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Poll: The Verdict From The Corner Office


Cover Story: Business Week/Harris Executive Poll

POLL: THE VERDICT FROM THE CORNER OFFICE

Corporate executives think the high cost of civil justice is a drag on U.S. business and the economy. Fully 83% say their decisions are increasingly affected by the fear of lawsuits, and a 62% majority say the legal system significantly hampers U.S. competitiveness. Executives know whom they blame for the problem: plaintiffs, the contingency-fee system, and generous juries. They are also quite firm about the solutions. An overwhelming 97% favor much more use of alternative methods to resolve disputes, and 91% want judicial screening of cases. But most oppose restrictions on expert witnesses and don't want to see more government spending on the courts.

HIGH COURT COSTS

Here are some possible reasons for the high cost of litigation and civil justice. For each one, please say whether you think it is a major reason, a minor reason, or not a reason for the high cost.

Major Minor Not a Not

reason reason reason sure

The knowledge that major corporate

defendants and their insurance

companies have deep pockets 92% 8% 0% 0%

Contingency fees that enable people

to sue without any financial risk 85% 13% 1% 1%

Juries that hand out awards that

are too high 79% 17% 3% 1%

Laws or regulations that make

it too easy to sue 64% 29% 6% 1%

Outside corporate lawyers who drag

out cases to jack up their

hourly fees 47% 45% 7% 1%

Large corporate litigants that drag

the process out in an effort to

outlast opponents with fewer

resources 34% 55% 9% 2%

Companies that compete in

the courtroom instead of in the

marketplace 13% 60% 26% 1%

Companies that rush potentially

dangerous products to market,

opening themselves to subsequent

lawsuits 9% 70% 19% 2%

POSSIBLE REFORMS

Here are several proposals now under consideration to rein in frivolous litigation and cut legal costs and delays in the civil justice system. Please tell me whether you favor or oppose each of the following:

Favor Oppose Not

sure

Making much greater use of alternative

dispute resolution methods, such as

arbitration, mediation, and private judges 97% 2% 1%

The judicial screening of cases to eliminate

apparently frivolous or very weak claims 91% 9% 0%

Requiring the loser in civil suits to

routinely pay the winner's legal costs 83% 17% 0%

Restricting the pre-trial discovery

process 49% 43% 8%

Restricting the use of expert witnesses 28% 66% 6%

Increasing federal and state spending on

the courts 28% 69% 3%

LITIGATION'S IMPACT...

In your company, would you say that the following have a major impact, a minor impact, or almost no impact on your business?

Major Minor Almost Not

impact impact no impact sure

The high cost of defending and protecting the company from litigation

40% 49% 11% 0%

Fear of litigation that hampers the

introduction of valuable new products

or entry into new markets 10% 47% 42% 1%

Legal issues that divert

valuable management time and energy

from running the business 44% 50% 6% 0%

...AND HOW IT'S GROWING

Would you say that the fear of lawsuits has more or less impact on decision-making within your company today than it did 10 years ago?

More impact 83%

Less impact 5%

No difference 11%

Not sure 1%

COMPETITIVE BURDEN

Do you feel that the U.S. civil justice system significantly hampers the ability of U.S. companies to compete with Japanese and European companies, or don't you feel that way?

Does hamper 62%

Does not 32%

Not sure 6%

Survey of 400 senior executives at corporations drawn from the BUSINESS WEEK Top 1000. Interviews were conducted Jan. 27-Feb. 11, 1992, for BUSINESS WEEK by Louis Harris & Associates Inc.Edited by Mark N. Vamos


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