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Wednesday, January 15, 2020

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A path to improving Louisiana’s job base and struggling economy

A path to improving Louisiana’s job base and struggling economy

A newly released report from Chief Executive magazine on the Best and Worst States for Business brings additional news confirming what we already know: Louisiana’s national reputation as a “judicial hellhole” is costing our state thousands of jobs at a time when we need them most.

After ranking in the Top 10 best states for business in recent years, Louisiana tumbled to No. 37 and now ranks among the worst 15 states in the country. CEOs participating in the magazine’s survey directly attributed the state’s dramatic fall to high tax rates and excessive litigation. One CEO even described our state’s legal climate as “awful.”

This is not the reputation we want to have with executives who can bring billions of dollars in new investments, increase job opportunities for struggling workers and lower costs for working families. If we want to change this perception, we have to shut down the Louisiana lawsuit lottery.

For years, a select group of personal injury attorneys has routinely abused our courts with meritless claims, seeking jackpots instead of justice. We find overwhelming evidence of this in newspaper headlines highlighting ridiculous lawsuits and in the millions they spend on billboards and TV ads promising hundreds of thousands of dollars to plaintiffs who want to get rich quick.

Now, it seems the litigation threat is coming from the highest levels of state government. The governor recently raised eyebrows by intervening in dozens of parish lawsuits that were cooked up by one of his biggest campaign supporters that just so happens to be a trial lawyer who specializes in suing the oil and gas industry.

Some describe the effort as a shameless money grab, while others see it as outright extortion. Either way, these job-killing practices must stop if we want to make our state more competitive and help working families.

Louisiana is in a recession. Revenue collections are down, economic growth is virtually non-existent, and a staggering 6.3 percent of our workers are unemployed.

In response, the governor and lawmakers have raised sales taxes and passed dozens of other new taxes that will extract more than $3.5 billion from individuals and employers over the next five years.

Unfortunately, this prescription will not put us on a path to prosperity. In fact, the dangerous combination of higher taxes and excessive litigation will only further undermine our economic competitiveness.

There is no doubt that the proliferation of meritless lawsuits is suffocating our state’s already struggling business environment by further increasing the cost of doing business in Louisiana.

From legal defense costs, to the time spent away from business operations, to the lost opportunity to reinvest in equipment or hire a new employee — the costs of excessive litigation are real. Simply put, the more time and money employers spend on fighting frivolous lawsuits, the less time and money they can spend on creating jobs.

Obviously, if a business is responsible for damage or injury, it should be held accountable for its actions. But too often lawsuits against small businesses and employers in Louisiana seem to be motivated by money, rather than merit. That’s bad for our economy.

A national economic study estimated lawsuit abuse costs Louisiana thousands of new jobs every year. Furthermore, an improved litigation climate could increase employment in our state by as much as 3 percent and help Louisiana businesses save billions in unnecessary legal costs.

The math on this is simple—bad lawsuits cost good jobs. Until we get serious about passing common sense legal reforms, lawsuit abuse will continue to be one of the largest impediments to creating jobs and growing Louisiana’s economy.

Melissa Landry is executive director of Louisiana Lawsuit Abuse Watch (LLAW), a grassroots legal watchdog dedicated to improving the state’s legal climate.

Executive Director
Louisiana Lawsuit Abuse Watch
Baton Rouge, LA