Wednesday, November 16, 2005

Snowe-Feingold Introduce Bill to Allow Small Businesses to Recover Legal Costs; Equal Access to Justice Reform Act of 2005 to Rein in Frivolous Lawsuits

To: National Desk, Business Reporter
Contact: Chris Chichester of the Senate Committee on Small Business and Entrepreneurship, 202-228-5843
WASHINGTON, Nov. 16 /U.S. Newswire/ -- U.S. Sen. Olympia J. Snowe (R-Maine), chair of the Senate Committee on Small Business and Entrepreneurship, and U.S. Sen. Russ Feingold (D-Wis.) today introduced the Equal Access to Justice Reform Act of 2005 (S. 2017), which will make it easier for small businesses to recover their legal costs when they prevail in litigation involving the Federal government.
"Small businesses deserve the same equal access to the justice system to defend themselves and protect their interests like large businesses," said Sen. Snowe. "Our legislation will hold Federal agencies accountable if they file frivolous lawsuits against small businesses. Federal agencies should not be granted special privileges above small businesses that insulate them from bearing any of the financial burden of costly and expensive litigation."
"The legislation Senator Snowe and I are proposing today deals directly with a problem that affects small businesses and individual Americans across this country that face legal battles with the Federal government," Sen. Feingold said. "Even if they win in court, they may lose financially because they incur the great expense of paying their attorneys. We should do all that we can to help ease the financial burdens on people who have the right to have their claims reviewed and decided by impartial decision makers."
Sen. Snowe and Sen. Feingold noted a recent National Federation of Independent Businesses poll found that the median total cost to settle a legal dispute is about $5,000.
This bill will reform the Equal Access to Justice Act (EAJA), first enacted in 1980, by removing barriers and inefficiencies from the current law and modernizing the bill to better suit today's small businesses. It would:
-- Eliminate the current requirement in EAJA that the prevailing party seeking fees show that the government's position was "not substantially justified." That requirement means that a small business often must go through a second costly legal proceeding to obtain attorneys' fees. In practice, courts typically give a very wide berth to the substantially justified defense -- which means that a prevailing small business can rarely, if ever, recover its legal fees under EAJA.
-- Raise the threshold for a qualifying small business from $7 million net worth to $10 million net worth, index that threshold for inflation, and remove the $125 per hour cap on legal fees so that small businesses can obtain competent legal services and receive fair reimbursement.
-- Require agencies that lose lawsuits, other than NLRB, EEOC, OSHA, and MSHA, to pay legal fees awarded under EAJA out of their own budgets, and not out of the General Treasury fund. This will help make agencies more accountable for their decisions and discourage abusive Federal enforcement actions.
-- Promote a fair and cost-effective process for prompt settlement and payment of attorney's fees claims.
Sen. Feingold has introduced EAJA reform legislation in four previous Congresses, beginning in 1995. A companion bill, H.R. 435, introduced in the House by Reps. Don Manzullo (R-Ill.) and Earl Blumenauer (D-Ore.) has received support from a broad range of groups, including: the American Center for Law & Justice; American Civil Liberties Union; American Conservative Union; American Dental Association; American Medical Association; Association of Trial Lawyers of America; Chamber of Commerce of the United States; Heritage Foundation; Home School Legal Defense Association; Illinois State Bar Association; Leadership Conference on Civil Rights; National Association for the Advancement of Colored People; National Association of Manufacturers; National Federation of Independent Business; Natural Resources Defense Council; Sierra Club; and the Small Business EAJA Coalition (representing 27 major trade associations, and millions of businesses).


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