How to Save American Business

Nevertheless, these are steps in the right direction. You can help us most, however, by using your considerable clout as President to get the health care industry to bring its cost increases under control.

Lawsuit Nightmare

Medical malpractice is not the only area in which we need tort reform, as I'm sure you're aware. Lawyers on contingency fees have turned all kinds of litigation into a nightmare for small businesses. In my company, it got to the point where we'd get a call from the same lawyer every time we let one of our employees go. We were becoming the guy's meal ticket, and we had to put a stop to it. So a year and a half ago, we began requiring our employee-owners to agree to arbitrate any disagreements that might arise. Now, rather than going to court with every problem, we hire arbitrators, who are paid by the hour, to work out compromises. With no 30% or 40% contingency fees to be had, the lawyers have stopped calling, and our annual spending on legal fees, lawsuits, and claims has plunged from $414,362 in 2003 to $97,169 in 2004.

With arbitration, moreover, everybody has to be reasonable. For instance, one of our employees recently filed a complaint about another employee who had allegedly made an inappropriate remark. We don't condone such behavior, and we put the offender on suspension. During the arbitration process, we got the sense that the employee who had complained wasn't happy being at the company anymore. We offered him a 90-day severance package. He asked for three years of severance pay. When we refused, he decided to come back to work.

I'm not saying that all lawsuits are frivolous. Of course, some employees have legitimate complaints, and some employers don't treat people as they should. But the vast majority of business owners try to do the right thing, and they shouldn't have to pay because of a few bad apples. We've cut down on employee lawsuits by switching to arbitration, and we urge other business owners to do the same. But we could all use some help from the government in terms of tort reform.