LOS ANGELES (Reuters)—Deep budget and job cuts to California's court system, the nation's largest, could cause up to $30 billion in economic losses and triple average litigation times for Los Angeles County, a study showed Wednesday.

Legislators in the largest and richest U.S. state, who slashed $100 million from the court budget in 2008, are pondering ways to plug a $21 billion shortfall in state spending—a prospect that is roiling the legal community.

The internal study, commissioned by Los Angeles County and made available to Reuters, posits a worst-case scenario of a 30%-per-year cut to state court budgets through 2013. That would slow economic recovery by trapping $15 billion of unresolved corporate deals and disputed assets in legal limbo, and have additional negative ramifications.

Many lawyers and judges agree that operating at current funding levels over the long term would damage already strained trial courts, slow economic growth and hurt business by raising legal costs and delaying settlements.

The National Center for State Courts says court operations in many states are near a "tipping point" at which they may not be able to handle constitutional duties and are trapped in a cycle of widening budget deficits and falling tax revenues.

"It is our sense that this is going deeper and we are not coming out of it right away," said Dan Hall, NCSC vp of court services. "We are not expecting those revenues to return until 2013 or 2015."

Roy Weinstein, an economist who co-authored the study, said, "The number of filings is increasing and the pipeline is getting smaller at the same time you are trying to push more through." He added: "The value of the (assets) that are going to be stuck is increasing."

The potential closure of one-third of Los Angeles County courtrooms would stretch the average wait for trial to 4-1/2 years from 16 months, resulting in the loss of $13 billion in legal industry revenue and 155,000 jobs, the study showed.

"There will be a reduced demand for legal services because people are going to realize that lawyers and their firms can't resolve problems quickly enough," Mr. Weinstein said.

'Serious consequences'

The drop in economic activity would cut state and local tax revenue by $1.6 billion by 2013, according to the study by Mr. Weinstein and fellow economist Stevan Porter of Micronomics.

Courtroom closures would disproportionately hit civil trials and their mainly corporate litigants because of speedy trial guarantees afforded criminal defendants—a fact that has alarmed major law firms and the local bar association.

Lawyers "are universally troubled...Everyone now recognizes this is a real risk—more than a risk," Los Angeles County Presiding Judge Charles McCoy said. "If the (2009) budget we are now working on is not modified, this will happen."

Lawmakers convene in January to write a new budget for fiscal 2010-2011, and their starting point will be a proposal by Gov. Arnold Schwarzenegger that had not been unveiled.

Judge McCoy has pressed lawyers to help him convince lawmakers that a planned $5 billion in court construction bonds must be delayed and fees collected to service them diverted to court operations until the crisis passes.

Other presiding judges, court administrators and trade unions eyeing construction jobs oppose the move as premature.

"(The study) ought to be used to work very hard with the legislature...to talk about these budget cuts and their impact on the judicial branch and why they shouldn't occur," said Michael Roddy, San Diego Superior Court executive officer.

California Chief Justice Ronald George, who has asked Gov. Schwarzenegger to restore the $100 million cut from the system last year, is cautiously optimistic about 2010 funding.

"We are not going to let any court go under," Justice George said. "By the same token, we are not prepared to take drastic measures before we know what the budget landscape looks like."