Texas How Texas Courts Are Addressing Corporate Counsels' Concerns

Editor: Corporate Counsel are frequently asked for input about the legal climate in a state when a company is considering that state for a new business location or expansion of current locations. What are some aspects of the judicial climate in Texas that make it an attractive place to do business?

Jefferson: I don't see my role as head of the Judiciary as the equivalent of the Executive or Legislative branches, both of which have a direct interest in making Texas an attractive climate for business. But I will say this: A strong judiciary creates predictability in the law, certainty in commercial transactions, and confidence in fair treatment in a system designed to do justice to all litigants. Business leaders have reported, in survey after survey, that they are more likely to invest in states whose courts can offer judicial efficiency and consistency. In 2004, for example, a United States Chamber of Commerce national survey listed business leaders' top concerns about the legal environment. They were most concerned about punitive damages, an area recently addressed by the Texas Legislature and which I am sure we will discuss in more detail later in this interview. Close behind, however, were concerns about judicial competence and timeliness of decisions. I was glad to read that businesses understand the critical need for adequate funding of court systems and for judges who have been recruited from among the most capable and successful lawyers. Businesses and citizens alike should urge their legislatures, both state and federal, to compensate judges at a rate that will retain our brightest and most experienced judges. Of course, that rate will be significantly less than what the judge could earn in the private sector, but it cannot be so low that only the wealthy need seek a career in the judiciary. If, as the survey indicates, judicial competence is more important to corporate counsel than workers compensation and product liability issues, then corporate counsel should place as a top priority the retention of good judges by ensuring adequate pay.

Editor: Is an effort being made to adequately compensate judges and provide them with adequate resources?

Jefferson: Yes. There is a bill sitting on Governor Perry's desk right now that would give Texas judges their first pay raise since 1997. (Texas judges are not as fortunate as their colleagues in other states that receive a cost of living adjustment each year.) If the bill becomes law, the state's district court judges will receive an annual state salary of $125,000; the intermediate appellate court justices will receive an annual state salary of $137,500; and the justices and judges of the state's two high courts will receive an annual state salary of $150,000. This is a significant increase in pay, and the Texas judiciary is certainly appreciative that, with the Governor's full support, the Legislature has recognized the danger in an under funded judiciary. I believe there is more work to do on this issue and will in the future urge the Legislature to provide a mechanism for automatic, annual pay increases for judges. I will also continue to fight for full funding for our courts and support for a technology fund that will ensure increased public access to the judiciary. Until adequate pay and adequate funding is removed from the political process, the Texas judiciary's independence is threatened.

Editor: Are business issues likely to be considered by judges who are knowledgeable about those issues? Is an effort made to train judges in handling business issues?

Jefferson: Yes, Texas judges, especially in the major metropolitan areas, are very likely to have extensive experience handling business issues. There are many trial courts of specialty jurisdiction in the major cities in Texas for example, family courts with jurisdiction over family law matters, probate courts with jurisdiction over matters involving trusts and estates, and criminal courts with jurisdiction over criminal matters. The more specialty courts a metropolitan area has, the more likely a civil district court judge will preside over matters involving business disputes. And, yes, Texas judges are well trained. Our Texas Center for the Judiciary provides specialized judicial education. And Texas' CLE programs are some of the best in the nation given the large pool of lawyers in the state who present at CLE programs and the number of excellent CLE providers, such as the State Bar of Texas and the many great law schools we have in Texas who regularly sponsor CLE programs. Our judges are very active in participating - and presenting - at these CLE events.

It is unfortunate, though, that most of our state judges lack the financial means to hire law clerks like federal judges do. Law clerks would allow our state trial judges to be more efficient, and provide the court with an excellent resource for untangling the many complex questions complex commercial cases present. To the extent they increase the odds that our trial court judges "get it right," law clerks would help expedite the litigation process and minimize the delay inherent in appeals. We just need more funding in so many areas.

Editor: Cost of litigation is a major concern of corporate counsel. What steps are being taken to make the courts more efficient?

Jefferson: There are many reform efforts underway in Texas whose goals are to reduce the costs of litigation. The Supreme Court is always interested in ways to reform its own rules to help keep the cost of litigation down. Rising costs not only frustrate business, but they also close the courthouse door to individuals of modest means.

