People you haven't even met are stealing money from you. That's right. You can be technically proficient, price yourself accordingly, market your services intelligently, manage your people wisely, control your costs rigorously - and still make less profit than you should.

Where's that money going? Straight into the pockets of trial lawyers.

Not all lawyers, mind you. Many are reasonable people performing hard work on behalf of their clients.

However, an avaricious minority would rather bring forward frivolous lawsuits in hopes of quick settlement offers, or class actions with potentially huge payouts - for the attorneys, not their clients.

You may never be the target of a frivolous lawsuit, but that doesn't mean you're not paying for them.

Think about how your health insurance benefits have skyrocketed. In a recent survey, the Air Conditioning Contractors of America (ACCA) learned that our members experienced a 60-percent increase in premium costs in just three years. Think about how much harder it is to get insurance now, especially insurance related to environmental and mold issues - and how much it costs when you can get it.

These problems aren't rising up in a vacuum. An explosion in medical malpractice lawsuits, resulting in massive jury awards, has caused an equal explosion in the cost of malpractice insurance. This is passed along to you in the form of higher premiums.

And the reason many contractors can't get adequate coverage for environmental exposure is a rash of big "toxic mold" lawsuits based on little more than junk science and sensational media coverage.

Who's Footing The Bill?

When some people hear the phrases "trial lawyer" or "frivolous lawsuit," they immediately think of the big stories - the huge verdicts against huge companies, like that McDonald's coffee lawsuit. But the majority of frivolous legal actions happens on a smaller scale and usually is targeted against small businesses, like contractors.

According to the U.S. Chamber Institute for Legal Reform, small business only accounts for 25 percent of business revenue, but pays 68 percent of tort liability costs - in excess of $88 billion a year.

In most cases, when faced with a lawsuit (even if it has no merit), small business owners settle with the plaintiff rather than endure a long and potentially more costly judicial process. Trial lawyers count on this.

And so, the costs keep rising for all small businesses, even if they don't connect the dots and realize the true cause.

As the system stands now, it may seem there's not much you, as a single contractor, can do about it. The only way to stop the madness is to change the system.

More Powerful Than Money

In Washington, money talks. There's no reason to pretend otherwise. According to the Center for Responsive Politics, trial lawyers are the biggest contributors to political campaigns in the nation, bar none.

But believe it or not, there's something worth more than money inside the Beltway. In fact, it's the only reason campaigns need that money in the first place.

Votes.

Members of both parties have long pushed for tort reform in Congress, but the only way it will ever become a reality is if small business owners and employees recognize how much the issue affects them, and vote accordingly.

Consider these bills that have been introduced in Congress:

  • The Small Business Liability Reform Act, sponsored by Reps Steve Chabot (R-Ohio) and Ken Lucas (D-Ky.) - This bill would limit punitive damages on civil cases involving businesses with fewer than 25 employees.

  • The Equal Access to Justice Act, sponsored by Reps. Don Manzullo (R-Ill.) and Earl Blumenauer (D-Ore.) - This bill would make it easier for small businesses to regain legal fees in disputes with the government.

  • And my personal favorite, the Personal Responsibility in Food Consumption Act, sponsored by Rep. Ric Keller (R-Fla.) - This bill dares to suggest that people should be held accountable for their own eating habits, and not the restaurants that sell them food. (Trial lawyers have made no secret that Big Food is their target now that they have finished with Big Tobacco.)

    I'm not going to lie to you: These bills probably won't pass this Congress. Passing legislation is a lot harder than introducing it.

    The only way our elected officials will take the need for tort reform seriously, and act on it despite large trial lawyer campaign contributions, is if the issue matters to them where it counts: their vote totals.

    It's up to contractors and our colleagues in small business all over the nation to recognize that this fight is not about Big Industry; it's about American enterprise. The system is not going to get better by itself. It will only get worse unless we do something about it.

    When it comes to politics, trial lawyers have more money than we do, mainly because they've taken it from you.

    But there are a lot more of us than there are of them. And if we learned anything from the last election, it's this: One person, one vote - yours counts.

    Guest columnist Paul T. Stalknecht is president and chief executive officer of the Air Conditioning Contractors of America. Learn more about ACCA at www.acca.org. To reach Stalknecht, e-mail him at paul.stalknecht@acca.org.

    Publication date: 09/27/2004