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June 7, 2004

Chamber: Small Businesses Victimized by America’s Legal Crisis

WASHINGTON, D.C. – The United States Chamber of Commerce Institute for Legal Reform (ILR) today released a study showing the tort system costs U.S. small businesses $88 billion a year.

“As a small business owner, I have seen first-hand the devastating effect legal costs can have on small businesses,” said Maura Donahue, Vice President of Donahue/Favret Contractors, Inc., of Mandeville, Louisiana, and Chair of the U.S. Chamber’s Small Business Advisory Council. “Money that should be used to expand and hire new employees is instead siphoned off to pay for legal costs. Small business owners are the engine that drives the U.S. economy. They create 75% of the new jobs in this country, but are clearly being handcuffed by a steep rise in frivolous litigation.”

The study, conducted for ILR by NERA Economic Consulting, found that the total annual cost of the tort system to U.S. businesses (large and small) is $129 billion per year. Small businesses with $10 million or less in revenue bear 68 percent of that cost, paying $88 billion a year. That equates to about $150,000 a year for each small business – money that could be used to hire additional employees, expand operations or improve health coverage.

“America’s small businesses are paying the price for our legal crisis in lost business opportunities,” added ILR president Lisa Rickard. “That is why we need comprehensive legal reforms at the federal and state levels that will rein-in the excessive influence of unscrupulous trial lawyers and restore fairness and balance to our legal system.”

The mission of the Institute for Legal Reform is to make America’s legal system simpler, fairer and faster for everyone. It seeks to promote civil justice reform through legislative, political, judicial and educational activities at the national, state and local levels.

The U.S. Chamber of Commerce is the world’s largest business federation representing more than three million businesses and organizations of every size, sector and region.

A full copy of the ILR study is available online, http://www.legalreformnow.com

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