Only eight months into a business court pilot program, Gov. Rick Snyder has signed legislation that cuts the program short and establishes 17 business courts across the state beginning Jan. 1.
The pilot program was launched at the 17th Circuit Court in Kent County and was expected to last three years. The purpose was to simplify business litigation, reduce the cost of that litigation, speed up the judicial process and clear up the court’s overall docket.
“I think the pilot program in Kent County has been a resounding success, in part because of the excellent qualifications and hard work of Judge (Christopher) Yates, and the increased efficiency and responsiveness that I have seen in business disputes,” said Jim Peterson, an attorney at Miller Johnson.
Circuit Court Chief Judge Donald Johnston appointed Yates to the business court at the onset of the pilot program.
Now that the program is set to become permanent and will be extended throughout Michigan, all circuit courts with three or more judges will be required to have a business court. Local courts will recommend judges, with the Michigan Supreme Court making the final appointments. Judges will then serve six-year terms and can be reappointed.
The State Bar of Michigan made the establishment of business courts a priority following recommendations made by the Judicial Crossroads Task Force and conversations with legislators and Gov. Snyder.
State Bar of Michigan President Bruce Courtade said that while he personally would have liked to have had a chance to see what tweaks might come out of the pilot program, the time was right to establish the courts. He believes the new business courts will help businesses in two big ways.
“Speed and predictability,” said Courtade, an attorney at Rhodes McKee. “Speed because when you have a docket that is devoted to business issues, first of all the rules have been set up to make things move along more quickly, to have disclosures made earlier in the process to push things along. Plus, you are going to have a judge who is familiar with the business concepts so there’s not a big learning curve every time he faces a new case or a new issue.
“Predictability arises because part of the process is that every order that the judge issues is written and is available online. For instance, I can tell you how Judge Yates has ruled in past cases involving facts very similar to what my client might be facing today. That will help when my client first comes in the door and describes the problem. If I know Judge Yates has ruled four times on that issue and this is how he’s ruled all four times, it helps me advise my client and it helps the client understand what is the likely outcome if he decides to go to court. So it may end up, in some cases, not being filed because the potential party knows what the result will be if they go to court.”
Peterson agrees and said he is already noticing an increased efficiency and a growing predictability out of the 17th Circuit Court.
“I think the predictability of business decisions will make it easier for the lawyers involved, but also for the business to chart a path where they are able to avoid litigation,” Peterson said.
Peterson said that, typically, a business case would take at least a year from filing through resolution, but with the new business court system, he expects to see a substantial time reduction.
Approximately 25 other states have established business courts since 1993. Peterson thinks Gov. Snyder was so quick to sign the legislation because it is another step in making Michigan more attractive to businesses.