Commentary: Businesses struggling for air in abusive legal climate
If you live in Illinois, go ahead and subtract $761.81 from your annual salary.
No, this is not an increase to Social Security, a higher 401(k) contribution, or even a new tax passed by the state legislature. This is an invisible "tort tax" and is a result of having a flawed and unpredictable civil justice system that awards disproportionate damages and incentivizes ridiculous lawsuits.
According to The Perryman Group's Economic Benefits of Tort Reform report, not only does every Illinoisan lose over $760 in income per year, but our state suffers nearly 100,000 permanent lost jobs and an estimated $498 million in lost government revenue.
As the president of a small business, these numbers are shocking, but not surprising. My company, W.S. Hampshire, Inc., is a fabricator and supplier of custom services, including Computer Numerical Control (CNC) milling and machining, die cutting, and thermal forming. We employ a small number of hardworking employees, and our top priority is the safety and well-being of our workforce.
Unfortunately, as an Illinois business, we are forced to grapple daily with a legal climate that incentivizes attorneys to pursue outsized settlements or court awards without consideration of merit, proportionality, or the interests of counterparties and their employees.
Specifically, workers' compensation laws encourage attorneys to bypass the traditional and appropriate arbitration process in favor of substantial legal fees and major settlements. What was designed to protect employees from harm has turned into a major economic setback for the state, as companies scramble to respond and are often forced to lay off workers or shut their doors for good.
Any business owner will tell you, the last thing we want is for employees to get injured on the job. Unfortunately, many jobs involve risks, especially in the manufacturing industry, where employees are handling hot, heavy, or sharp materials daily. Despite numerous and proactive safety precautions, accidents are inevitable. This is a simple a fact of life.
Lawsuits are not weapons; they are tools of justice designed to compensate individuals who have been harmed.
Traditionally, workers' compensation claims have been settled through mediated arbitration, where the parties work together to ensure a fairer and more efficient process that justly compensates the plaintiff, while ensuring the business at fault is able to continue operations and retain its employees.
In Illinois, however, our legal system has allowed trial lawyers to bypass arbitration.
They know many businesses cannot afford a trial and will settle, while others will risk it and stand to fork over even more.
Our legal system and all related parties need to keep in mind the businesses and jobs that are lost as a result.
In the same vein, Illinois product liability lawsuits put businesses on the defense yet again. All the costs and consequences remain the same, but with product liability, companies bear the responsibility for seemingly all consumer accidents, too, regardless of merit or preventability on behalf of the plaintiff.
A dangerous pattern has emerged in Illinois that is not sustainable and will only continue to hurt Illinoisans and businesses in the long run. The targeting of businesses and exploitation of our weak legal system increases costs for consumers as businesses raise prices to pay for litigation. Further, it pushes jobs and businesses out of the state and hurts taxpayers through lost government revenue.
Lawsuit abuse is at a tipping point in our state, and lawmakers in Springfield must enact tort reform to bring fairness back to our legal system. Small businesses are the backbone of our economy, and everyone will suffer if we allow this pattern of legal malfeasance to continue.
• Jeff Pope is the President of W.S. Hampshire, Inc. and the chairman of the Technology and Manufacturing Association's government relations committee.