A recent article in the Indianapolis Star, It’s Cheaper for Mom and Pop to Settle by Regan Morris (June 5, 2006), pointed out a rising trend in the legal field. Due to the rising costs of litigation, it is often cheaper for small businesses to settle lawsuits than to defend against them. Even when Mom and Pop know they have done nothing wrong.
According to Karen R. Harned, executive director of the National Federation of Independent Business Legal Foundation, “People are creating cottage industries for litigation.”
This a disturbing trend. Small businesses form the backbone of many of our communities. And by filing frivolous lawsuits under the theory that the small business can’t afford the cost of defending itself in court, we undercut the foundations of our legal system. And as an attorney who works with small businesses in the heartland, I can attest to the cost benefit analysis that the owners undertake each time a lawsuit is threatened. Whether or not the threat is legitimate.