Family Businesses Seek Predictable Judicial Landscape

Family businesses thrive when our country provides a business climate that promotes expansion and job growth. Thankfully, there was plenty to celebrate this National Small Business Week given the strong state of the American economy. There’s no doubt that government policies – such as reducing regulations and alleviating tax burdens – have spurred some of this growth.

Business and consumer confidence is high, with small businesses now more willing to invest in the future and wage growth starting to pick up. This was the first Small Business Week on record in which the country has more jobs available than workers to fill them. In addition, the labor force participation rate is beginning to tick upwards, meaning more sidelined workers are reentering the workforce. It’s remarkable what a revamped tax code and a friendlier regulatory environment can do for the economy. For every new regulation that has been put into place, 22 have been repealed under the Trump administration.

While these policies from our executive and legislative branches of government have benefitted family businesses, troubling patterns from the judicial branch threaten to spoil the growth. Increasingly, courts have been issuing questionable yet massive verdicts that harm the business climate – and in some cases, threaten the ability of companies to continue operations entirely.

Patent trolls, judicial meddling in the marketplace, liability lawsuits, and excessive regulations are all hurdles small businesses must overcome to continue operating. Recent news demonstrates the effect these issues can have on local communities. Apple recently shuttered locations in the Eastern District of Texas to avoid the excessive verdicts stemming from baseless intellectual property claims that have made the jurisdiction infamous.

Similar developments are unfolding in San Antonio, where Amrock, a title insurance, property valuations, and closing services company, fell victim to a $706 million verdict – one of the largest trade secret verdicts in American history and larger than the verdicts that caused Apple to relocate. A housing valuation company, HouseCanary, won this lawsuit despite their own witness admitting that none of the alleged trade secrets were used by Amrock and despite four former HouseCanary executives testifying that the company did not possess the functioning proprietary technology it promised Amrock.

For small businesses that depend on established firms for work, these rulings are troubling. These companies support thousands of jobs — such as small business contractors, security firms, and marketing firms — all while helping local economies. When producers lose trust in this type of environment, it shows in the form of reduced investment or even complete relocation. For businesses and the economy to remain on firm economic footing, judicial rulings need to guarantee an equal playing field for all businesses.

Small businesses are part of a complicated interwoven economy. When an unfair or threatening legal environment causes businesses to pack up and leave, it has a deleterious effect that ripples through the economic system. Family-owned firms create millions of jobs and have helped to power the economic recovery that has led to record-low unemployment and impressive job creation numbers. We must ensure that all levels of government promote, rather than diminish, this economic growth.

Alex Ayers is Executive Director of the Family Business Coalition in Washington, D.C.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.

Morning Consult