California’s ‘Judicial Hellhole’ Poses Challenge to Businesses

Anyone who has litigated a case in Los Angeles knows that court proceedings there have slowed considerably in recent years.

A reputation for being unfriendly to business and home to large verdicts has earned Los Angeles the ranking as the worst “judicial hellhole” in the nation, according to the American Tort Reform Association’s 2025-2026 annual report.

California’s expansive consumer protection laws as well as documented shortages of court reporters and judicial vacancies have contributed to the case backlog.

For businesses operating in California—and especially those headquartered elsewhere—the challenge becomes managing risk in a litigation environment that is both complex and unpredictable.

While Los Angeles’s “hellhole” ranking has generated headlines, the reality is far more nuanced. Expansive new consumer protection laws and evolving liability theories are being tested in California courts.

Behind the scenes, procedural constraints and structural pressures have contributed to making Los Angeles one of the most demanding jurisdictions in which to defend high-stakes disputes.

There have been efforts to address the bottleneck, including the 2025 “one year to trial rule” implemented by the Los Angeles Superior Court that mandates most civil cases go to trial within a year of filing date.

New Regulations

While federal regulatory momentum softened in 2025, California advanced expansive consumer protection measures. The state has more robust product liability, data privacy, cybersecurity and consumer marketing laws than arguably any other jurisdiction in the country. Many of these laws are being interpreted and litigated before there’s meaningful guidance on how they will function in practice.

Claims filed before there is meaningful guidance on threshold issues such as standing, damages, evidentiary standards or available defenses are time-consuming—and expensive. California litigation often feels like a moving target, especially for businesses used to resolving disputes in jurisdictions with more settled precedents. No one wants to be the test case for how a new regulation will be interpreted in litigation.

All companies doing business in California need to proactively assess operations, products, and commercial practices as part of an ongoing risk management process. Given how rapidly regulatory requirements are evolving, compliance can’t be a one-time exercise. In some instances, businesses may need to adjust their approach as courts interpret new laws, moving from initial, good-faith efforts to practices shaped by judicial guidance.

Businesses that operate in multiple states also need to decide whether to align all of their operations with California’s regulatory standards or develop California-specific practices while maintaining different approaches elsewhere. That analysis is highly fact-dependent, requiring businesses to weigh cost and operational complexity against risk tolerance.

Overloaded Courts

Another reason for California’s reputation as a difficult jurisdiction is the court system itself. California courts face crowded dockets and judicial vacancies. Although the situation has improved somewhat—Los Angeles County began 2025 with 25 Superior Court vacancies and ended the year with 16—many courts are still working through pandemic-era backlogs.

Limited motion calendars and constrained trial settings mean that even routine matters can take months to be heard. The growing complexity of modern litigation—from mandatory settlement conferences to extensive discovery requirements—often slows proceedings further. And if cases are tried to jury, businesses may face significant risk in the form of nuclear verdicts, which have become increasingly prevalent in Los Angeles County in recent years.

For businesses, these delays have practical consequences. In real estate and construction disputes, extended litigation timelines can stall development, complicate financing, and strain relationships between owners, contractors, and lenders. In product liability matters, prolonged discovery and motion practice often increase costs long before liability questions are fully resolved. Even the most well-managed cases become more expensive and disruptive when they remain active for months or years.

While businesses can’t control court resources, they can take steps to mitigate delays. In a slower-moving system, thoughtful planning and disciplined litigation strategy often make a meaningful difference in controlling cost and minimizing disruption. Early case assessment, targeted discovery strategies, and realistic motion planning can help avoid unnecessary detours. When appropriate, alternative dispute resolution may be able to settle some matters more quickly.

Looking Ahead

For companies considering expanding their California operations, the key takeaway isn’t that the jurisdiction is unmanageable, but that it requires a different approach.

Standard risk models and litigation strategies developed elsewhere may not work given current constraints on California courts and the potential for outsized verdicts. Understanding how California law diverges from other jurisdictions allows businesses to anticipate where exposure may be greater than expected.

Businesses should consider the venue and forum from the outset. While companies can’t always control where a dispute is filed, decisions made at the outset of a commercial relationship—such as dispute resolution provisions or operational structuring—can meaningfully influence how and where litigation unfolds.

California’s litigation climate can be a challenge. At the same time, the state remains one of the largest and most dynamic markets in the world, offering significant opportunities for businesses willing to plan thoughtfully and adapt.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Ashley R. Fickel is a partner at Stinson who focuses on business, real estate and construction litigation and consumer class action defense, and data and private cybersecurity.

Kyle R. Besa is an associate at Stinson whose practices includes complex business and professional liability disputes and broader litigation matters.

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