Last fall, the Court promulgated a new procedural rule that severely limits the trial court's discretion to approve ad litem fees in civil nonfamily, nonprobate cases without limit. The new rule prohibits a court from considering an ad litem's compensation as a percentage of the judgment or settlement in the case. The rule is intended to curtail abuses in this area that sometimes prevent settlement and lessen the overall compensation to the individual harmed.

Elongated and expansive discovery is one of the main reasons today's lawsuits are so expensive. In an effort to reduce the costs and delays associated with discovery practice, the Texas Supreme Court, in the late 90s, promulgated new procedural rules in Texas that significantly streamline discovery in Texas. The changes were too comprehensive to detail in this interview, but they were, by all accounts, quite innovative. For example, the rules require a party to set a discovery control level at the beginning of the case to make discovery more efficient and less acrimonious; the control level determines certain limitations and timelines for discovery. The rules also eliminated boilerplate objections in discovery, forbade speaking objections in depositions, and added a discovery procedure called a 'request for disclosure' as a helpful tool to obtain basic discoverable information quickly and efficiently.

Texas also has multidistrict litigation rules that allow a judicial panel to transfer civil actions involving common questions of fact to a single pretrial court for consolidated or coordinated pretrial proceedings if doing so would be for the convenience of the parties and witnesses and would promote the just and efficient conduct of the actions. Modeled after the federal rule, but custom-made for Texas, this rule has streamlined litigation in some of the most complex and difficult commercial and personal injury disputes this state has seen.

Editor: What is being done to curb misuse of electronic discovery? Are costs shifted where very broad discovery is requested? Are corporations exposed to unreasonably high penalties for perceived lack of cooperation in circumstances where they have made a good faith effort to comply?

Jefferson: As part of its discovery rule reform, Texas led the nation in addressing electronic discovery issues. Texas' rule requires a requesting party to specifically ask for electronic data and requires a responding party to produce the data only if it is reasonably available in its ordinary course of business. Otherwise, the requesting party must get a court order and pay the reasonable expense of any extraordinary steps that have to be taken to retrieve and produce the information.

Editor: Tell us about the use of technology in the courts. What is the status of e-filing and the use of electronic briefs?

Jefferson: Texas has been e-filing documents in its courts since 1995. The Texas Judicial Committee on Information Technology has made great strides in setting standards for e-filing, helping courts obtain the software and hardware needed for e-filing, and educating the courts, court clerks, and lawyers about the advantages to e-filing. Today, I am pleased to report there are 13 Texas counties allowing e-filing. Another 8 counties are about to implement e-filing, and, once these counties are live, the five largest metropolitan areas in Texas will accept e-filing. We will continue to support the rest of Texas' 254 counties to join this encouraging trend.

There is much work to be done before we see universal use of the latest technology in our courthouses. But we have begun the task at the Supreme Court. Several years ago we began placing electronic versions of appellate briefs online and made them accessible on the web. Last fall, we began making audio recordings of oral arguments available online on the very day of argument so that the public no longer has to travel to Austin to view the Court's proceedings. We would like to take another step forward and provide real-time video webcasting of oral arguments. We asked the Legislature for webcasting funding this past session, but were unsuccessful this past legislative session. That is a true disappointment because the cost of video streaming is minimal compared to the enormous advantages of opening Court proceedings to the public, and to litigants, regardless of geographic constraints.

Legislatures must realize that the judiciary can't be left behind as other branches of government move into the 21st Century. In Texas, funding for technology is left largely to local governmental entities, and this has led to a tremendous amount of disparity on how courts use technology. A lawyer in New York could file pleadings and access all the court's records without ever leaving her desk if the case was pending in Houston. But, if the case were in a small town in East Texas, the court clerk may not even have a computer docketing system. Some counties have impressive systems that allow an attorney to present complicated evidence electronically as a witness is discussing it; other counties rely on pencil and paper. We need to eliminate this disparity so all our courts realize the increased efficiency that accompanies modern technology.

Editor: Texas has an elective system for selecting judges. Does this attract quality judges?

