State officials hail formation of court

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By Paul Janczewski
Legal News

If ever there was a time that Michigan needs to send a message encouraging businesses to locate here, it’s now. For years, the state has been mired in a national economic slump that has seen layoffs, high unemployment, and government cutbacks.

While other areas have seen a slight recovery, Michigan, now more than ever, has to pull out all the stops to attract business, grow existing operations, and provide the economic incentives where companies want to come here, and stay here.

And the recent formation of a business court docket in Macomb County, the first in Michigan, and a House bill to create a statewide business court are two steps in the right direction.

“Businesses look to states that have courts that provide efficient and expeditious ways of solving business problems,” said Kevin A. Fanning, a business attorney and partner for Clark Hill. “That could tip the scales in favor of the state with a business court docket.”

State Rep. John Walsh recently introduced legislation to create a business court system in Michigan, which he hopes makes the state offer a friendly climate for companies, and more jobs for Michigan residents.

“This is absolutely a good thing for Michigan,” Walsh said. “What’s good for business means more jobs in the state, and means our citizens are better off. That’s the bottom line.”

Although the Macomb County Circuit Court business docket pilot program and Walsh’s bill both occurred in relative proximity of each other, talk of a business court has been discussed in legal circles for years.

Fanning said the idea of creating a business court in Michigan has been discussed for the past 10-15 years among lawyers involved in various state Bar of Michigan committees to “create a part of the court system that is more expeditious and less expensive to litigate business disputes, thereby making the court system here more user friendly for business cases and making our state more attractive to businesses that might locate here.”

He said the idea really took hold when the state Bar Judicial Crossroads Task Force convened, which examined a number of items, such as reducing the number of judges and budget issues. One of those committees met a number of times, beginning in 2009, and that was where the real groundwork was laid to establish a business court docket within circuit courts that would serve business cases that met certain criteria.

It called for the formation of a pilot project.

“And Chief Circuit Judge Mark Switalski of Macomb took that proposal to the next level,” Fanning said.

He signed an administrative order establishing the pilot project and assigned Judge John Foster to handle complex business cases, Fanning said. The specialized business court docket began November 1 for cases that fell into two specific categories, each containing a number of complex business cases.

The idea was to free some judges from hearing certain types of business cases and assign those to one judge who would become familiar with these issues and cases and speed up the process. Instead of all judges hearing a variety of criminal and civil matters, and not specializing in any one aspect of business disputes, the pilot project would assign one judge to hear certain business cases, which would not only aid business-to-business disputes, but relieve other judges of that burden and allow their criminal and civil dockets to move along more quickly.

Also, a special business court judge will have received training to handles those complex cases, and develop skills as he sees more and more such cases. That also will allow the judge to develop a better understanding on when and where to use certain procedural methods, such as alternative dispute resolution processes.

Fanning said the Crossroads Task Force looked at 27 other states that currently have business court dockets and decided having one in Michigan would make our overall court system more efficient, and make it less expensive for businesses to do business in Michigan, thereby making our state look more attractive to staying here, or locating here.

In the Macomb County business docket, cases filed after November 1 that qualify for the specialized docket could fall in Category 1, 2 or 3.

Category 1 cases include business torts, antitrust law, intellectual property, trade secrets between business, security law and other. Category 2 cases, which include collection of professional fees and some others, will only be assigned to the business court docket by mutual agreement of the parties. Category 3 cases, including products liability, personal injury and wrongful death, medical malpractice and some others, will be excluded from the business court docket.

“The expectation will be that (Judge Foster) will be better able to control his docket and flow cases through more quickly, and try to seek earlier resolution of cases using ADR mechanisms, and get the parties talking about the case problems quicker, and if it has to go to trial, it’ll be a faster process,” Fanning said.

In a Macomb County Circuit Court news release, Akers lauded the pilot program.

“Macomb County’s Specialized Business Docket is an innovative program that will not only be welcomed by the business community, but will also improve the overall efficiency of the court system,” she said.

Many people were responsible for pushing the business court concept from talk to action, and many of the same people were highlighted in the Crossroads Task Force report, including Douglas L. Toering of Toering Law Firm PLLC; Diane L. Akers of Bodman PLC, past chair, Business Law Section; Judge Switalski; Michael F. Gadola, Office of the Governor-Legal Division; and a host of others too numerous to name.

Clark Hill issued a press release recently outlining the Macomb business court.

“We’ve been following this issue for a long time,” Fanning said.

He is also a member of a State Bar committee, and his firm puts out a series of newsletters to inform clients of major changes that could affect their business.

“We’re just on top of the issue, and we believe these changes make business better, cheaper, and more efficient,” Fanning said.

He said Gov. Rick Snyder also is a proponent on the business court, and all these people, from the State Bar committee members, to Snyder’s team, and others, including the Walsh bill, “came together at the same time.”

“And in Michigan, that’s what you need, the right people to do the same thing at the same time,” Fanning said.

Walsh, a Republican House member from Livonia, chairperson of the Judiciary Committee and Speaker Pro Tem of the House, and a former corporate attorney himself, said he has also been following the talks about a statewide business court and felt the time was right to introduce his bill.

“Cases involving business versus business can become very complicated,” Walsh said. “What we’re trying to do is create a court that has judges dedicated to the issues of business, so they understand the complexities.”

“We believe that if we have a better judiciary more focused on business issues, those items will move faster. It will also allow judges that are specialists in criminal or family law matters to concentrate on those issues and move those more expeditiously,” he said. The result will be all cases moving through the system faster, and “strengthen and revitalize the state’s economy.”

Under his bill, the new court division would be divided into four regions, roughly tracking the four appellate districts. One judge in each district would be designated as the business court docket judge, although the size of the district, willingness to cooperate and number of filings would all be key factors. Some counties may opt out, and other counties may elect to have their own business court docket, based on factors in each particular county or region.

It would operate similar to the Macomb County pilot project, with a few differences. But the bottom line would be to create an environment where business disputes would be handled by judges with expertise in specific areas, creating an atmosphere favorable to those disputes by being faster and cheaper than what exists now.

Walsh said he’s been encouraged by the response so far, from colleagues in both the state House and Senate, as well as Snyder’s office. He said some details have to be worked out, and it will likely undergo some changes as it moves through the legislative process.

Walsh also said Macomb County’s pilot program is “exactly what the state Bar had hoped for,” and both will send a message encouraging businesses to locate in Michigan to take advantage of it.

“If we can create an environment where businesses have a greater certainty in the judicial process…that will peak their interest,” Walsh said.

He hopes to have his bill go through the House and Senate and signed into law by March 2012.

Fanning said he often spends quite a bit of time in courts watching judges handle numerous matters and are unable to devote the time to complicated business issues. The business court will allow him and other attorneys handling business matters to spend less time waiting, and more time working, saving his client’s money and allowing business disputes to be handled by judges specializing in those matters.

“Businesses then will have more money to invest in their business, and not their attorney,” he said. “It says our (state) doors are open for business, so come enjoy our lakes, our four seasons, our skiing, because we want you to come here and be prosperous so you can enjoy what our state has to offer.”

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