Attorney James Holmes: Texas Needs Specialized Business Courts

Attorney James Holmes of Holmes PLLC announces his support of House Bill 1875 – one of the most important pieces of legislation introduced during this session. According to Holmes, an attorney practicing commercial litigation and oil and gas law in Dallas, the state’s legal system needs a serious intervention. Thankfully, Governor Abbott has suggested a plan for needed changes by way of HB 1875.
Currently, trial judges are overworked with broad, general jurisdiction. They’re expected to manage humanity’s vast and diverse legal needs (family law, criminal law, guardianships, car wreck cases) – and foisted on them are business cases involving lengthy, well-populated, and contentious hearings and jury trials. Trial judges are expected to manage their general docket while acquiring knowledge of business litigation concepts such as financial statements, borrowing facilities, secured interests, operating agreements, internal affairs, derivative actions, qualified transactions, licensure, and more.
The foregoing results not only in delay but also in inaccurate jury verdicts and trial judgments. The mess then spills into the appellate courts. Because in the trial courts all business claims are thrown against the wall to see what sticks, appellate courts bear a tremendous burden of separating wheat from chaff. Following years of work, they discard much chaff and find little wheat. Only big businesses or very high-net-worth individuals can finance the hundreds of thousands (or millions) of dollars that are necessary to stop judgment collections during an appeal, to present a case’s merits on appeal, and to outlast an appeal’s years-long odyssey.
Not surprisingly, large corporations would not want to subject their corporate governance to Texas’s current trial and appellate systems and, accordingly, usually choose to incorporate in another state, like Delaware.
The Governor’s plan presents a refreshing alternative to the foregoing, and the plan is in step with the trend to have specialized business courts in the U.S. and abroad. The plan would position seven business-trained judges in various parts of the state; no more than four of them could come from the same political party. These business-court judges would oversee only derivative actions (i.e., shareholder lawsuits against officers or directors) and commercial disputes exceeding $10 million in controversy. The plan does not do away with juries or minimize their historical functions; rather, it expressly preserves “the right to a trial by jury.”
The plan lays the groundwork for developing specialized laws for corporate governance, to be administered by specialized courts. This will encourage large corporations to incorporate in Texas.
In sum, HB 1875 would provide consistent, predictable results for business litigants and their attorneys.  Also, HB 1875 would put Texas in line with national and international trends in business litigation and business law – attracting more businesses to Texas so that its economy keeps booming.
Media Contact:
The Margulies Communications Group
Source: Holmes PLLC