Liability
• Sixteen (16) percent of small-business owners are “very” concerned and another 31 percent are “somewhat” concerned that they will be defendants in a liability suit in the next few years. The primary reasons for their fear are the vulnerability of their industry to suits, they can be dragged into suits in which they have little or no responsibility, and suits occur frequently. However, 36 percent are “not too” concerned and 17 percent are “not at all” concerned. Those not concerned cite steps they have taken to minimize a suit and the belief that a suit is only a remote possibility.
• Eleven (11) percent of small-business owners were defendants in a liability suit during the past five years. The incidence is virtually identical to that reported by a similar sample of owners in 1995. There effectively has been no change in the frequency of liability suits filed against small businesses, at least in the last decade.
• The most common types of liability suits filed against small businesses are product or professional liability and personal injury, i.e., premise liability. A customer is the most likely person to bring the suit.
• Most cases do not go to court. By a 9 to 1 margin, they are settled before trial. However, many small-business owners are disappointed. About half feel that they are pushed into settlement by their insurer when they would prefer to fight.
• Fourteen (14) percent of those not sued have received a credible threat of a liability suit over the last five years. The nature of the case threatened and the position of people threatening them are similar to those filing suit. The exception is premise liability where suits are filed with much greater frequency than are threats made. In total, nearly one-quarter of small employers in the last five years have either been sued or credibility threatened with a liability suit.
• Over 20 percent report that they spend more time on liability problems and potential liability problems than such vital business activities as introducing new technologies or processes, evaluating changes in employee wages and benefits, obtaining or repaying business loans, evaluating the competition or looking for ways to cut costs.
• Most small businessmen and women take multiple steps to protect themselves against the consequences of a liability suit. Among the most common are educating employees about ways to prevent a suit, checking with insurance agents or brokers about the adequacy of insurance, and seeking legal advice. Less common are changing products, services or operations to limit exposure or to withhold them for fear of a suit.
• Just 3 percent of small-business owners have filed a liability suit against someone else in the last five years, practically the same percentage who said they did so in a 1995 poll. Small businessmen and women are about four times as likely to be defendants in a liability suit as a plaintiff.
• Small employers believe that liability law tilts in favor of plaintiffs. Fifty-eight (58) percent claim that the law leans toward those suing others; 5 percent claim it leans toward those being sued – an 11 to 1 ratio. Just 21 percent believe the law is balanced between the interests of plaintiffs and defendants. Sixteen (16) percent don’t know.
• Small-business owners located in states having a more positive climate for conduct of liability suits experience fewer suits both as a defendant and as a plaintiff.
