10/25/2005
CONTACT: Michael J. Donohue, (202) 554-9000
Legal reform legislation supported by more than 300 organizations
WASHINGTON, D.C. — The National Federation of Independent Business, the nation’s largest small-business advocacy group, today announced it will “key vote” legislation in the U.S. House of Representatives designed to prevent the filing of frivolous lawsuits and reduce abusive, job-destroying litigation. The bipartisan bill, H.R. 420, the Lawsuit Abuse Reduction Act of 2005 (LARA), is expected to come to the House floor late this week.
“Litigation is big business, and it’s killing small business,” said NFIB Executive Vice President Dan Danner. “When a single lawsuit costs the average small-business owner $5,000 just to settle, and their salary averages $50,000 a year, it is clear that they can’t afford to be preyed upon by lawyers who target small businesses. NFIB strongly endorses H.R. 420 because this legislation will significantly reduce the culture of predatory lawsuits harming our small businesses, communities and economy.”
The Lawsuit Abuse Reduction Act will help to reduce the number of frivolous lawsuits and the exorbitant costs that can drive small businesses to financial ruin. In a 2004 NFIB Research Foundation survey, small-business owners ranked the “cost and availability of liability insurance” as the second most important problem facing small-business owners today.
In the 108th Congress, NFIB advocated reforms of the legal system, including caps on medical-malpractice awards and punitive action against attorneys who bring frivolous lawsuits. Passage of real liability reform legislation is a centerpiece of NFIB’s legislative agenda in the 109th Congress. As an NFIB Key Vote, the final tally on the Lawsuit Abuse Reduction Act will be sent to all 600,000 NFIB members as part of the group's How Congress Voted scorebook just before the 2006 elections.
In summary, H.R. 420, the Lawsuit Abuse Reduction Act of 2005:
- Permits judges to order plaintiffs to reimburse reasonable litigation costs, including attorney’s fees.
- Makes sanctions against attorneys or parties who file frivolous lawsuits mandatory rather than discretionary
- Removes a “safe harbor” provision that allows plaintiffs and their attorneys to avoid sanctions for frivolous suits by withdrawing them within 21 days
- Reduces “court-friendly shopping” by requiring that plaintiffs in civil tort actions sue only where they live or were injured, or where the defendant's principal place of business is located.
Editor’s Note: For more information about the attitudes of small-business owners regarding liability issues and legal disputes, please view the NFIB National Small-Business Poll: The Use of Lawyers.
The National Federation of Independent Business is the nation’s largest small-business advocacy group. A nonprofit, nonpartisan organization founded in 1943, NFIB represents the consensus views of its 600,000 members in Washington, D.C., and all 50 state capitals.
