Colorado’s overcrowded courts and rules governing non-economic damages have lowered the state’s ranking for tort reform.
According to the U.S. Chamber of Commerce’s state liability systems ranking study, Colorado slipped from eighth to 21st — a drop that surprised Will Temby, president of the Greater Colorado Springs Chamber of Commerce.
“Tort reform is something businesses look at heavily,” he said. “If a state is friendly to personal injury lawyers that increases the cost of doing business for all of us.”
The study, produced by the Harris Poll for the U.S. Chamber, serves as an indication about attitudes in the business community regarding the changing political and judicial climate in Colorado and throughout the nation.
The drop moves Colorado to the “moderate” list. But a single year’s rankings should not worry business owners, said Mike Goess, chairman of the business division at Regis University’s Graduate School.
The rankings could be affected by large settlements in a few cases, he said.
In general, Goess said, Colorado’s legal environment is friendly toward businesses.
“Our rules on non-economic damages haven’t changed,” he said. “So I’m suspicious of that being a reason for the lower ranking — it’s probably just an issue of perception.”
Lawyers with experience in state courts ranked Colorado highly for its rules of scientific and technical evidence, as well as the impartiality of the court system. But the state ranked 25th nationally for timeliness of courts to act on motions of summary judgments or dismissals and 26th for rules governing non-economic damages.
Small businesses, in particular, feel pressure to settle or not pursue a case in court when plaintiff’s counsel can use long court dockets and threats of excessive damage as leverage, said Jeff Weist, executive director of the Colorado Civil Justice League.
“Colorado’s courts are overworked and understaffed; this perpetuates an ever-worsening spiral of needless and questionable litigation slanted against defendants,” he said. “Business and political leaders alike should be alarmed about our state’s significant slip in the U.S. Chamber study.”
Overcrowded courts were addressed by the state Legislature, when House Bill 1054 passed April 27. The bill adds 63 judges statewide during the next four years.
Goess said that when he was a practicing attorney he encouraged clients to settle civil litigation cases. The backlog in the courts was only one reason — the uncertainty behind jury verdicts is another.
“Civil cases are very expensive to litigate,” he said. “And they are expensive to lose. Businesses want to locate in a jurisdiction where prospects are more favorable, where there’s less risk.”
Colorado ranked 15th in overall treatment of tort and contract litigation, 17th in enforcing meaningful venue requirements, 21st in treatment of class action suits and mass consolidation suits, and 21st in punitive damages. Its other rankings were 24th for discovery rules, 25th for judges’ competence and 20th for juries’ predictability.
Overall, there has been improvement in how senior attorneys view the state court liability system, with a net increase of 25 percentage points between 2003 and 2007 among those indicating the system is excellent or pretty good.
According to the study, 57 percent of major businesses say that the litigation environment in a state is likely to affect business decisions, such as where to locate or do business.
The respondents also were asked to name the most important issues that state policy makers should focus on to improve litigation environments. Reform of punitive damages was the top issue, followed by timeliness of decisions, tort reform in general, elimination of unnecessary lawsuits, caps or limits on jury awards, and caps on non-economic damages.
The best thing a state can do to attract business is to have a balanced legal system,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce. “An unfair legal system sucks the life out of a state’s economy. It affects business expansion, it affects jobs and it takes money out of consumers’ pockets.”