Reed Smith Client Alerts

In a significant change to the Texas civil court system, Governor Greg Abbott signed HB 19 (H.B. 19 § 9, 88th Leg. Reg. Sess. (Tex. 2023)) into law in early June, establishing an entirely new system of business courts. While many states have already instituted similar business or complex litigation courts, enactment in Texas will likely prove to be contentious.

While the Act is set to take effect on September 1, 2023, the new business courts will not begin to hear cases until after September 1, 2024. The additional period is designed to give the state time to confirm judges, promulgate rules, and erect the necessary administrative infrastructure. Initially, there will be five judicial divisions that correspond with the state’s population centers in and around Austin (third), Dallas (first), Fort Worth (eighth), Houston (eleventh), and San Antonio (fourth). Two judges will sit in each division. The Texas legislature left open the possibility of funding another six divisions (to correspond with the more rural judicial districts) at the next legislative session.

Unlike other Texas courts, business court judges will be appointed to two-year renewable terms by the governor with the advice and consent of the Texas Senate. To serve, a candidate must be: (1) at least thirty-five years of age; (2) a U.S. citizen; (3) a resident of the division for at least five years; and (4) a licensed attorney with more than 10 years’ experience in a qualified field including corporate transactional work, complex civil business litigation, previous experience as a civil court judge in Texas, or some combination of the three. Moreover, HB 19 confers the newly-created Fifteenth Court of Appeals with exclusive intermediate appellate jurisdiction over the business courts. The Fifteenth Court of Appeals will be comprised of five justices who will hear sensitive matters of statewide importance (e.g., challenges of state law). Initially, the justices will be appointed by the governor, and thereafter, they will be subject to statewide election. As with the creation of the business courts, there are forthcoming legal challenges to the statutory scheme that established the Fifteenth Court of Appeals.