It’s no secret that Louisiana’s legal system does its economy no favors.
It ranked as the worst in the nation in ILR’s Ranking the States: 2017 Lawsuit Climate Survey. It has never ranked higher than 47th in the survey’s history, which dates back to 2002.
A new study found that tort costs in Louisiana equated to 2.9 percent of its 2016 GDP, which is the seventh-highest figure in the country. That study also found that Pelican State households paid $4,015 each into the tort system that year, putting them in the top ten.
Driving those numbers are the plaintiffs’ lawyers who continue to rack up the lawsuits and through new creative ways. We already know about the billboards, but now they even pitch local governments to sue. Look no further than the lawsuits filed against the energy industry by private lawyers on behalf of local parish governments.
Interestingly enough, those lawsuits don’t appear to be popular among the state’s residents. Plaquemines Parish was one such local government that hired private lawyers to sue energy companies. A recent survey found 57 percent of its residents said they don’t support lawsuits against those companies, who either directly or indirectly support the jobs of over 262,000 people in the state. That didn’t stop the private contingency fee lawyers and some ambitious local politicians from signing them up, though.
So who are the real winners from this lawsuit rush? Lawyers, for one, who stand to make tons of money. When private lawyers represent local governments on a contingency fee basis, the “lawyers’ interests in collecting settlement payments for their clients may not fully align with those municipalities’ own interest.” They only get paid if they win or settle. If they’re the ones in the room negotiating, whose interests do you think are on their minds?
Neighboring states, whose economies look much more attractive than Louisiana’s, also stand to benefit from all the lawsuits. According to the 2017 Lawsuit Climate Survey, 85 percent of senior corporate attorneys and executives think a state’s lawsuit climate is likely to impact important business decisions, like where to locate and hire.
That figure, and Louisiana’s lawsuit climate ranking, could help explain why the state ranked 45th in job growth last year. It could also help explain why Texas, Louisiana’s neighbor, ranked fifth. Innovations in the lawsuit industry don’t seem to equate with employment growth.
It isn’t just job growth that highlights the huge differences between Texas’ legal system and the lawyer-fueled one in Louisiana. Louisiana had the ninth-most lawyers per capita in 2017, while Texas only had the 23rd-most. That could also help explain why Louisianan households paid $4,015 each into the tort system in 2016, while Texans paid only $3,535 each.
We’ve already seen how lawsuits have turned Sportsman’s Paradise into a litigation nightmare. Now we may be seeing how they’re stunting job growth.
Louisiana lawmakers still have time to act, but must do so quickly. To start, they can consider legislation similar to a recently enacted Texas law that brings transparency to the process by which private lawyers sue on behalf of local governments. This could be beneficial to a state in which these lawyers are bringing unpopular lawsuits against its most significant industry.
Despite a loss in their most recent meeting on the gridiron, it’s been LSU that’s gotten the better of Texas A&M over the past handful of years. If Louisiana wants to replicate that success in the job market, though, it better take action soon.