October 12, 2006
– 82% of Iowa's business leaders responding to a recent survey
said that the legal climate in Iowa imposes costs on businesses
that hurt job growth.
The survey, conducted by The Iowa Association of Business and Industry
with assistance from the Center for America in July
2006, invited Iowa business leaders and owners to
anonymously complete an internet-based questionnaire. The
results show how the out-of-control legal environment is
increasing costs to consumers and impeding economic growth and
Four out of five, 80%,
say that the legal climate in Iowa increases the cost of
everything consumers buy in Iowa.
Nearly four out of ten, 39%,
have decided against developing new products and/or services
in order to avoid liability lawsuits.
More than seven out of ten
business leaders responding, 73%, say that they now spend
more time than ever before trying to manage the risks of
Nearly seven out of ten, 69%, say that the legal climate in
creates disadvantages for businesses in Iowa compared with
More than half, 55%,
say that the legal climate in Iowa discourages them from
spending to create or improve products and/or services.
“Increasing costs due to litigation
and fear of litigation have clearly impacted the attitudes of
job creators in Iowa,” said John Gilliland, Senior Vice
President of the Iowa Association of Business and Industry (ABI).
“We hope this Iowa specific data will help policy makers
understand the need for continued reforms to Iowa’s legal
The survey reveals how the legal
climate in Iowa impacts the state’s economy and how business
investors view the effect of the legal climate on their
companies. Despite a top 25 ranking in the
Research Institute's recently released
US Tort Liability Index, Iowa business owners still feel threatened by
lawsuits and are spending a great deal of time and money
protecting their businesses from them.
"Lawsuit abuse is undermining Iowa
business plain and simple," said Dan Pero, President of the
Center for America. "A climate of litigation depresses
wages, curtails job growth and hurts the pocketbooks of every
Iowa family and job provider. Iowa has so many benefits that
make it an attractive home for prospective and current
employers, particularly small business. Unfortunately, too many
lawsuits can make a state like Iowa uncompetitive in the race
for jobs. In fact, many small business owners are just one
lawsuit away from bankruptcy which would have a devastating
impact on communities across the state. Iowa is fighting for its
economic livelihood and that fight cannot be lost because too
many trial lawyers are more concerned about what's in their
wallet than what they take from the wallets and pocketbooks of
hard working Iowans."
One third of the business owners and
managers participating in this survey, 33%, have 49 or fewer
employees. Another 20% have 50 to 99 employees and 33% have 100
to 499 employees. Leaders representing businesses with 500 or
more employees comprise 14% of the respondents.
Thus, the survey respondents reflect the group of small and
medium size businesses that traditionally generate the greatest
share of new jobs and fuel local economic growth.
Listen to an audio interview with ABI's John Gilliland
Download Full Survey Report