Why New York Small Business Owners Want Lawsuit Reform

Date: September 01, 2015

New York is one of the most litigious states in the nation, and for business owners, this presents tremendous risk.

“One of the greatest threats for any New York small business is the threat of lawsuits and litigation,” says Tom Stebbins, executive director of Lawsuit Reform Alliance of New York. “One lawsuit can potentially bankrupt a small business, and most small businesses pay far more for insurance than they would in any other state.”

One key part of this problem is contingency fees. Under current rules, most personal injury trial lawyers take 33 percent of the total settlement or judgment, which leads to more speculative lawsuits, a greater volume of unnecessary litigation and victims who are left with a fraction of their total award.

New York has limited contingency fees in medical malpractice lawsuits, and there is a movement underway to do the same for other lawsuits, including proposed legislation A5190 of 2014. This bill would limit contingency fees to attorneys in property damage or personal injury tort actions.

NFIB and the Lawsuit Reform Alliance of New York are working together on this issue and support a sliding scale for contingency fees, which would mean fairer compensation for plaintiffs, more timely settlements and parity with other states. The scale currently used for medical malpractice lawsuits is 30 percent of the first $250,000 of the sum recovered, 25 percent of the next $250,000, 20 percent of the next $500,000, 15 percent of the next $250,000 and 10 percent of any amount more than $1,250,000. (For more information, visit http://www.nylawsuitreform.org/contingency-fee-limits/.)

“[Adjusting to a sliding scale] will ensure that trial lawyers only take on good cases, reducing the number of bad lawsuits in New York and lowering the threat of lawsuits against New York small business,” Stebbins says.


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