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 If you think times are tough at the gas pump or
grocery store right now, you’re in for a shock when you read the latest Citizens
Against Lawsuit Abuse (CALA) Economic Impact Report for Illinois. According to
the most recent data, Illinois loses 178,178 jobs annually, and each Illinoisan
pays almost $2,100 more each year for goods and services, all thanks to our
state’s broken legal system.
If you’re wondering how legal issues could possibly contribute to less money in
your pocket, you’re not alone. But as a fourth generation Illinois small
business owner, I’ve seen the detrimental impact of our backwards legal climate
firsthand. I can report that our state is indeed in bad shape and on an
unsustainable path thanks to lawsuit abuse.
Unfortunately, our state’s problems start in Springfield, where lawmakers
continue to pursue an increasingly anti-small business agenda. The most recent
example – Senate Bill 72, the Prejudgment Interest Act – passed last year and
put Illinois businesses on the hook for the nation’s highest interest owed on
future damages. In other words, inflated interest charges begin accruing for
defendants before they can even defend themselves in court.
The natural outcome? Plaintiff’s attorneys have every incentive to sue
businesses, regardless of merit, in order to leverage a settlement. They know
the high pretrial interest is enough even to dissuade innocent parties from
risking the wrong verdict in court. And on the other hand, because businesses
must prepare themselves for these predatory tactics by allocating more dollars
for legal expenses, they are forced to raise prices and lay off employees. Those
that can’t afford to do this, including many small and family-owned businesses,
are often forced to close down altogether.
As if this wasn’t enough, Illinois businesses are also unnecessarily hampered
with hyper-restrictive workers compensation laws. For all intents and purposes,
employers are restricted from working with employees through a vehicle known as
"mediated arbitration" when a dispute arises. Instead, both parties are forced
to shell out money for attorneys’ fees and court costs and take the matter to a
judge.
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Unfortunately, as many of us know all too well, taking matters to court is just
a more expensive, less effective, and indirect path to a worse outcome. Not only
are employees less likely to resolve any legitimate claims with employers, but
they also receive a far smaller portion of any settlement that is reached in
court. This especially hurts those in the manufacturing industry like me, where
our employees take more risk than most and might not receive what they deserve
in the case of injury. If mediated arbitration could somehow be restored, it
would remove what is essentially a giant middle-man – the court – save
businesses and employees time and money, and lead to more positive workers
compensation outcomes for everyone.
We saw 40% more people leave our state than move here in 2020, and the trend is
the same in the business community. It doesn’t take an economist to understand
that over-penalizing and restricting businesses results in lost jobs, higher
prices, and more business closures. In fact, the Illinois economy suffered over
$11 billion in unnecessary costs last year due to lawsuit abuse alone. In an
overinflated economic environment, where we are all still feeling the
aftereffects of COVID-19 and supply chain shortages, we cannot afford to make
our problems worse. Illinoisans and small businesses deserve better from our
leaders, and now is the perfect time to reverse course, enact meaningful legal
reforms, and prioritize putting our state back on the right track.
Zach Mottl is the 4th generation of his family to own and operate
Atlas Tool Works, Inc. (Lyons, IL)
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