Three quarters of small business owners say fear of a lawsuit alone could force them to close their doors

(Sacramento, CA) – Approximately 98 percent of small business owners believe that lawsuits filed against businesses have hurt California’s economy and have had a negative impact on the state’s business climate, according to a survey released today by California Citizens Against Lawsuit Abuse (CALA).

More than 800 members of the National Federation of Independent Business/California (NFIB) responded to the survey and clearly believe that lawsuit abuse is harmful to their business and raises prices across the state.

“Small businesses are the heart of California’s economy,” said John Kabateck, Executive Director of NFIB/California. “This survey overwhelmingly demonstrates that lawsuit abuse is a real threat to our state’s small business community and California’s economic health.”

Ninety-seven percent of the survey respondents said that lawsuit abuse was a significant or major problem for California’s business climate, with nearly 60 percent of those responding they had been threatened with a lawsuit over the past five years. Even if they have not been personally sued, nearly three-fourths of small business owners say the threat of lawsuits could lead them to consider closing their doors.

Just the threat of a lawsuit can have disastrous consequences, according to the survey:

• Nearly 94 percent of businesses said the fear of lawsuits could force them to raise their costs.
• Nearly 75 percent said it could force them to restrict, reduce or change products and services offered to customers.
• Nearly 78 percent said it could cause them to reconsider expansion of the business.
• More than 67 percent said it could require them to lay off employees.

“Our small business owners have enough to worry about without constantly having to fear being sued,” said David Houston, CALA Chairman. “The lawsuit-happy mentality in California is bad for businesses, bad for employment, and bad for California’s economy.”

Almost all small business owners surveyed believe that aggressive personal injury lawyer advertisements encourage people to sue even if they have not been injured (98%) and that the motivation for filing lawsuits is to win big money (92.3%).

Respondents were dissatisfied with California’s legal climate as well, with nearly 98 percent believing that California should pass new laws to protect businesses from frivolous or unfair lawsuits. In addition, nearly 95 percent felt that the law currently favors those who sue.

“The fact is that lawsuit abuse is an issue that affects all Californians,” says Houston. “When our system is used for greed instead of fairness, we all pay, and we all lose.”

The full report is available here.