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Lawsuits Cost Small Businesses $105 Billion in 1 Year

Small businesses paid $105.4 billion in 2008 related to lawsuits, a new study from the U.S. Chamber of Commerce's Institute for Legal Reform (ILR) finds. When medical malpractice costs were added to all other tort liability costs, the total for small businesses was $133.4 billion.

"As America struggles out of this current economic downturn, this study shows that our lawsuit system continues to be a drag on job-creating small businesses," said ILR President Lisa Rickard.

The study was conducted for ILR by NERA Economic Consulting. It concludes that small businesses (those with $10 million or less in annual revenue) paid, collectively, $35.6 billion of the lawsuit costs out-of-pocket rather than through insurance.

Litigation liability costs are expected to continue to grow. NERA forecasts that by 2011, small businesses, including small medical businesses, will be paying $152 billion in tort costs.

"Our lawsuit system is increasingly burdening owners, workers and our entire economy," Rickard said. "Regrettably, next year’s escalating lawsuit costs will be arriving at the worst possible time for small businesses operating on razor thin margins and straining to keep their workers employed."