By Brian Drake

Full Story in The Cap Times

Small businesses are the backbone of Wisconsin’s economy. They provide jobs, foster innovation and contribute to the state’s vibrant communities. Yet, these small enterprises often face numerous challenges: rising costs, workforce shortages, fluctuating demand and regulatory burdens. One major issue that continues to threaten the survival of small businesses is the growing liability risks stemming from the state’s litigation environment.

However, in Wisconsin the number of lawsuits filed, including class-action and personal injury cases, has increased in recent years, putting an immense strain on small businesses. For many of these companies, defending a lawsuit, regardless of merit, can cost thousands — if not millions — of dollars in legal fees, settlements and other expenses. This financial burden is especially hard for small businesses, which lack the vast resources and legal teams of large corporations.

The excessive cost of litigation is often a major deterrent to business growth. When owners are forced to allocate significant portions of their budget to legal defenses, they have less capital to invest in hiring employees, expanding operations, or upgrading their products and services. For many small businesses in Wisconsin, this may result in stagnant or declining growth, preventing them from reaching their full potential.

One of the key components of lawsuit reform is the implementation of reasonable caps on unquantifiable damages like loss of companionship or pain and suffering. By setting a limit on the amount that can be awarded to plaintiffs in personal injury cases, businesses are better able to predict potential liabilities and plan accordingly.

With these limits in place, businesses can avoid the fear of massive, unpredictable damage awards that could jeopardize their operations. This would provide Wisconsin’s small business owners with more stability and confidence in running their businesses.

Another important aspect of reform is limiting “frivolous” lawsuits. Too often, businesses are sued for reasons that have little or no merit, simply because the legal system allows for excessive and baseless claims to be filed. These lawsuits consume valuable time and resources. They also create a chilling effect where small business owners become overly cautious in their operations.

Curbing lawsuit abuse could reduce the overall cost of doing business in Wisconsin. When businesses are forced to pay for liability insurance to cover the potential costs of lawsuits, premiums often skyrocket. These higher premiums are passed down to consumers in the form of higher prices for goods and services. By reducing the volume and cost of lawsuits through tort reform, insurance premiums would stabilize or even decrease, allowing small businesses to offer more competitive pricing and allocate more funds to improving their products or services.

Tort reform is not just a legislative issue; it’s a crucial factor for the survival and growth of small businesses in Wisconsin. By addressing the excessive costs of litigation, reducing frivolous lawsuits and stabilizing the business climate, tort reform would provide small business owners with the tools they need to thrive.

Brian Dake is the president of Wisconsin Independent Businesses.