Article written by SBAM’s Advocacy Team
Background:
Last Wednesday, November 12th, SBAM participated in the launch of a new coalition called the Michigan Alliance for Legal Reform. SBAM joins this group as a founding member along with more than 30 other organizations across the state joining forces to advocate for reforms to Michigan’s legal environment.
The Issue:
A series of recent unfavorable rulings from Michigan’s Supreme Court has expanded the scope of liability in Michigan. As result, the state has earned a reputation as litigation-friendly, even being branded a “Judicial Hellhole” by the American Tort Reform Association. This environment means more businesses are facing lawsuits, fewer cases are dismissed, and liability insurance premiums are on the rise.
For small businesses, the increased risks and costs can be particularly burdensome. SBAM’s President & CEO, Brian Calley, noted that for small businesses, “one lawsuit can literally take them out.” The Alliance will work to advance legislative solutions that curb lawsuit abuse and pursue fair reforms that protect employers. This advocacy work begin with two bills, which have been introduced in the House to address some of the more pressing issues in Michigan’s tort landscape.
House Bill 4582 – Open & Obvious
In 2023, the Michigan Supreme Court overturned the state’s longstanding open and obvious doctrine, marking a major shift in premises liability law. For more than two decades, the open and obvious standard protected property owners from liability when a hazard was “open and obvious.”, deterring frivolous lawsuits and provided stability for property owners.
With the elimination of this doctrine, property owners can now be held liable and sued, regardless of how obvious a hazard might be to a reasonable person. Judges must instead conduct a full fault analysis in every case, creating new and costly legal hazards for Michigan property owners. As result, businesses have seen more lawsuits, as nearly every slip-and-fall claim must proceed rather than be dismissed. These increased claims and lawsuits continue to drive up premiums and create uncertainty and risk even when a potential hazard is apparent.
House Bill 5281 – Third-Party Litigation Funding
The Third-Party Litigation Funding Act would establish a comprehensive regulatory framework for companies that provide cash advances to plaintiffs in civil lawsuits. Currently, consumer litigation funding arrangements allow a funder to purchase a portion of the plaintiff’s potential award in exchange for upfront money, with very little oversight or transparency. As result, businesses can find themselves the target of a predatory lawsuit that is funded by an unknown, well-funded third party. This bill would limit fees and charges from funders, requires plain-language contracts, and would create transparency in situations where these funding arrangements exist.
To learn more about the Michigan Alliance for Legal Reform, visit their website: https://miallianceforlegalreform.com/
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