Down 38.49% in 2008, the S&P 500 experienced its worst performance in over seven decades. In 2009, the S&P 500 bounced back and was up 19.67%. Notworthy S&P news for small business owners, however, is the fact that CIT Group was booted from the index when it filed for bankruptcy – the 5th largest in U.S. history. CIT was a HUGE lender to small businesses around the country. As CIT’s marketing materials put it, “For more than 100 years, CIT has provided capital to small business and middle market customers. These sectors continue to play a vital role in the US economy and in overall employment, representing more than 90 million jobs.”
Although the bankruptcy was a quick “pre-packaged” filing that had little real impact on its day-to-day operations, the impact on small business remains to be seen given the new shareholders of the company will be debtors, i.e., large financial institutions, and the most recent board members have a financial pedigree that favors big business interests.
It should come as no surprise that our current deep recession has been boosting corporate litigation. According to a CFO article published earlier in the year, “[l]egal wrangling is erupting across the board as aggrieved plaintiffs battle over breached labor contracts, unwarranted executive layoffs, dubious financial disclosures, broken supply chains, ailing strategic partnerships, ravaged 401(k) plans, unjust competitive practices, intellectual-property infringements, and curtailed credit lines.” In fact, New York State’s courts will close out 2009 with 4.7 million cases – the highest tally ever – so the general litigation climate could probably not be any worse.
Finding ways to cost-effectively manage this uptick in litigation can be a great challenge for shrinking or non-existent in-house departments. You should tap into your existing service professionals. It is never too late to use your existing providers – whether in insurance, law or accounting – to assess and implement loss control and prevention techniques and initiatives, advocate on your behalf with claims adjusters regarding existing claims, and coordinate existing litigation with outside counsel. Much of this work should be included in your current service contracts or should be at a minimal additional charge.