, a ratio that is higher than 40 other states.
Coupled with this excessively high resident-to-lawyer ratio is an increasing number of lawsuits in Louisiana courts. According to the most recent data from the state Supreme Court, civil filings in city and parish courts shot up from fewer than 73,000 to nearly 90,000 between 2006 and 2009. That's a 24 percent increase in statewide civil filings over the period—a disturbing trend that we must address. Clearly, litigation is a growing industry in Louisiana, but it does not represent the kind of business we want to grow.
Like our neighbors to the west, we need to adopt an aggressive pro-growth, pro-jobs agenda that will help stop lawsuit abuse and help businesses put people back to work. Common sense reforms to put an end to venue shopping and curb fraudulent asbestos and silica claims have helped strengthen the Texas economy, and they can work in Louisiana too.
We just need to ask ourselves: Do we want more jobs or more lawsuits?
The upcoming campaign season in which all lawmakers are up for election or reelection offers a unique opportunity to bring new leaders to the Louisiana House and Senate.
Louisiana Lawsuit Abuse Watch and the Coalition for Common Sense will be working together and with numerous other community groups to educate candidates and voters about the negative impact that meritless lawsuits have on Louisiana jobs and families. We hope you'll take the time to find out where your candidates stand on the fight for legal reform and cast your ballot on Election Day.