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June 2012
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Legal system reform a jobs issue


Fresh off their overwhelming legislative victories in November, Kentucky's legislative members have chosen to emphasize creating jobs, and improving the economic competitiveness of the Bluegrass State. This is a good choice and sends a clear message to employers that Kentucky is open for business.

Making Kentucky a "right-to-work" state (where workers will no longer be forced to pay union dues as a condition of their employment) was a terrific first step. Neighboring states like Virginia and Tennessee have long been right-to-work states, which has made them a more attractive option for companies choosing where to locate a business.

But labor policy isn't the only area in Kentucky that needs some attention. The state's legal climate is also problematic. Fortunately, the Legislature has already begun to tackle this challenge.

Just recently, the state Senate passed an important legal reform measure: a bill that would establish medical review panels to reduce the number of frivolous medical malpractice lawsuits. This type of litigation drives up the cost of medical care and insurance, and makes it more expensive to do business in Kentucky. Medical review panels will also allow doctors to spend more time and money on patient care, improve efforts to recruit the best doctors to Kentucky, and increase health care access for Kentucky patients.

Many of our neighboring states already have similar legislation in place for these very reasons. The House should follow the Senate's lead and pass this bill immediately.

Other specific legal reforms, like bringing sunshine to the state attorney general's use of contingency-fee attorneys (private lawyers who keep a significant percentage of money awarded) are long overdue. A poll conducted by the Partnership for Commonsense Justice in 2014 found that 84 percent of Kentuckians supported establishing reasonable limits on contingency fees collected by lawyers, and 64 percent supported increased transparency and legislative oversight when the attorney general hires these private lawyers to represent the state in litigation.

Kentucky's legal environment is also impacted by its unusually high judgment interest rates - that's the interest on a jury award that accumulates while a defendant appeals a decision. Kentucky's current 12 percent rate is the highest in the region, which can discourage defendants from appealing a verdict they believe is incorrect or unfair.

This all has real world results. Today Kentucky ranks 39th out of the 50 states in a survey sponsored by the U.S. Chamber of Commerce's Institute for Legal Reform (ILR) on the best and worst state lawsuit environments. The business leaders surveyed say that Kentucky's legal environment is likely to impact important business decisions, such as where to locate, invest, or create jobs. By contrast, North Carolina and Virginia have among the best litigation climates, ranking number seven and 11, respectively.

So, while Kentucky has an unprecedented opportunity to attract new business and create jobs, this strong economic future is at risk if we don't reform the legal system.

The Legislature has taken a great first step. It's time to continue moving ahead with tort reform, and send an unmistakable message that Kentucky means jobs.

Dave Akisson is president/CEO of the Kentucky Chamber of Commerce. This column was co-written by Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform.

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