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The passage of laws that curb abuses in Texas’ civil justice system has made the state attractive to business, but the state should consider additional reforms, such as limiting attorneys’ contingent fees, according to a report released this month. The Pacific Research Institute (PRI) ranked Texas first among the 50 states in its “U.S. Tort Liability Index: 2006 Report” because Texas has passed a number of tort reforms in recent years. “Texas has definitely led the nation in terms of legal reforms in so many different areas,” Lawrence McQuillan, a co-author of the PRI report, said at a May 15 news conference in the state Capitol. California-based PRI is a nonprofit, nonpartisan think tank that develops and proposes public policy solutions based on free-market ideals, according to its Web site. Texas Gov. Rick Perry and a group of state legislators and tort reform leaders joined McQuillan at the news conference for a presentation on the report, which links tort reforms with the health of a state’s economy. The PRI’s report “is the best evidence yet that lawsuit reform in Texas is improving health care, it’s protecting jobs and it is strengthening our economy,” Perry said. But while Texas ranks first in the PRI’s report, the state has not completed the job of overhauling its tort system, McQuillan, the institute’s director of business and economic studies, warned. McQuillan said Texas ranks at the bottom on seven variables that PRI considered in the study. To determine the rankings for its report, PRI compared each state with the other 49 states on 39 variables grouped into five categories: monetary tort losses; threats; caps on appeal bonds and damages; substantive-law rules and reforms; and procedural or structural rules (and reforms. As noted in the report, the American Tort Reform Association declared two areas of Texas � the Rio Grande Valley and Gulf Coast region � “judicial hellholes” in 2005. “Judicial hellholes are defined as regions where personal-injury lawyers specifically seek to have trials conducted because they expect an excessive verdict or excessive settlement, a favorable precedent, or both,” according to the report. The institute also tracked whether a state has limits on attorneys’ contingent fees, a reform Texas has not enacted. As noted in the report, Illinois limits contingent fees by using a sliding scale ranging from one-third to one-fifth of an award, depending on the total recovery, while Oklahoma strictly limits contingent fees to 50 percent of a plaintiff’s recovery. During a question-and-answer session at the news conference, Perry said it’s too early to talk about whether a cap on attorneys’ contingent fees would be proposed in the upcoming legislative session. However, he did not rule out the possibility that such a proposal would be introduced as legislation. “We certainly would not take it off the table as a legitimate issue of debate,” Perry said. State Sen. Robert Duncan, R-Lubbock, who played a key role in tort reform efforts in the Legislature over the past decade, says in an interview that he thinks legislation will be introduced in the next session to limit lawyers’ contingent fees. But Duncan, a partner in Crenshaw, Dupree & Milam, predicts that such a measure would not gain momentum in the Legislature. “Putting price controls in the legal system probably isn’t warranted,” Duncan says.
Have a comment about this story? We want to hear from you . Your comments will be posted at the end of this story. Editor’s Note: Texas Lawyer reserves the right to post comments that are deemed appropriate for this forum. Please include a name and location with your comments, along with the story’s headline.

Marc R. Stanley, president of the Texas Trial Lawyers Association, says tort reformers tried unsuccessfully in the 1995, 2003 and 2005 legislative sessions to pass limits on attorneys’ contingent fees. “I don’t think there’s any appetite for it,” says Stanley, a partner in Dallas’ Stanley, Mandel & Iola. Stanley says Texans hold sacred the right of private parties to enter into business contracts. Texas Watch, a nonprofit organization that has opposed tort reforms in the past, contends in a news release that it’s not surprising Texas tops PRI’s list for protecting special interests, because the institute receives a major portion of its funding from oil companies, drug companies and the tobacco industry. “If you believe corporate accountability is a quaint notion best exploited for a marketing campaign, then come on down,” Alex Winslow, a spokesman for Texas Watch, says in the release. PRI spokeswoman Susan Martin says the institute receives 60 percent of its funds from foundations, 20 percent from corporations and 20 percent from individuals. She says, “The institute’s policy is donors don’t have any input into the analysis or interpretation of research or the writing of any publications.”

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