Report shows lawsuit reforms boost local economy

Marilyn Tennissen Apr. 28, 2008, 9:00am

More than a billion dollars have been added to the local economy and more than 8,000 jobs have been created in Southeast Texas thanks to lawsuit reforms, a national economist reported Monday.

"Lawsuit reform has led to improvements in the Texas business climate that have generated hundreds of thousands of jobs," economist Ray Perryman stated in a press release. "Approximately 8.5 percent of Texas' economic growth over the past decade is the result of lawsuit reform."

The report released April 28 shows lawsuit reforms enacted in Texas since 1995 have resulted in $1.75 billion in annual spending in Beaumont-Port Arthur and 8,308 permanent jobs.

According to the report, statewide annual spending increased $112.5 billion and 499,000 new permanent jobs were added along with a $2.6 billion increase in state tax revenue.

"A Texas Turnaround: The Impact of Lawsuit Reform on Business Activity in the Lone Star State" was commissioned by the Texans for Lawsuit Reform Foundation, the research arm of Texans for Lawsuit Reform.

The executive summary of the published report states that a series of lawsuit reforms have transformed the state's civil justice environment from one that previously hindered economic activity and deterred job growth to one that promotes productivity, enhances efficiency, creates jobs and boosts the competitiveness of the state's businesses and industries in a global economy.

The Perryman Group's analysis shows that while the goal of reform in Texas has been to create an honest civil justice system that ensures compensation for legitimately injured parties and a fair system to determine liability, lawsuit reform has had the additional benefit of encouraging economic growth which produces a ripple effect throughout the state's economy.

Business owners and taxpayers have been able to save millions of dollars by eliminating the expense of unnecessary litigation including administrative costs, court costs and the waste of time of executives and employees, the report states.

The economic gains that Perryman attributes to lawsuit reforms include:

  • $112.5 billion increase in annual spending

  • $51.2 billion increase in annual output – goods and services produced in Texas

  • $2.6 billion increase in annual state tax revenue

  • $468.9 million in annual benefits from safer products

  • $15.2 million in annual net benefits of enhanced innovation

  • 499,000 permanent jobs

  • 430,000 additional Texans have health insurance today as a result of the medical liability reforms

    The report mentions that the most recent Pacific Research Institute U.S. Tort Liability Index ranks Texas second among all states for "inputs" (cost factors) and 18th in terms of "outputs" (jury verdicts). However it also mentions that while the state ranks well in terms of jury awards per capita, it continues to be hampered by the risk of large, unreasonable verdicts in some areas.

    And while the Perryman Group's study validates the success of Texas lawsuit reforms, it states that further improvements are still needed.

    "Continued attention to remaining problem areas will further enhance the benefits of a more fair, efficient and effective system of civil justice in Texas," the report states.

    Texans for Lawsuit Reform is the state's largest civil justice reform organization. TLR is a bipartisan, volunteer-led coalition with more than 16,000 supporters residing in 818 Texas communities and representing 1,266 different businesses, professions and trades. For more information about TLR visit

    The report is available for download at

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