March 2004--Some places are better than others when it comes to doing business, and one reason-according to corporate attorneys--is that certain areas have more business-friendly legal environments. This may be important to note for states seeking to encourage economic development.

The Institute for Legal Reform recently released this year's study noting the best and worst legal environments in the U.S. for doing business. The 2004 Annual State Liability Systems Ranking Study found attorneys feel the litigation environment is more fair and reasonable in some states than in others.

The study included interviews with nearly 1,500 corporate attorneys, 80% of whom reported the litigation environment in a state can affect important business decisions at their companies, such as where to locate or do business.

According to the companies surveyed, the states with the worst legal environment for doing business were Mississippi, West Virginia, Alabama, Louisiana, and California. States with the best legal environments were Delaware, Nebraska, Virginia, Iowa, and Idaho.

Los Angeles, mentioned by 16% of attorneys, was said to be the local jurisdiction having the least fair and reasonable litigation environment. Also mentioned by 9% of the attorneys surveyed were New York, San Francisco, and Chicago.

Attorneys were asked to rate legal environments on judge fairness and impartiality, judge competence, jury predictability, handling of evidence, discovery, timeliness of summary judgment/dismissal, punitive damages, treatment of class actions, and overall treatment of tort and contract litigation.

The companies surveyed felt policymakers should focus on improving certain areas of the legal system in order to encourage economic growth in their areas. The main issue attorneys mentioned was the reform of punitive damages. The second most important issue, they felt, was tort reform.

Overall, however, dissatisfaction with legal environments for businesses was down--56% of attorneys surveyed gave a fair or poor ranking to their state court liability systems, compared to 65% in 2003.