Tort Costs for Small Businesses

Torts—civil law suits—against small businesses (defined here as having less than $10 million in annual revenue) cost an estimated $160 billion in 2021, according to a recent publication from the U.S. Chamber of Commerce Institute for Legal Reform. Given inflation and economic growth, costs for malpractice litigation, intellectual property infringement lawsuits, and other civil actions against businesses are expected to grow by 6.4%. Even worse, businesses with under $1 million in annual revenues account, while having only 7% of revenues, bear 34% of the commercial tort liability costs, meaning “the tort system is more than seven times as expensive for the smallest businesses compared to the largest ones.” Can laws be changed to protect small businesses, such as from frivolous actions that still are costly and time consuming, even if the businesses ultimately prevail? #IdeaoftheDay