The troubling state of our economy is, appropriately, being discussed all around us.
While Americans are making less, losing their jobs and fighting to keep their head above water, there is yet another clandestine way we are being robbed of our hard-earned money. In times of economic uncertainty, we need to be more aware than ever of where our every dollar is going.
Lawsuit Abuse Awareness Week, (October 6 to 10) is the ideal time to illustrate one tax most people are unaware they even pay – the lawsuit tax. In its 2007 annual report on U.S. tort cost trends, Tillinghast Towers Perrin found that our country paid $247 billion in tort costs. That comes out to $825 for every man, woman and child, or $3,300 for a family of four.
This “tax” is excised in numerous ways, such as higher prices for goods and services, higher insurance premiums, and higher medical and pharmaceutical bills.
As hard as this cost hits citizens, it impacts company’s even harder, particularly small businesses. A recent survey by California Citizens Against Lawsuit Abuse (CALA) and members of the National Federation of Independent Business (NFIB) found that lawsuits have a significant impact on the small business community.
Of the nearly 1,000 people who responded to the survey, nearly 83 percent believe that the number of liability lawsuits in California is increasing, with more than 98 percent stating that lawsuits filed against businesses have had a negative impact on business growth and prosperity.
In addition, just the threat of a lawsuit can have major impact on small businesses. Nearly three-quarters of survey respondents said that the threat of a lawsuit could force them to close their doors. Majority percentages of respondents also said such threats could force them to raise their prices or lay off employees. Considering that close to 60 percent said they have been threatened with a lawsuit in the past five years, these numbers could have serious implications to the state’s business climate.
Year after year, bills that would help California’s small business community are voted down in our legislature’s committees. Even though study after study finds California’s business climate to be among the worst in the nation, our legislators refuse to act. Harris Interactive/Institute for Legal Reform ranked our state 44th in terms of its legal climate in a recent study, while Forbes ranked California 40th on its list of the best states for business.
The CALA survey came to the same conclusion. Nearly 98 percent of respondents felt that California needs to pass new laws to protect businesses from frivolous our unfair lawsuits and nearly 95 percent feel that current laws favor those who sue.
Litigation costs have an enormous impact on our society. During Lawsuit Abuse Awareness Week and throughout the year, we should encourage our legislators to stand up against frivolous lawsuits and vote for common sense reforms. Every man, woman, child, and business in America could use a break from the lawsuit tax.