MCAA Works to Pass the Lawsuit Abuse Reduction Act; Small Business Owners Have Little Faith in Legal Profession

The House of Representatives recently passed H.R. 420, the Lawsuit Abuse Reduction Act by a vote of 228-184. This bill (LARA) will help rein in frivolous lawsuits by (1) restoring mandatory sanctions on attorneys, law firms, or parties who file frivolous lawsuits; (2) abolish the "safe harbor" provision that allows parties and their attorneys to avoid sanctions by withdrawing a suit within 21 days after a motion for sanctions has been filed; (3) permit monetary sanctions, including reimbursement of reasonable attorney's fees and litigation costs in connection with frivolous lawsuits; and (4) extend the Federal Rule of Civil Procedure 11to state cases in which a state judge finds the case substantially affects interstate commerce by threatening jobs and economic losses to other states.

LARA provides a national solution to end unjustifiable forum shopping and stops litigation tourism. The impact of frivolous lawsuits on businesses goes well beyond the financial impact; litigation causes substantial emotional hardship and changes the tone of the business. Small businesses have few options to "recoup" these costs; raising prices is not an option, but oftentimes cutting operating expenses (such as letting employees go) is a painful but necessary step in an effort to rebuild the company. It is time to put an end to baseless claims; individuals and attorneys who victimize innocent people should be held accountable for their actions. This legislation is supported by the Bush Administration and MCAA will continue to work to pass this bill in the Senate so the President can sign it into law.