Sept. 30, 2004--Capital Hill delivered some potentially good news to small business owners last week when it passed a piece of legislation called the Lawsuit Abuse Reduction Act.
The bill, sponsored by Rep. Lamar Smith, R-Texas, was drafted with the intent to limit the number of frivolous lawsuits by making attorneys and plaintiffs accountable for bringing frivolous lawsuits to court. If the bill passes the Senate, it passed the House on a 229-174 vote, it could be a cause for celebration among the many small companies that lack in-house counsel or the financial resources to support a baseless lawsuit that goes to trial.
According to the National Federation of Independent Business, the nation's largest small-business advocacy group, smaller companies make excellent targets for frivolous lawsuits because of their willingness to settle out of court rather than going to trial, which cost $100,000 on average to fight. A recent NFIB survey found that half of all small business owners that responded said they were "very concerned" or "somewhat concerned" about the specter of a lawsuit against them.
To make lawyers and their clients accountable for bringing lawsuits the court deems frivolous, the bill would force plaintiffs to pay the legal costs of the defendant and a "three-strikes" rule that would automatically suspend any lawyer that brings three frivolous lawsuits into the courtroom.
House Republicans also saw the bill's passage as a way to sound off on the Democratic vice-presidential candidate, Senator John Edwards, who reportedly made $39 million during his 10 years as a personal injury lawyer.
"This week is John Edwards appreciation week," said House Majority Leader Tom Delay, R-Texas, who went on to call the Smith's bill an effort "to take back America's legal system from the lords of the ambulance chase."
Darren Dahl is a contributing editor at Inc. magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, North Carolina.