Balancing the state budget and funding all of 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.


In order to attract business investment and spur economic growth, the government must look at innovative policies that improve the economy without depleting needed revenue. One promising solution is legal reform. Improving our state’s legal climate could improve our economy as well.


75% of attorneys at U.S. companies say a state’s lawsuit environment is likely to impact important business decisions at their company, including where to locate or expand.


States with predictable legal systems that discourage lawsuit abuse allow businesses to more accurately project what future legal expenses will be, allowing them to free up capital for business expansion and job creation.



Right now, the same attorneys that said a state’s lawsuit environment is likely to impact important business decisions ranked New Jersey’s legal climate as 38th in the nation. That is a drop of six spots from 2012, when the survey was last conducted.


New Jersey's Rank is 38

We must work on improving our state’s legal climate and repairing our reputation.


When businesses fear lawsuits, they are overly cautious about launching new ventures and bringing innovative products to market.


New Jersey currently ranks 7th on the Kauffman Foundation’s Startup Activity Index, which is designed to measure new business creation activity and people engaging in business startup activity. Improving the state’s litigation climate would reassure entrepreneurs, inventors, and investors that New Jersey is open for business.


Lawsuits kill small business.Small businesses are disproportionately impacted by litigation.


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.”


Legal reform is a win-win when it comes to the state budget.


In the short run, legal reform can provide an economic stimulus without loss of tax receipts or an increase in spending. In the long run, states with improved litigation climates see more economic activity, leading to increased revenue collections.


Click here to read NJCJI’s legal reform agenda, which includes several budget neutral tactics for improving our state’s reputation and economic outlook.