Texas Creates Business Courts to Ease Legal Workload

Texas Supreme Court Justice Evan A. Young called the new business court “the most substantial modification of the judicial system of our state since 1891.”

Jerry Bullard, a Fort Worth lawyer with more than 30 years of experience, is one of the inaugural ten judges. He was appointed by Gov. Abbott to serve in the Fort Worth division of the court. Bullard said he was happy in his private practice and never envisioned he’d become a judge before members of the legal community encouraged him to apply for an appointment.

“I was happy to be a practitioner, but at the same time, the call to service and the encouragement of others, it led me down the path to where I am now,” Bullard said.

Here’s everything you need to know about the new court system.

How it works

The new court system is designed to lighten the load of the rest of the state’s judicial system by putting complex business-oriented cases in front of judges with expertise in handling business law. Before September, those cases would have landed on state district court dockets.

Parties can file cases in either district courts or the new business court system. Even so, the new judicial system will only handle governance cases with more than $5 million in controversy or those involving publicly traded companies as well as contract disputes or other “qualified transactions” where more than $10 million is at stake.

The business court is divided into 11 divisions across Texas. The five divisions covering the state’s largest cities and their surrounding counties are already up and running.

Texas Business Court judges will issue written opinions, unlike state district courts. Bullard said he looks forward to writing opinions and that the intent behind them is to build up a business court precedent for how Texas law handles certain disputes.

“I think it benefits everybody,” Bullard said of writing opinions. “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.”

The new system adds Texas to the list of more than half of U.S. states that already have a business court system.

Delaware’s Court of Chancery is one of the reasons more than 60% of Fortune 500 companies are incorporated in the nation’s first state, said Ryan Wooten, a partner with the Orrick law firm who specializes in complex litigation.

“For Texas to create [the business] court suggests that we want to have a court that is looked to like the Delaware courts,” Wooten said. “I think Texas is saying to businesses, ‘Come here, we will have a court for you that will help you, in a very sophisticated way, resolve your disputes and you can put your trust in this state.’”

Gov. Abbott said these courts will offer more efficient decisions, and thus less expensive ones, for businesses operating in Texas. He also spoke about the importance of having judges experienced in business matters deciding business disputes.

“There are some people who up until now, are judging business cases and have no idea what goes on in the business world,” Abbott said. “[Texas businesses] deserve to have well-qualified judges with a wealth of experience either as a former judge themselves or as litigants who have been heavily involved in litigating business cases.”

The new business court stands out because judges are appointed by the governor instead of being elected at the ballot box, the process in place for state district courts. The governor’s nominations are then subject to approval by the Texas Senate. This is similar to Delaware’s court, but judges there serve 12-year terms while Texas Business Court terms are just two years.

Abbott said he was closely involved with the nomination of the 10 judges for the business court, knowing that they would come under keen scrutiny as the first people to hold the office.

Opponents of the business court and the accompanying appeals court have already aired their grievances with the new system. Adrian Shelley, the Texas director of progressive advocacy group Public Citizen, was critical of how the new court is being staffed.

“The transition from certain cases being heard by courts with elected judges to courts with judges that are appointed by the governor, that concerns us,” Shelley said.

Appointed judges may not reflect the ideology of local communities, Shelley said. He was particularly concerned about how that might impact the environmental cases that comprise much of his group’s activity in Texas. Appeals for cases of that nature brought against state agencies, as well as business court cases, will be heard in the new statewide 15th District Court of Appeals instead of Democratic-leaning Travis County courts.

Reporting from investigative news source The Lever found that five of the 13 judges appointed to the new business court and the new appeals court had worked on behalf of fossil fuel companies. All three of the judges on the new appellate court were among those five.

Abbott hinted at the criticism of having appointed judges at the swearing in ceremony and gave his own take.

“It doesn’t mean it’s predetermined about who may win or who may lose,” Abbott said. “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.”

Background

The business court was created when House Bill 19 was signed into law on June 9, 2023 by Gov. Abbott. Several months before that, Abbott had been in North Texas advocating for these new courts when he spoke to business leaders at the Arlington Chamber of Commerce.

KERA and WFAA reported that the governor was scathing in his assessment of the legal landscape for companies in Texas.

“Our court system, especially in our large cities, is a travesty of justice, and it is running businesses out of the State of Texas,” Abbott said at the February 2023 appearance.

The governor, a former Texas Supreme Court Justice, expanded on those issues in his speech at the swearing in in Fort Worth.

“The truth about our legal system is that we have clogged courts,” Abbott said. “There are too many cases — whether it be civil or criminal — that are being held up, that are slowed down, that are not being adjudicated, that are, in a way, hindering justice because decisions are not being made.”

The latest statewide data from the Office of Court Administration indicated that Texas district courts had nearly 18,000 pending civil cases between Sept. 2023 and Feb. 2024.The clearance rate, which shows if a court is keeping up with its caseload, was at 87% for civil cases. A rate below 100% reflects that a court has disposed of less cases than have been filed.

Abbott and his allies in the legislature see this new court system as the way to alleviate the issue by moving complex business cases to a specialized court with judges experienced in those matters.

Abbott reaffirmed the need for a business court by highlighting the size of the Texas economy, which has now grown larger than countries like Brazil, Italy, Russia and Canada.

“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,” Abbott said.

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