Jefferson: There has been an ongoing debate in Texas among our state's legislative and judicial leaders as to whether Texas' current elective system for selecting judges ought to be replaced with an appointment-and-retention type selection system. My predecessor was (and continues to be) a tireless advocate for judicial selection reform. Those reform efforts and the corresponding debates will undoubtedly continue in the coming years. Regardless, the Texas Judiciary is among the most respected judicial systems in the nation as we aspire to attract and retain the most capable jurists of the highest quality and integrity.

Editor: Concern is being expressed about the failure of courts to enlist quality jurors by making jury service attractive and making it possible for jurors to take notes and ask question as the trial proceeds. Are steps being taken in Texas to address these concerns?

Jefferson: The Texas Supreme Court has long shared the concern about the decline in enthusiasm about jury service. There are several reform efforts underway in Texas involving jury service.

Perhaps the most significant recent reform is the passage of a bill this spring that increases juror pay - from $6 a day - to a minimum of $40 for each day of service after the first day. The Supreme Court has, for years, maintained that an increase in juror compensation would enhance the jury system in Texas and made recommendations to the Legislature accordingly. The new law is a great step towards improving the willingness of citizens to participate in a fundamental component of the American democracy.

The young lawyers in our state also have developed programs to promote jury service. In fact, the Texas Young Lawyers Association was nationally recognized for their program, called "We the Jury". This program provides a curriculum to high schools to teach students about the importance of juries in our democratic society. The program teaches students what it means to be a juror, how jurors are selected, and the role that a juror plays in a trial. Students participate in a mock jury selection process, then view a mock trial for which they participate in a mock jury selection.

I hope to make improvements in our jury system a priority of my office as well. Counties should pay attention to the human factors of jury service: Minimize waiting times and provide comfortable waiting areas; don't leave jurors wondering what will happen when they are called for service; inform them about the process. All of these ideas were recommended by various advisory committees and have been implemented in some Texas counties. But we could be doing more. I would like to study whether allowing jurors to take notes under carefully controlled conditions and providing time during long trials for attorney summations would produce better results and less erroneous jury verdicts. I would also like to study whether we have done enough to ensure that our juries in Texas reflect the diversity of our citizenship.

Editor: Corporate counsel are concerned about uncertainties generated by the possibility of high punitive damages and excessive damages for pain and suffering. Have any steps been taken to create a more level playing field for business?

Jefferson: The Legislature passed sweeping civil action reforms in 2003. The new law includes caps on non-economic damages and total damages in certain personal injury cases. The law also requires, in all civil cases, a unanimous verdict before punitive damages can be awarded.

Editor: What steps have been taken in Texas to limit the imposition of high appeal bonds that can effectively bar a corporation from exercising its right of appeal?

Jefferson: The Legislature's 2003 reform efforts also made it easier for a judgment debtor to post a supersedeas bond. The new law caps the amount of bond required to 50% of the judgment debtor's net worth or $25 million, whichever is less, and requires the court to lower the amount of the bond if the debtor shows substantial economic harm.

Editor: Corporate counsel have expressed concern that in a number of states class actions have been certified without providing an adequate opportunity for the defendant to present objections and without the opportunity for an interlocutory appeal. They are also concerned about coupon settlements where the class gets only coupons and the attorneys receive a large fee. Has there been reform of the rules applicable to class actions?

Jefferson: Texas has recently seen significant reforms in the area of class actions. First, this Court has issued several opinions that curtail the practice of "certify now, worry later," by requiring a trial court to conduct a rigorous analysis of a class before ordering certification and to include a trial plan with any class certification order. Additionally, the Texas Legislature included class action reform in its 2003 tort reform package, prompting this Court to amend its class action rule. And, yes, these reforms include a provision that, if a portion of the class recovery is paid in coupons, attorney's fees must be paid in coupons proportionally to the recovery for the class. They also allow, for the first time, interlocutory review of class certification orders.

Editor: Are interlocutory appeals permitted to test rulings that might be erroneous and to terminate unnecessary and costly litigation?

Jefferson: A party may not appeal an interlocutory order in Texas unless its appeal is expressly authorized by statute. But the list of orders that are immediately appealable seems to be growing and now includes class certification orders, temporary injunctions, certain orders involving media defendants, certain orders in medical malpractice cases concerning the timeliness and the sufficiency of required expert reports, and certain orders concerning arbitration.

Published September 1, 2005.