Across the country, business executives, senior attorneys and general counsel consistently view Indiana’s legal climate as among the best for businesses out of all 50 states.
That’s according to the U.S. Chamber of Commerce Institute for Legal Reform’s 2017 Lawsuit Climate Survey, a biannual report that ranks each state in terms of the perceived fairness and reasonableness of its liability system. In the 2017 study, which surveyed roughly 1,300 business leaders and attorneys, Indiana was ranked 15th nationwide, earning a score of 71.9 out of a possible 100. That’s up from the last survey in 2015, when Indiana ranked 18th overall.
The survey asked participants to give each state an A to F grade in 10 individual categories: venue requirements; treatment of tort and contract litigation; treatment of class actions/mass actions; damages; proportional discovery; scientific and technical evidence; trial judges’ impartiality; trial judges’ competence; juries’ fairness; and quality of appellate review. States’ scores in those categories were then compiled to find their overall ranking. Indiana placed in the top 20 for each of those individual categories, earning spots in the top 10 for treatment of tort/contract litigation and damages.
Nationwide, the survey shows the overall litigation environment is perceived as improving, with 63 percent of respondents viewing state court liability systems as excellent or pretty good, up from 50 percent in the 2015 survey. Glenn Spencer, vice president of state government affairs at the Institute for Legal Reform, credits that perceived improvement to tort reform litigation that has made its way through legislatures across the country in recent years.
Spencer also praised Indiana’s rules regarding discovery, noting that Indiana’s courts generally don’t allow plaintiffs’ lawyers to request “massive amounts of documents not pertinent to the case in question.” The Hoosier state ranked 14th in the “proportional discovery category” in this year’s survey.
However, that ranking was slightly down from the 2015 survey, when Indiana was considered the 11th best in terms of discovery. To that end, Erin Roth, senior vice president, general counsel and secretary of industrial manufacturer Wabash National Corp. in Lafayette, said the state must continue to monitor and refine its discovery rules. Especially in the digital age where huge amounts of data can be easily accessed, Roth said it is becoming increasingly important for judges and litigators alike to be mindful of how much discovery is truly necessary to provide adequate representation in a case.
Commercial court benefits
Aside from an assessment of each state’s overall litigation environment, the U.S. Chamber’s Lawsuit Climate Survey looks at how attractive each state’s litigation system is to current and prospective business. Both Roth and Kevin Brinegar, president and CEO of the Indiana Chamber of Commerce, credited the introduction of Indiana’s commercial courts — which were designed to better facilitate the process of business-related litigation — as part of the reason why the state’s overall ranking improved.
In the past, businesses had been dissatisfied with how their cases were handled in Indiana, Brinegar said, noting complex cases could get bottled up as trial judges also worked through cases on their docket related to entirely different areas of the law, such as divorce. But with the commercial courts, judges are trained to handle the unique nuances of business law, making it easier for those cases to be resolved efficiently and effectively, he said.
Roth agreed and offered specific praise for how the commercial courts have improved the timeliness of resolution of business litigation. Further, there is a perception within the business community that Indiana’s courts, at all levels, have lost their expertise in that sort of litigation, but commercial courts are helping to improve that perception, she said.
“We used to have a large number of judges at all levels that did spend some period of time within the business world,” Roth said. “… Some of that’s been lost, and until we’re able to replenish some of the judicial bench with that expertise, having commercial courts that do have judges that are really diving into these issues … will help with that perception.”
Power of perception
It’s imperative to a state’s business development that business executives and general counsel such as Roth have a positive perception of its legal environment, as that environment could make or break a business’s decision to continue or open operations in a state. In fact, according to the 2017 survey, 85 percent of respondents indicated it was either very likely or somewhat likely that a state’s litigation environment would impact important business decisions, a result that didn’t surprise Brinegar or Roth.
A state’s legal reputation is very likely to be a site-selection factor when a business is choosing where to house its operations, Brinegar said. Though other factors such as the available work force or access to natural resources might be more important, a state that has a negative legal reputation among the business community could be marred by that public perception, he said. He pointed to notoriously difficult venues such as East St. Louis and most of Illinois — which were each ranked in the survey among the 10 worst legal environments for businesses — as evidence.
Even companies with deep Indiana roots can base their decisions around the state’s litigation environment. For example, at Columbus-based Cummins Inc., the reputation of certain venues can influence whether the company chooses to move forward with litigation in that particular venue, said Shiv O’Neill, Cummins senior counsel of global litigation. However, because of Cummins’ strong ties to the Hoosier state, Indiana’s litigation environment isn’t likely to influence the company’s decision to continue its Indiana operations, O’Neill said.
Room to grow
No Indiana venues were included on the list of worst legal environments, an achievement underscored by the fact that Indiana has been ranked in the top 20 each time the U.S. Chamber has conducted this survey. Aside from commercial courts, Brinegar credited the state’s nonpartisan method of selecting appellate judges as a reason for the state’s positive perception, while Roth pointed to the fact that judges tend to rule within the “realm of predictability” and do not issue many “outlier” opinions.
However, when the Lawsuit Climate survey was completed in 2010, Indiana was named the fourth best state in the country, a rank it has yet to repeat. In fact, the state has never again returned to the top 10, instead coming in at 14th in 2012 and 18th in 2015.
To get back into the top 10, Spencer suggested legislative reform could help the state improve its nationwide perception.
He specifically pointed to Senate Bill 236, a bill introduced during the 2017 legislative session that was intended to increase transparency in civil asbestos actions. That bill, which was authored by Sen. Susan Glick, R-LaGrange, did not make it out of the Civil Law Committee, so Spencer urged the General Assembly to take another look at that topic during the upcoming session.
Though Indiana fared well on the 2017 survey, O’Neill noted it’s important for the state to take the feedback from the results and apply it toward a plan for improvement.
“Studies like this are important because they help us have some perspective on where we rank and what are good venues and what are bad venues,” she said.•