The Bulletin -- September 19, 2012

PA’s Legal Climate Turning Business Away

A recent survey of corporate attorneys found that a state’s legal climate is a significant determining factor in a business’s decision to locate or expand there. The survey results bode poorly for Pennsylvania’s competitiveness.

“What we found is that 70 percent of corporate attorneys say that a state’s legal environment is very important to its business interests,” said Michael Lepage of the US Chamber Institute for Legal Reform (ILR), which conducted the survey of over 1100 corporate lawyers, “and CEO’s tend to listen to counsel.”

In the survey, Pennsylvania ranked 40th in the nation, down from 34th just two years before.   

ILR and other business groups unveiled the findings at Independence Hall because, Lepage said, “Philadelphia has one of the worst legal abuse ratings of any city in the country.”

The PMA has been working with the General Assembly to enact extensive changes to the legal system. The General Assembly did approve the “Fair Share Act” in 2011, which makes a business’s damages in a liability suit more commensurate with its level of fault. But additional changes are needed. 

“Like the burden of excessive regulation, lawsuit abuse is a cost to employers that is as impactful as taxes,” said PMA Executive Director David N. Taylor. “In the ongoing competition between the states for investment, jobs, and growth, Pennsylvania must work to limit lawsuit abuse if we are going to catch up and keep up with other industrial states.  This survey points to a state-level problem, which only our lawmakers in Harrisburg can solve.”

Measures needed include:

 • Ending “venue shopping” where cases are moved to counties – primarily Philadelphia – where judges and juries are prejudiced towards plaintiffs.

• Enacting the “apology law” that would permit a medical professional to express empathy, remorse, benevolence, or sorrow without that statement being used as an admission of malfeasance or neglect.

• Creating a statute of repose that caps the time after which product liability suits can be filed.

• Protecting innocent sellers from lawsuits if they had no control over the design or manufacture of the product.

• Placing limits on non-economic damages.

“Pennsylvania stands geographically between the nation’s worst legal climate in West Virginia and its best in Delaware. Unfortunately, the state is heading more in West Virginia’s direction by allowing plaintiffs’ lawyers to ‘forum shop’ for favorable venues like Philadelphia to cash in,” said Lisa A. Rickard, President of ILR.

The study ranked Delaware (1), New York (18), Ohio (30), New Jersey (32), and Maryland (33);and all ahead of Pennsylvania.

According to the 2011 study, Creating Conditions for Economic Growth: The Role of the Legal Environment, conducted by the NERA Economic Consulting for ILR, Pennsylvania could save up to $1.7 billion in tort costs and increase employment by as much as 0.57 – 1.53% if it were to improve its lawsuit environment.

Click here to read ILR’s findings.

Reform of RACP Tops List in Fall Legislative Agenda

Scaling back the debt limit of a capital projects program (Redevelopment Assistance Capital Programor “RACP”) is the number one priority for many Republican lawmakers when members return to Harrisburg on September 24, according to a top staffer in the House Republican Caucus. “We’ve been very clear that it’s an absolute priority for us,” the staffer said. “We’re not willing to budge on it.”

The House did approve legislation last spring to gradually reduce RACP's borrowing limit from $4 billion to $1.5 billion, and make the process determining which projects receive grants more accountable.

Meanwhile, the Governor through executive order, limited RACP spending to $125 million a year, and directed priority to large regional economic development projects and post approved projects.

For his part, Senate Pro Tempore Joe Scarnati (R-Jefferson) earlier told reporters that he wants to make sure a final bill to overhaul RACP gives rural communities a chance to compete for state aid.

The General Assembly faces a tight time schedule for enacting the RACP reforms and other legislative initiatives. It plans, at most, a dozen session days before the General Elections on November 6.  And no voting days are planned in lame duck after the elections. The 2012-13 session ends on November 30.

Other measures it might consider include an initiative to put the regulation of charter schools under a statewide board. The House and Senate approved different versions of the bill before summer recess but they failed to settle differences over a provision in the charter legislation dealing with charter and cyber charter vendors and the Right-to-Know law.

Senate Majority Leader Dominic Pileggi (R-Delaware) said earlier this summer that charters would be a priority for his caucus, while House Majority Leader Mike Turzai, R-Allegheny, indicated he would be open to moving charter legislation as well.

Action on legislation that would privatize the state’s liquor system is uncertain. One Caucus source said the measure is not on the agenda but said he could not rule out some action even if it’s not complete privatization.