Ryan Waal Mar. 10, 2016, 11:00am


NEW ORLEANS - A September 2015 study by the U.S. Chamber Institute for Legal Reform ranked Louisiana as the second worst state for litigation against businesses, with New Orleans ranking as the fifth worst city.

The reason cited: an inefficient, out-of-control liability system marked by sluggish judgments, biased and incompetent judges, and poorly selected juries—three areas where Louisiana is ranked the absolute worst in the nation.

Startling statistics like these have propelled the Pelican Institute for Public Policy, a non-partisan research and educational organization with libertarian leanings, to advocate for comprehensive tort reform in Louisiana.

A November 2015 article for the institute’s Pelican Post by contributor Margaret Mire examines various aspects of the problem, claiming the state’s current liability system creates excessive litigation and, as result, excessive insurance premiums for Louisianans.

“A poor legal climate is a trial lawyer’s heaven and a defendant’s…hell," Mire wrote. "In Louisiana, trial lawyers can expect to win huge settlements and insurance companies can expect to pay huge settlements.”

Mire said insurance premiums are increased by the risk of litigation in Louisiana, a risk that not only makes coverage more expensive, but also inhibits job growth.

“Businesses are less likely to open and expand out of fear they will be facing frivolous lawsuits and expensive settlements," she wrote.

The link between liability overreach and economic health has been widely examined in recent years. A 2011 working paper—also published by the U.S. Chamber Institute for Legal Reform—claimed that a mere 10 percent decrease in commercial and personal taxes made possible by tort reform could result in a 5.8 percent increase in employment and a 2.5 percent increase in business activity.

For Mire, the extent of the economic damage is severe enough that comprehensive tort reform has become a necessity. 

“If Louisiana wants to lower its cost of living, attract more businesses and ultimately improve its economy as a whole, tort reform is necessary," she said. 

Four key areas of potential reform are outlined in Mire’s article: stricter venue requirements, increased jury trials, caps on non-economic damages and restrictions on legacy lawsuits. The first two, she claims, would reduce the number and size of settlements awarded from biased or incompetent judges.

“[A] plaintiff-favoring judge probably isn’t too hard to find [in Louisiana],” Mire wrote, adding that “trial lawyers likely have a pool of judges that tend to over-award plaintiffs out of ignorance.”

For her third suggestion, capping non-economic damages, Mire suggests Louisiana adopt the American Legislative Exchange Council’s proposed cap of $250,000, which she says would go a long way toward reducing premiums.

Her fourth proposal regards legacy lawsuits, in which landowners seek damages for pollution and contamination to their property as a result of reckless or negligent action by oil and gas companies. Mire argues that these suits, which can be filed without evidence, cost companies millions and have led many to leave the state.

Not all policy analysts agree on the severity of tort excess. The Center for Justice and Democracy, a New York-based consumer organization focused on civil justice, published a briefing book in January that claimed only 7 percent of state civil cases are tort-related and that most result in “modest awards” of less than $5,200.

While some contest that tort reform is blown out of proportion, Mire insists that Louisianans deserve a more hospitable legal and economic climate.

 “These simple reforms are nothing radical," she concluded. "They would simply bring Louisiana up to speed with the rest of the nation.”

Organizations in this Story

Pelican Institute for Public Policy
643 Magazine Street
New Orleans, LA 70130

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