Is California the Most Litigious State in the Union?
Is California the most litigious state in the Union?
Well, whether we are number one or not hardly matters as we are certainly one of the top spots for lawsuits, settlements and complex legislation. But the question “Is California the most litigious state” is frequently asked.
According to a 2016 report by ATRA.org on “Judicial Hellholes,” California ranked number one on their list. As they said, “California is the epicenter for lawyers trolling to bring disability access lawsuits against small businesses and ridiculous class action lawsuits against food and beverage companies.”
Another site, www.chiefexecutive.net, has ranked California as the worst place to do business and this conclusion was largely based upon “the direct impact of excessive litigation on job creation and the ability of businesses to survive and thrive. Unlike legislatures in most other states, California’s General Assembly rarely acts to limit lawsuit abuse… “
And, according to a report by CALA (Citizens Against Lawsuit Abuse) titled “More Lawyers, Less Public Services: The Cost of Litigation to California’s Cities and Counties,” California is the most litigious state in the country.
And to make matters worse, according to www.judicialhellholes.org, Los Angeles County historically has been the most lawsuit-loving jurisdiction in California.
Our “Golden State” is very friendly towards lawsuits, big settlements and is loaded with lawyers pursuing those big dollar payouts. Add to this the fact that the legislature passes tons of complex laws and you have a recipe for disaster for the small business owner in this state.
And to make matters worse, our worker friendly legislature has repeated attempted to pass legislation to force business into the legal system, not only making the cost-effective alternative of arbitration difficult to obtain, or even unavailable, but adding criminal penalties to the business owner. And while arbitration may seem expensive at an average of $6000 per arbitration, this cost pales against the YEARS of litigation and legal costs that can break even a successful business.
And simply following the law and running a sound business is not protection as any business, or individual, is open to frivolous lawsuits that can kill you with legal costs regardless of fault.
How to protect your small business from lawsuits
Caution: It would not only be impossible to present a full protection plan, as this is an extensive subject and requires a highly individualized approach, but it would be a disservice as a proper protection plan is best done with an experienced professional, such as a trusted lawyer or insurance broker.
That being said, there are several general steps that any business should take:
- Ensure that your business is properly titled and formed. The type of business entity and how it is established could be your first wall of protection.
- Find a good lawyer, both business and employment, and see that your business complies with the law.
- Seek out an insurance broker that understands the needs, and risks, of a business owner. This is a very, very important step as without proper insurance and a top insurance company that has your back you could lose everything.
- Cleanly separate out your business assets from your personal assets. Talk to your lawyer and to your accountant to ensure that there are clear lines between your personal assets and the business.
Finally, whatever you do, TAKE ACTION NOW! If you wait until a lawsuit strikes then it is likely too late as the courts will view any protective actions taken after the fact of a suit as fraudulent and invalid.