Tort Reform Rejuvenates Mississippi Industry

Mississippi governor Haley Barbour is quite happy with the results of tort reform in his state. Lawsuits are down. Business and employment are up.

"We were America's No. 1 judicial hell hole for jackpot jury verdicts," the two-term Republican governor told me. "For trial lawyers, this was the state you wanted to come to if you wanted to sue someone."

But it was not the state to come to if you wanted to start a business. Mississippi's antibusiness reputation was so awful, Mr. Barbour said, that the CEOs of several Fortune 500 companies told him specifically that they wouldn't consider locating in the state unless the tort system was fixed.

For doctors, the situation was a little different – many who were inside the state were getting out as fast as they could. With 25% annual increases in malpractice premiums, many physicians simply couldn't survive if they stayed. The outflux left some counties without a single obstetrician. In some cases, residents had to drive 100 miles to find a doctor.

Shortly after winning election in 2003 by running on a tort-reform platform, Mr. Barbour stitched together a coalition of doctors, business groups, taxpayers and even unions to roll back the trial lawyer lobby.

"It was not just a battle," recalls Charlie Ross, the Senate sponsor of the reform bill, "it was a five-year war." The law that eventually passed was every trial lawyers' worst nightmare. It capped awards for noneconomic damages, and prevented the popular practice whereby a plaintiff attorney seeking to bring a class-action shops around for a court where he'll be likely to get a favorable ruling or judgment.

Almost overnight, the flow of lawsuits began to dry up and businesses started to trickle in. Federal Express invested $1 billion in a new facility in the state. Toyota chose Mississippi over about a dozen other states for a new $1.2 billion, 2,000-worker auto plant. The auto maker has stipulated that the company would pull up stakes if the tort reforms were overturned by the legislature or activist judges.

That hasn't happened. About 60,000 new jobs have arrived in four years – not a small number in a workforce of about 1.3 million – and a sharp improvement from the 30,000 jobs lost in the four years before Mr. Barbour took office. Since the law took effect, the number of medical malpractice lawsuits has fallen by nearly 90%, which in turn has cut malpractice insurance costs by 30% to 45%, depending on the county.

Another encouraging sign: Fewer Mississippians are heading to law school and more are looking at business school as the best way to get rich. Many in the younger generation are pursuing a career path that will make them wealth creators, not wealth redistributors. ___WSJ

Trial lawyers are vultures and parasites on the life of a community and region. They are bent on re-distributing wealth, never creating it. In an opportunity society, creating wealth through commerce is a win-win proposition.

Count on the vultures to jump in whenever they are allowed to do so.