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Survey gives N.J. court system poor grade, but small firms appreciate mediation

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While a number of the nation's largest employers said 31 states have a fairer and timelier civil justice system than New Jersey, the head of an employers group said small businesses involved in litigation would rank the state much higher.

"Big corporations' litigation interests are focused on class action and product liability cases, but small businesses are more interested in the competency of the judiciary and their efficiency in the resolution of litigation," said John Sarno, president and general counsel for the Employers Association of New Jersey. "New Jersey is anecdotally highly competent and efficient in the legal sense, because it has a very robust public mediation program that resolves many civil disputes efficiently and cost effectively. But a big corporation wouldn't know that."

According to the U.S. Chamber of Commerce's "Lawsuit Climate 2012" survey, more than 1,100 business lawyers and executives of companies with annual revenues of at least $100 million ranked New Jersey 32nd for its overall treatment of tort, contract and class-action litigation.

Marcus Rayner, executive director of the New Jersey Lawsuit Reform Alliance, said the results are not surprising, considering "certain aspects of New Jersey law draws litigation from all around the country and makes it easy to sue large companies, particularly in our pharmaceutical industry."

"Predictability in what the law means and how it's applied is extremely important to companies, because a lack of predictability combined with longer court proceedings means higher costs," Rayner said. "With the state court beginning this fall a year-long review process, we're asking it to consider some reforms that would make it more predictable, like reducing the cost of appeals and changing the rules of evidence to allow judges to omit testimony from experts whose expertise is questionable."

A previous study by the U.S. Chamber's Institute for Legal Reform found such reforms could drop the state's litigation costs by as much as 21.5 percent and reduce business costs by $1.7 billion, which would yield between 35,000 and 94,000 jobs in New Jersey.

Without tort reform, Sarno said New Jersey will remain "a very litigious state," though he noted the public mediation program "works very well for moving along the average commercial dispute of a small business. Without that program, those disputes would crash the state court system."

But not all businesses have the resources to go through that process, Rayner said.

"Litigation for large businesses is disruptive and expensive, but for small businesses, it can mean the difference between closing your doors or staying open," Rayner said. "Even with the option for mediation, businesses find themselves caught between their insurance companies, so they're commonly forced to settle" instead.

While corporate concerns dominate issues in the state's civil justice system, Rayner said businesses of all sizes are "under strong pressure from the New Jersey Consumer Fraud Act."

"New Jersey is rightfully the most pro-consumer state in the country, but the law is so broadly construed that businesses find themselves guilty for honest mistakes, not outright fraud," Rayner said. "That constant liability threat is a deterrent to business in New Jersey, and a reason why companies give the court system bad marks."

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