In two states, Alabama and Iowa, rankings for lawyer per capita populations exactly matched the GSP growth rankings.
But is economic activity stunted where loads of lawyers do business?
“Where you have a lot of business centers, generally you will have a lot of attorneys, and it doesn’t necessarily mean that they are bad for the economy,” said Walter Olson, founder and editor of the Web site, www.overlawyered.com, and senior fellow at the Manhattan Institute.
Olson said he has a better yardstick.
“If you could measure how many attorneys are out there advertising for injury cases, that would be a much better indicator for how high the expected hassle value is of doing business in a given state,” he pointed out.
No question about it, though, legal expenses add up.
“The cost of litigation is one of the most significant mortgages on an organization’s bottom line,” said Harlan Loeb, a lawyer with the public affairs firm Hill & Knowlton.
Fortune 1000 companies spend an average of $12 million a year on litigation costs, he said.
Setting up shop where there’s less litigation can reduce stress, as well as save money.
“Litigation requires a lot of management attention, and executives will face adversarial hassles,” Olson said. “The morale [of employees] improves if they are in a place where they don’t have to be so adversarial all the time.”
Businesses thinking of expanding to a new location should investigate the levels of litigation at potential sites, as well as these related topics, Olson said:
* The number of malpractice lawsuits filed and malpractice premium levels.
* Whether tort reform has been enacted.
* Whether juries are more plaintiff-friendly.
* The levels of workers’ compensation payouts and claims.
Insurance brokers may know how a community stacks up compared with other parts of the country, Olson said.
Trade journals, newspapers, Google searches and networking at conferences might also yield some answers, said Joe Hollingsworth Jr., one of the authors of “The Southern Advantage” and CEO of Clinton, Tenn.,-based The Hollingsworth Cos.
Michael Keating is senior research editor for Expansion Management. He can be reached at mkeating@penton.com.
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