(May 16, 2008) California’s legal system continues to rank in the bottom tier in an annual assessment of state legal environments.

California ranked 44 out of 50 in the “Lawsuit Climate 2008: Ranking the States,” conducted by Harris Interactive for the U.S. Chamber Institute for Legal Reform and released on April 23.

California moved up one spot from 2007, when it ranked 45th.

Attorneys with Experience

For the study, Harris Interactive, a leading non-partisan market research firm, asked 957 attorneys representing business (most of whom had on average, 20 years of experience, including more than nine years in their current positions) to evaluate up to five states in which they were “very” or “somewhat familiar” with the litigation environment.

Survey respondents assigned each state a letter grade for each of 12 factors, ranging from overall treatment of injury/damages and contract litigation to the competence and impartiality of judges.

The survey results underscore the need for California Chamber of Commerce efforts to promote balance and stability in the state’s legal system, including compliance with disability access laws, punitive damages, class action lawsuits and arbitration.

Frivolous Lawsuits

A separate survey of California business owners, released on April 21, found that 88 percent believe frivolous lawsuits are a serious problem.

The survey, conducted by Virginia-based Public Opinion Strategies for the U.S. Chamber, found 59 percent believe the number of unfair lawsuits against businesses in California will increase over the next five years and 73 percent say California should enact new laws to help protect business from unfair and frivolous lawsuits.

Impact on Economy

The California business owners in the Public Opinion Strategies survey reported raising prices, limiting the types of products sold, reducing employee benefits or laying workers off in response to their concerns about frivolous lawsuits.

Of the 250 business owners surveyed, 85 percent were small businesses with fewer than 20 employees.

Other studies have shown the direct correlation between a healthy legal climate and a healthy economy. In a 2002 U.S. Chamber study, for example, economists found that per capita state gross domestic product rises 0.75 percent for every 10 percent improvement in a state’s legal climate ranking.

Staff Contact: Kyla Christoffersen

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