Is liability threatening business?

• Position: One Minute Survey Results

Yes, say respondents to Financial Executive's July/August One-Minute Survey. Eighty-four percent say they are very concerned about the effects of liability on the ability of U.S. and Canadian businesses to compete, and an additional 13 percent say they are somewhat concerned.

Over half (58 percent) of the 31 respondents say that their company has been a defendant in a lawsuit in which it could have been liable for damages significantly in excess of its share of responsibility. (Twenty-six percent say they have not been, and 16 percent don't know.) Even more alarming, 83 percent say they are either very concerned or somewhat concerned that the continued viability of their companies may be threatened by liability suits.

Given the extent of respondents' concern about the effects liability suits will have on their own businesses and on business in general, it is not surprising that nearly all would strongly support legislation under which each defendant's share of damages in a lawsuit would be proportionate to its share of responsibility. In fact, one respondent says, "We need the loser to pay in all cases, even when the loser is the EEOC or the EPA." But, cautions another, the defendant's responsibility must be clearly defined. "At present," according to this respondent, "courts are following the ACC rule--'anything close counts'." A third has yet another suggestion: "Consider the New Zealand approach to liability. The public has agreed to forego litigation and, in the event of injury, the government pays all costs through a special tax on all products."

[We note that the concept of proportionate liability is incorporated in the Product Liability Fairness Act, which, even though it did not make it in the Senate in early September, will come up again in the next session of...