Our court system is in financial trouble, which 
translates into delays, mounting costs and headaches for creditors.  BUT it is not doom and gloom IF you take proper care to draft your contracts correctly.  In fact, this is a great time to have the system work in your favor and for you to secure a quicker result with reduced legal expense.      

Let me explain how:

On May 15, 2012, California Governor Jerry Brown announced a revised state budget which impacts the State's judicial branch significantly.  The latest budget revision would transfer $300 million out of the trial courts' emergency reserves, and remove another $240 million from court construction funds. Altogether, the revised budget imposes over $540 million in new funding cuts to the trial courts, which have already suffered budget cuts of $653 million over the last three years. 

Los Angeles County Bar Association President Eric Webber commented on the budget revisions as follows:   

"California's revised budget punishes the trial courts' financially responsible behavior in prior years, by confiscating funds built up through careful planning intended to buffer cutbacks in courtroom operations as caseloads continue to rise even as the courts' budget is slashed.  The loss of the courts' reserves and construction funds may leave the courts no option but to close more courtrooms. The damage to California's justice system from four years of court budget cuts is real, and has put the courts' ability to dispense justice to individuals and businesses in California in jeopardy.  It's another sad day for justice in our state."

What Does This Mean?   

LASC is also responding to budget cuts by closing court rooms and even entire departments.  LASC will be closing 56 courtrooms, including 24 civil, 24 criminal, 3 family, 1 probate, and 4 juvenile court rooms.   LASC Department 12, which handles all writs of attachment applications, will be closed and the caseloads distributed to regular department judges.  Rents and profits receivership matters will be reallocated to Departments 85 and 86. 

Reallocating caseloads from specialized judges to regular department judges means that judges will be less familiar with procedures and standards, which increases your risk of receiving an unfavorable ruling.  Higher caseloads equates to slower response times and delays.  It also leads to changes in procedures that can create loopholes.  For example, the LASC will no longer allow debtors' exams for post judgments to be delayed, unless the debtor is a "no-show." 

Did You Know?  

Our clients who have adjusted their contracts are not having this problem.  In fact, it is just the opposite. They are taking advantage of the situation.  There is an old, but enforceable California statute allowing the parties to agree in their contracts that cases can be filed in the court, but referred immediately to retired judges for all purposes (with reservation of the right to hearings on prejudgment remedies to be heard within the court, such as replevins and writs of attachment).  The referral to a retired judge for all decisions basically takes the case off the court docket and out of the hands of the jury.  It accomplishes the same purpose as a jury waiver clause.  

We are having much success securing recoveries quicker and with less expense with a private judge then would be available during normal litigation.  This is not arbitration in the traditional sense, where you are limited by the rules of the American Arbitration Association or other arbitration processes. Instead, you will have fully experienced retired judge with a streamlined process.

Please feel free to contact us to discuss your options for adding these enforceable contract provisions that will give you the ability to protect the future of your contracts in California.  

Marshall Goldberg