2017 ranking of state liability systems.
Courtesy U.S. Chamber Institute for Legal Reform

South Dakota has replaced Delaware as the No. 1 choice of in-house counsel and business executives for handling corporate lawsuits, according to a new report from the U.S. Chamber of Commerce’s Institute for Legal Reform.

The new Harris poll announced Tuesday morning at a Chamber conference in Washington, D.C., showed Vermont, Idaho, Minnesota and New Hampshire closely following South Dakota in the rankings. Delaware had been the top state in the studies for the past 15 years, but finished 11th this year.

The report suggested Delaware dropped so much because of its treatment of class action and mass consolidation suits, as well as its handling of proportional discovery. The state also angered companies when in 2015 it sided with plaintiffs lawyers and overturned “loser pays” provisions in company bylaws.

“Delaware no longer lives up to its nickname as the ‘First State,’” said a statement from ILR President Lisa Rickard. “As the competition between states to enact legal reforms gets tighter, Delaware is losing ground.”

The report ranked Louisiana as the worst state for corporate litigation, followed by Missouri, Illinois, California and Florida.

Speaking Tuesday at a Chamber business conference, Rickard said Louisiana’s low ranking was mainly due to being “home to one of the worst lawsuit jurisdictions in the country, New Orleans.”

Missouri, Rickard said, “has allowed junk science in their courtrooms, and tens of thousands of people with no connection to the state having brought lawsuits there.” She said the state passed some major legal reforms this year “and hopefully we’ll see Missouri turn itself around.”

She called California a “nightmare in just about everything for business.” Of Illinois, she simply said: “ditto.”

She criticized Florida for dropping from the middle of the rankings to an all-time low of 46th. “Florida has a problem with their judges and their laws, and an abundance of some of the most aggressive plaintiffs lawyers in the entire country,” Rickard added.

But she praised West Virginia, which still ranks a lowly 45th, for pulling itself up from the bottom of the list for the first time. Until today it has always been ranked 49th or 50th, she said.

Former U.S. Sen. John Sununu, keynote speaker at Tuesday morning’s conference, said the rankings are important because of their economic impact. Though not a lawyer, Sununu serves as an adjunct senior policy adviser at Akin Gump Strauss Hauer & Feld in Washington, D.C.

Legal reform and higher rankings can help “improve competitiveness, job growth, business climate and economic opportunity in your state,” Sununu said.

The ILR survey confirmed Sununu’s statements. Some 85 percent of respondents said a state’s lawsuit environment is likely to impact decisions about where to locate or expand their business.

Along with the survey, ILR Tuesday released its latest version of a study on how states can improve their lawsuit climates. The study, “101 Ways to Improve State Legal Systems,” lists key legal reforms that states can adopt and includes specific examples recently enacted by some states.

Participants in the Harris poll were a national sample of 1,321 in-house general counsel, senior litigators or attorneys, and other senior executives at companies with at least $100 million in annual revenue. Participants indicated they were knowledgeable about litigation matters and had firsthand, recent litigation experience in each state they evaluated.

Contact Sue Reisinger at sreisinger@alm.com.