In today’s business world, small businesses are vulnerable to legal attacks says the the Florida director of the National Federation of Independent Businesses (NFIB) and a group called the Citizens Against Lawsuit Abuse (CALA).
NFIB, the nation’s leading small business advocacy organization, and CALA released economic reports that detail the cost to Florida’s major cities as the result of tort costs.
The study, conducted by CALA, showed that frivolous lawsuits cost the Florida 126,139 jobs and $614.8 million in annual state revenues.
“Small businesses don’t have staff attorneys to defend themselves against every nuisance suit or bogus accusation, and they aren’t sitting on piles of cash,” said Bill Herrle, NFIB’s executive director for Florida. “When a small business is sued, it has to spend thousands of dollars to defend itself. Just one lawsuit can be enough to put a small business out of business, even if the case is eventually thrown out of court.”
The report also shows that excessive tort costs to the Florida economy result in $7.6 billion in annual direct costs and $11.8 billion in annual output (gross product). The study says tort expenses also cost $516 million to annual local governments.
“When my business was faced with litigation, it created a significant strain on our operations,” said Michelle Smith, owner of Source1 Specialty Services Inc., an NFIB member business in Winter Springs. “The time and financial resources it required of us took attention away from our customers, which is where the attention needs to be for a small business to grow. Small businesses like ours should not have to operate with the threat of an unwarranted lawsuit hanging over our heads. Without a doubt, Florida desperately needs lawsuit reform.”
Herrle said, “Our members will be working with their local legislators to stop predatory practices such as third-party litigation financing, jury awards that are based on inflated and even fictional medical costs and workers’ compensation and medical malpractice reform.
“We need the Florida Legislature to balance the scales of justice and create an environment where small businesses can afford to grow and create jobs,” Herrle said.
Herrle credited state lawmakers with helping to address one legal issue that the business community has fought to enact — Assignment of Benefits (AOB).
In AOB cases, property and motor vehicle owners in need of repairs sign over benefits to contractors, who ultimately pursue payments from insurance companies.
Insurers and legitimate restoration companies argue the practice has become riddled with fraud and litigation by the actions of a few bad apples within the restoration industry.