Thursday, October 13, 2011

John Coyle Commercial Docket Article


John Coyle, an assistant professor of law at UNC-Chapel Hill, just completed an article in which he considers the extent to which business courts such as the Ohio commercial dockets are likely to attract various forms of business – relocations, incorporations, and litigation – to a particular state. A brief summary of the argument’s basic points, are pasted in abstract form below.  The entire article is available for download at SSRN (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1928108).

The article seems like an interesting critique on one of the many possible policy rationales for creating commercial courts.  Best of luck to Mr. Coyle, from Ohio.



Abstract

"Business Courts and Inter-State Competition

Over the past two decades, nineteen states have established specialized trial courts that hear business disputes primarily or exclusively. To explain the recent surge of interest in these courts, policy-makers and scholars alike have cited the process of inter-jurisdictional competition. Specifically, these commentators have argued that business courts serve, among other purposes, to attract out-of-state companies to expand their business, re-incorporate, or litigate their disputes in the jurisdiction that created the business court.

This Article critically evaluates each of these theories. It argues, first, that business courts do not serve to attract companies from other states because business expansion decisions in the United States are rarely driven by the high quality of the courts in a particular jurisdiction. It next argues that business courts are unlikely to attract incorporation business because their core attributes are such that they are unlikely to compete successfully with the Delaware Court of Chancery. The Article goes on to argue that while the creation of a business court may in some cases serve to divert litigation business to local lawyers, the opportunities for diversion are relatively limited.

The Article then draws upon these insights to offer a number of suggestions as to how future business courts should be designed. It suggests that states should think twice before creating business and technology courts. It notes that major institutional reforms will be required if states wish to use business courts to attract incorporation business away from Delaware. It also identifies additional steps that states might take to more effectively attract litigation business. The Article concludes by briefly evaluating the viability of several non-competition-based rationales for establishing business courts."