Last month, the State of Texas officially launched the new Texas Business Court system, with Governor Greg Abbott swearing in the new court’s ten inaugural justices on September 19 at the Texas A&M University School of Law in Fort Worth and affirming the important role the new system will play in enhancing our state’s already outstanding business environment:
“These experienced individuals will serve to ensure that Texas businesses will have a sophisticated and efficient process to resolve their disputes. I look forward to seeing the positive impact these courts will provide for a bigger, better Texas for generations to come.”
During the 88th Texas Legislature, under the leadership of our pro-business partners at Texans for Lawsuit Reform (TLR) the Texas Association of Business (TAB) strongly supported the passage of HB 19, which created the first-ever specialty trial court, or the “Business Courts,” specializing in complex business disputes, now up and running across the state. This system helps provide Texas businesses confidence in knowing there are judges with the expertise necessary to deal with complex disputes among business parties, helping save employers both time and money.
Our new Business Court system will also further cement Texas’ position as the “Headquarters of Headquarters” – as coined by Governor Abbott – ensuring that we have a business court system to provide greater certainty for major global corporations and Fortune 500 companies that are increasingly relocating, expanding and moving their headquarters to Texas. The launch of Texas Business Courts is also a major factor contributing to the establishment of the Texas Stock Exchange (TXSE), as companies seeking to enter the new exchange are attracted to the stability that the Texas regulatory climate has to offer.
Texas has the best business climate in the galaxy, and the establishment of our Business Court system is only strengthening our gravitational pull.
Already, the business courts are demonstrating their impact, with the first two cases filed in early September in the Austin and Houston divisions. The launch of the business court system couldn’t come at a better time, as the latest statewide data from the Office of Court Administration shows approximately 18,000 pending civil cases, with a clearance rate of 87% – demonstrating that the civil court system is struggling to keep up with the current caseload.
However, beyond alleviating the current backlog in civil cases, the long-term impact of business courts on the Texas business environment cannot be understated. Under the law, parties that file cases in the new business court system will only handle governance cases involving over $5 million or those involving publicly traded companies, as well as contract disputes or other “qualified transactions” with over $10 million at stake.
Unlike state district court judges, Texas Business Court judges will issue written opinions, which newly appointed Fort Worth division judge Jerry Bullard said will help build up a business court precedent for how Texas law handles disputes between business entities:
“I think it benefits everybody. It benefits the parties, it benefits their lawyers, and it benefits the public, because the public can see what courts are doing and why they do it.”
It's important to recognize that the concept of specialized business courts is not new – in fact, Texas is joining roughly half of all U.S. states that have some form of a business court system. The State of Delaware, long hailed for its Court of Chancery that has prompted Fortune 500 companies and businesses to incorporate there for decades, is now facing stiff competition from the Lone Star State. As one Austin attorney made clear in a recent analysis on why companies are re-incorporating in Texas from Delaware – policy matters:
“Texas shows that states can become more business-friendly through policy choices. As recently as the early 2000s, trial lawyers were one of the most powerful political forces in Texas. This was before Texans for Lawsuit Reform worked with lawmakers from both political parties and pushed through historic tort reform that energized the state’s business climate.
“In the time since, Texas has continued to build on its reputation as a place where companies can count on a fair and transparent regulatory system…
“…Texas is now coming for Wall Street, too…The backers of the new [Texas Stock Exchange] are saying that ‘corporate issuers and exchange-traded product sponsors are demanding more stability and predictability around listing standards and associated costs.’ Does that sound familiar? It’s the same reason why businesses are fleeing Delaware — the listing standards in other jurisdictions keep shifting based on political winds rather than business judgment.”
As a former Texas Supreme Court Justice, Governor Abbott understands the importance of appointing experienced jurists who will rule fairly and impartially. He understands that the job of a jurist isn’t to bend the scales toward one side or the other, but to weigh the facts and ensure a just, fair, and efficient resolution to disputes that impact business operations in Texas and provide greater certainty to our regulatory and legal landscape. As Governor Abbott made clear following the launch of the new Texas Business Court system:
“We have to have a legal process system that will be able to address the inevitable challenges that will arise in such a massive context.”
“It doesn’t mean it’s predetermined about who may win or who may lose. It’s just predetermined that you’ve got well-qualified judges who will make sure that cases will get the attention and the knowledge they deserve.”
Texas Supreme Court Justice Evan Young rightly called the new Texas Business Court system “the most substantial modification of the judicial system of our state since 1891.” This significant change further solidifies Texas’ position as the best state for business, enhancing our appeal to job creators, investors, and entrepreneurs – all of whom thrive on certainty and predictability so they can expand their operations and bring more economic prosperity to our increasingly dynamic communities.
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