Yellowhammer Times

Frivolous lawsuits are reportedly exacerbating the financial difficulties faced by Alabama’s small businesses. According to Rosemary Elebash, Alabama's director of the National Federation of Independent Business (NFIB), these lawsuits add to the burden of inflation, creating worse conditions for small enterprises.

Many lawsuits are legitimate, and pursuing justice when wronged is a constitutional right. However, there are concerns that some are filed with financial gain in mind rather than genuine grievances. Small businesses, often operating with limited resources, find themselves allocating funds to cover legal expenses and settlements instead of reinvesting in their operations.

This diversion of resources affects business growth, job creation, and significantly influences insurance premiums, which rise to cover potential legal actions. Consequently, all Alabamians face higher prices.

In response, Alabama's small businesses are calling for legislative support for House Bill 420 and Senate Bill 293, known as the Lawsuit Fairness Act of 2024. The NFIB asserts these bills would not obstruct those with legitimate claims but would create fairness by addressing the imbalance in the current legal system.

The proposed legislation aims to regulate third-party financing companies that fund unrelated lawsuits, ensure expert witnesses are credible, and mandate truthful advertising from lawyers regarding court winnings.

The NFIB highlights that lawsuit abuse acts as an indirect financial burden on individuals and families. A 2021 report by The Perryman Group indicates that such abuses cost the average Alabamian $731 annually and the average family $1,016 per year.

The overall economic impact includes increasing business operational costs, influencing decisions on pricing, staffing, or closures, and creating a deterrent environment for new business initiatives. The NFIB advocates for a legal framework that ensures a balanced playing field for all parties involved.