Law and Business: How the Judicial System is Vital to How Iowa Companies Operate

May 10, 2019 | Law and business

Business and the legal system are intricately intertwined.

Judicial rulings can often have a profound effect on how businesses operate. And the speed at which courts operate is important in resolving disputes in a cost-effective manner, an obvious priority for companies.

“The judicial system is critically important to business success,” said Steven Bradford, senior vice president with HNI Corp. in Muscatine. “Having a fair and efficient legal system provides a stable climate in which business can flourish.”

But the legal system can sometimes be challenging for businesses to effectively maneuver. How can all businesses in Iowa have their voices heard? And what’s the importance of leveraging Iowa’s court system? Luckily for businesses around the state, Iowa’s legal system is largely robust, Bradford said.

“If you have to be in court, Iowa is a good place to be,” he said. “Businesses want to be treated fairly, and I think Iowa benefits from having a well-run judicial system.”

Rulings have broad effects for business

The judicial system is sometimes associated with inconsequential person-to-person or business-to-business disputes, but in the case of the Iowa Supreme Court — the state’s highest legal stage — those rulings can mean much more.

Ryan Koopmans, a lawyer with Belin McCormick in Des Moines, specializes in cases at the Iowa Supreme Court level involving antitrust, constitutional law and more. Koopmans worked as a clerk for a judge on the 8th Circuit Court of Appeals, a federal court that covers much of middle America, including Iowa, Minnesota, South Dakota and more. He then served a stint as Gov. Kim Reynolds’ chief of staff from 2017 to 2019 before joining his current law firm.

He has seen firsthand how the government operates and how judges come to decisions.

Cases that reach the Iowa Supreme Court often have sweeping effects. The cases may be between two businesses, or involve individuals or a government entity, but depending on the subject, a case could affect regulation and how businesses operate.

“From my perspective, it’s about public policymaking,” Koopmans said. “Businesses need to start thinking of courts as public policymakers and figure out how to engage them. When we think about shaping public policy, we usually think about the Legislature, the governor, but it’s important to understand the court’s role, too.”

Oftentimes, case law sets precedent for how laws apply to certain situations. Some of the more recent examples have concerned employment law, including rules for at-will versus contract employees. In June 2018, the Iowa Supreme Court ruled for the first time that employees with employment contracts could sue for wrongful termination. Another case ruled that the 2017 collective bargaining laws passed by the state unconstitutionally favored certain workers.

These rulings could have tremendous effects on certain businesses, which is why it’s all the more important that companies are aware of cases moving through the legal system and make their voices heard.

Keeping up with regulations and operating a business is “a balancing act for sure,” Bradford said. “My experience has been that most businesses want to make sure they don’t get in trouble with the law. They want to make sure they are doing the right thing, compliance-wise. You’re always thinking about the next thing that’s going to happen because no business is static.”

One of the best ways for businesses to voice their opinion or perspective on a potentially sweeping court case is through an amicus curiae brief. An amicus brief, as it’s more commonly known, allows an entity who is not a party to a case to submit their views on a case that could have wide-ranging implications.

The reason for these briefs is to give judges, who may not have the historical or broader background to understand the complexity of an issue, more perspectives to consider. That’s important, considering that the parties in the case are primarily concerned about winning or losing, not the broader implications, Koopmans said.

“In some cases, we can clearly see in the opinion that an amicus brief has had an effect on the case, or at least the legal ruling on the case,” Koopmans said. “And I think we’ve seen amicus briefings become more prevalent in Iowa because people are understanding that public policy is made in the court and not just in the Legislature.

“Businesses need to understand that if they want to affect this ruling, they have to give their opinions to the court.”

New business court helpful for companies

A relatively new addition to the Iowa judicial system is the Business Specialty Court.

In 2013, the business court was started with the idea of having a specific, responsive system for business disputes. Judges appointed to the court have a background in commercial litigation and law, allowing quicker rulings and more consistency.

The business court system is based in part on Delaware’s Court of Chancery, a specialized court that has been hearing business cases for more than 200 years. Delaware’s business climate is notably robust, with more than 1 million businesses registered in the state — that outnumbers Delaware’s population of almost 970,000. The businesses incorporated in Delaware equate to more than 50% of the country’s publicly traded companies and more than 60% of Fortune 500 companies.

Delaware has many different policies that make it an ideal place to incorporate, but the Court of Chancery has a reputation for handling business cases quickly and efficiently.

Iowa’s Business Specialty Court was originally enacted on a trial basis. Both parties had to agree to move the case to the special circuit. But on Jan. 15, the court implemented an option for one party to motion to move a case to the business court. For that reason, we could see more trials move into the business court in the future.

One of the biggest benefits of the Business Specialty Court is its goal to help businesses dispute a legal matter in a cost-effective manner. Going to court is a pricey process, especially when it comes to document discovery and presentation.

“These judges are more familiar in getting those cases teed up to go to trial, and they are more familiar with complicated discovery issues,” said Koopmans, who noted he hasn’t had a case go to the business court yet but is familiar with its processes. “It’s something that drives businesses crazy in the age of electronic discovery. Every email is saved and you have to review thousands of pages of documents.

“It’s very expensive, so anything a judge can do and manage the project better is really important to businesses as they try and keep the costs down.”

Associations give businesses a voice

Small businesses can sometimes find themselves at a disadvantage when it comes to the legal process. Many times, small companies don’t have access to quality inside or outside legal counsel. Other times, they may not have the budget size of larger businesses around the state.

The bigger the numbers, the easier it is to be heard.

Trade or industry associations provide those numbers. These organizations include the Iowa Association of Business and Industry — the largest business association in the state — local chambers of commerce or industry-specific organizations, all of which have helped or actually taken action via the judicial system on behalf of their members.

Associations can provide a valuable resource for small businesses looking for better representation, whether in the judicial process or at the state Capitol in regards to unfair bills and regulations.

“It’s important simply because you give more power for the more people you’re representing,” said Bill Brown, an attorney specializing in a wide variety of business issues at the BrownWinick Law Firm in Des Moines. “One of the benefits of an association is you get a broad range of companies. It’s not just a cost savings, because you are spreading the cost among different members, but it’s the breadth of representation that matters.”

Associations are also critical for helping companies stay on top of regulatory and judicial matters. Every year, associations all over the state release their policy goals for the upcoming legislative season. An individual business may have a good relationship with its local representative, but that may not be enough.

“If that representative isn’t a committee chair or on a committee you’re interested in, so what?” Brown said. “Associations have the combination of breadth of representation, the cost savings and the relationships built with those legislators. They can bring the right people to the table to bring these concerns to legislators.”

Associations are also critical in helping smaller business be aware of cases moving through the judicial system that could affect them. Many times, associations can submit amicus briefings on behalf of their members.

“It’s not just one business with an issue,” Koopmans said. “It shows that this is important to the business community as a whole. That will maybe force them to dig in a little more and evaluate the case a little closer.”

One adverse ruling can change how a business can operate. Associations can help stop rulings before they happen.

“If businesses want their voices heard, the best way is to join an association. Or you can cobble a lot of businesses together who feel the same way and write a brief,” Koopmans said. “It’s much cheaper to write a brief and stop a bad ruling than it is to go to the Legislature after the ruling has come out and get that case overturned.

“It’s so important to focus on the front end of the court so you don’t have to work hard to overturn rulings bad for business. If the court gets it right in the first instance, you don’t have to do that.”