Gov. Phil Murphy has issued an executive order creating a new Jobs and Economic Opportunity Council tasked with providing the Governor actionable advice on how to improve the state’s economy and create more jobs. We are encouraging the Council to include legal reform in its recommendations since our state’s current legal climate is hindering economic growth.


Balancing the state budget and funding all the programs the state thinks are important is not an easy task. Revenue growth is steady, but slow, and we are already one of the highest taxed states in the nation, so there is little room to maneuver. To attract business investment and spur economic growth, the government must look at innovative policies that improve the economy without depleting needed revenue. One often-overlooked tool in the economic development toolbox is legal reform. Improving our state’s legal climate could improve our economy as well.


A predictable legal system that discourages lawsuit abuse gives businesses the ability to more accurately predict and budget for legal risk, which in turn allows them to free up capital for business expansion, innovation, and job creation.


85% of executives and attorneys surveyed by the U.S. Chamber of Commerce report that a state’s litigation environment is likely to impact important business decisions at their companies, such as where to locate or to do business. Unfortunately, these same business leaders ranked New Jersey as having one of the worst legal climates in the United States – 41st and falling.


Though the U.S. Chamber’s survey focused on larger businesses, an improved legal climate benefits businesses of all sizes. Contrary to popular belief, most companies being sued are not “deep pockets.” Lawsuits are frequently filed against small businesses. In fact, 43% of small business owners report having either been threatened with or involved in a civil lawsuit.


According to the U.S. government’s Small Business Administration, “The impact of litigation on businesses goes well beyond the purely financial impact of legal fees and damages. Most small business owners are invested personally in their businesses; litigation causes not just financial loss, but also substantial emotional hardship, and often changes the tone of the business.”


Our poor legal climate is also stifling innovation. When they fear lawsuits, entrepreneurs, inventors, and investors are overly cautious about launching new ventures and bringing innovative products to market. One need only watch the hit television show Shark Tank for a short time before seeing the “sharks” pass on an otherwise exciting product or idea because the legal risk is too great.


There is a wide-spread, bi-partisan recognition that it’s time to make some changes that will rev up New Jersey’s economic engine, and foster a “stronger and fairer” economy. Some thoughtful tweaks to our legal system could improve our state’s legal reputation, and stimulate economic growth without raising taxes or increasing spending.