Wisconsin employers have repeatedly said in surveys that our anti-business litigation climate is one of the most important factors affecting their expansion decisions.
Gov. Scott Walker sounded a bit defensive when signing a lawsuit-reform bill he called for during the Republican-controlled Legislature’s special January session. Walker told reporters he wanted the bill passed quickly to ease the threat of frivolous litigation, because Wisconsin has "out of control" lawsuit abuse -- and employers have made it a top complaint. We have already tackled the first part of that explanation. We gave a False ruling to a small business group’s claim that Wisconsin has one of the most anti-business injury-lawsuit systems in the country. (Wisconsin stands out on a few high-profile issues, but is generally rated middle of the pack or even better in legal-climate surveys). Addressing reporters at a Jan. 27, 2011, bill-signing ceremony, Walker elaborated on the second part of his rationale. "Time and time again on survey after survey," he said, "employers tell us that one of the most important elements when they are considering expanding and investing in the state, is what the litigation climate is." Is lawsuit reform really one of the top priorities for employers seeking a friendlier business climate? The legislative debate is over. But we thought it was worth a look back as the changes -- which critics say will harm consumer protection in injury cases -- go into effect. Walker, through spokesman Cullen Werwie, pointed us to four national surveys. One was a 2010 national poll for the U.S. Chamber of Commerce, an advocate of easing lawsuits on business. In it, 67% of lawyers for major corporations said the litigation environment is likely to affect business decisions such as where to do business. A second -- a 2007 national survey for the chamber -- found half of businesses were concerned about getting unfairly sued. In that group, 11% blamed lawsuit-related business decisions for laying off workers. The other two surveys, by private groups surveying the public and doctors, showed strong support for tort reform as part of federal health care legislation. The national surveys don’t break out any state-specific results or rank concerns about the litigation climate against the many other factors that play a role in relocation or expansion decisions. And Walker did not cite any information specifically about Wisconsin. So, we went looking for some Wisconsin data -- and what we found did not break in Walker’s favor. The most on-point data comes from the annual surveys by Wisconsin Manufacturers & Commerce, a trade group that represents 3,500 Wisconsin employers. In June 2010, 263 CEOs responded to the organization’s survey that asked executives to pick "one thing state government could do to improve Wisconsin’s business climate." The result: 1 percent named lawsuit reform. The group also did a narrower 2010 survey, of the group’s board of directors. None named it, and over the last five years just 3 percent to 6.4 percent of board members mentioned it. In a prior survey of its full membership, in 2001, the WMC did not even put tort reform on the list of possible answers to that question. In 2010, lawsuit reform tied for lowest among 10 concerns in the membership survey. Topping the wish list: reduced taxes, less regulation and cuts in government spending. The song was the same when the membership was asked to name "one thing state government could do to help your business." Lawsuit reform was a non-issue (0 percent) in most years, with a spike to 10 percent in 2004. WMC is most often associated with big business, but has a mix of members. What about small business? We checked with the state chapter of the National Federation of Independent Business. The chapter made the claim that we rated False about Wisconsin having one of the most unfriendly legal climates for business in the United States. The group’s state director, Bill Smith, said lawsuit reform is always among the five or six concerns of small businesses, but it’s hard to rank the issues. The group hasn’t polled its members specifically on it. Meanwhile, when the Metropolitan Milwaukee Association of Commerce surveys its members, it lumps lawsuit reform in with regulation, so it’s impossible to say how big an issue it is. The lessons from these surveys: Lawsuit reform is a minor concern, or at least doesn’t stand out from the pack when businesses spell out what they want from government. But worries about lawsuits and their effect on business decisions are pretty widespread. Nevertheless, the business community has made a high-profile push in recent years to get changes in the legal climate. Various business and industry organizations even formed a coalition to lobby on the issue. Business concerns grew after Wisconsin Supreme Court rulings and legislative tussles broke out with Democrats over damages and liability in negligence cases. "Once businesses get sued, they get more concerned," said Jim Pugh of Wisconsin Manufacturers & Commerce. He argues that legal reform is widely desired by business, but overshadowed by taxation and spending concerns: "You have to look beyond surveys." So where does this leave us? In trying to tie the lawsuit reforms to job creation, Walker asserted the issue is "one of the most important factors" when businesses are deciding to expand or invest in Wisconsin. That’s a major overreach. He cited a series of national surveys, which show it’s a concern but lack Wisconsin data and don’t weigh how the concern stacks up against other issues. In the surveys of state businesses we found, lawsuit reform is on the radar screen -- but a blip behind taxes, regulation and other issues. We rate Walker’s claim False.
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