Small Businesses Hit
Hardest By Tort Litigation Costs
Individual
Cost Approaching $150,000 Per Business
CHARLESTON
,
“The
Institute’s study provides a detailed picture of just how destructive our
legal system can be to small businesses,” said Lisa Rickard, President of the
ILR. The report notes that this impact is being felt mostly on those small
businesses with less than $10 million or less in revenue a year.
These businesses are bearing 68 percent of tort system costs and each
pays nearly $150,000 a year to cover these expenses.
As for businesses with revenues of $1 million or less a year, the average
tort liability cost is $17,000 a year. Those
businesses bear 26 percent of the nation’s tort liability costs, but take in
only 8 percent of business revenues.
“This
‘hidden tort tax’ is money that could be used to hire additional employees,
increase production, or improve health benefits for workers,” Rickard noted.
Of
the $233 billion overall tort liability costs in this country, it is estimated
that $129 million falls on businesses, Rickard said.
Of the remaining costs, $80 billion is for personal liability (and is
handled largely through car insurance and homeowners’ insurance) and $25
billion is for medical malpractice.
“Our
leaders often pay homage to small businesses as the backbone of the American
economy, yet little has been done to ease the burden placed on these enterprises
by the steadily growing costs of litigation,” said Steve Roberts, President of
the West Virginia Chamber of Commerce. “No where is this more evident than in
“This
report shows that legal reform – the battle to rein in runaway litigation
costs – is not just a fight solely between large businesses and the
plaintiffs’ bar. In fact, lawsuit
abuse affects every business and every American.
This report clearly shows that small businesses have much to gain or lose
depending on the outcome,” Roberts added.
For
several years now, the West Virginia Chamber of Commerce has been advocating for
the need for civil justice reforms in
“We
must restore fairness and integrity to our judicial system before another worker
loses his or her job or another business closes its doors.
Institute
for Legal Reform Study Site - http://www.legalreformnow.com/study060804.cfm
West
Virginia Chamber of Commerce – (www.wvchamber.com)
As the state’s largest, most influential general business organization, the
West Virginia Chamber represents all business sectors in every region of the
state, with more than 95 percent of its members being small businesses. The
organization’s 5,000+ membership reach comes from its network relationships
with 54 local chambers of commerce and dozens of statewide business and trade
associations. The West Virginia Chamber is a proactive leader in the search for
solutions to problems, a voice for free
Institute
for Legal Reform -- (www.legalreformnow.com)
The mission of the Institute for Legal Reform is to make