Legal Wars: California’s Biggest Losers

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In its ninth annual survey, Chief Executive Magazine polled 736 CEOs, the largest number ever, about the best and worst states in which to do business. The results should make all of us less than proud–that is, unless you’re a trial lawyer. “The bottom line is that California is one of the most litigious states in the union.” We seem to forget that the enormous amount of money, paid out to trial lawyers and plaintiffs, originally was intended for vital social services and public safety programs.

The survey asked business leaders to grade states based on the following criteria: quality of workforce, living environment, and taxation and regulation. California placed dead last, the same rank it received in 2012, right behind Illinois and New York. Texas ranked No. 1, followed by Florida, North Carolina and Tennessee.

How bad is it? In California, more than one million lawsuits are filed every year. While some of these lawsuits have merit, many do not and these lawsuits are costing each and every one of us.

While legal reform might not be specifically listed as one of the issues in the survey, it was on the minds of these 736 CEOs when they responded. The legal climate is as critical to whether a business stays in a state or relocates as anything else, and a single abusive lawsuit can cost a company an enormous amount or put it out of business altogether.

Tom Scott, Executive Director of California Citizens Against Lawsuit Abuse (CACALA) did not mince words in a written comment on May 8, 2013. “If I were trying to grow a state’s economy, I would probably listen to someone who knows how to create jobs and is making decisions on behalf of shareholders, investors and employees. I think the time has come to take seriously all these various surveys that come out and rank California at the bottom or close to the bottom of nearly every category when it comes to our business climate.”

Scott said state legislators deserved part of the blame for “creating incentives for legal abuse.”

“The state of California has continued to pass law after law after law, regulation after regulation after regulation, and what it amounts to is more and more opportunities for litigation,” Scott added.

For decades we have heaped more laws and regulations on the books that have resulted in more lawsuits. While California is moving slowly in the right direction on legal reform, a lot more needs to be done.

If California is to move up the annual CEO list, it is imperative to reform its legal climate. We should be humiliated and angered that we are dead last. Call your California State representatives and senators and remind them that their job is to represent you the people, not give gifts and pay homage to the trial lawyers.

 Michael Arnold Glueck, MD, Newport Beach, is an ornery curmudgeon who has written extensively on medical-legal issues. Dr. Mike can be reached at [email protected].

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