• WisBusiness

Tuesday, December 20, 2011

Lawsuit reforms help Wisconsin's business climate

By Bill G. Smith

By James A. Buchen
Gov. Scott Walker has followed through with his promise to enhance Wisconsin's business climate through the adoption of common sense lawsuit reforms. Early in his tenure, Governor Walker signed comprehensive lawsuit reforms and most recently he signed three more needed legal reforms.

Coupled with tax relief, and regulatory reforms passed by the Legislature and signed into law, Governor Walker is ensuring that Wisconsin is open for business.

Lawsuit reforms protect small, medium, and large businesses from meritless lawsuits and ultimately reduce costs. For both employers and employees, this is welcomed news.

That is because our current tort system is too expensive. According to the actuarial firm Towers Watson, the cost of the U.S. lawsuit system in 2009 was $248.1 billion, which is 1.74% of the U.S. gross national product, or $808 per person.

Our state's small businesses, the backbone of our economy, are often disproportionately affected by excessive lawsuits.

One can argue that regulations, taxes, and insurance are the price of owning and operating a business, yet just one baseless lawsuit – or even the threat of a lawsuit – can be the unforeseen event that bankrupts a small business, putting people out of work, and personal assets in jeopardy.

Excessive, unpredictable lawsuits, whether decided in the courtroom or outside the courtroom regardless of guilt or responsibility, almost certainly means the loss of jobs, the loss of innovation, and the stifling of economic growth.

According to an Institute for Legal Reform study titled, Tort Liability Costs for Small Business, 62% of business owners and managers polled said they make decisions to avoid lawsuits. Sixty-one percent said these decisions make their products and services more expensive. More than a third surveyed had been sued, and 73% of those sued said that their business suffered due to the time-consuming nature of litigation.

Personal injury lawyers say lawsuit reforms are anti-consumer. That's not true. Rather, the recently enacted reforms place Wisconsin back into the mainstream compared to other states.

The comprehensive lawsuit reforms signed early this year addressed two 2005 Wisconsin Supreme Court decisions that harmed Wisconsin's business climate. One decision established a "guilty-until-proven-innocent" standard for businesses in certain cases, while the other made it easier for plaintiffs and their attorneys to win jackpots by lowering the standard for punitive damages. The new law overturned these poorly decided opinions.

Another reform put an end to unreliable expert testimony and evidence by requiring Wisconsin courts to adopt standards requiring testimony and evidence be based on sufficient facts and data. Known as the Daubert standards – named after the U.S. Supreme Court decision creating the protections – Wisconsin joined over 30 states plus the federal court system in adopting these new evidence requirements. The reform gets junk science out of Wisconsin court rooms.

In the most recent special session, Gov. Walker signed a bill into law which protects landowners – businesses, homeowners, renters, and non-profit organizations – from expanded liability for injuries to trespassers.

Another new law brings Wisconsin in line with other states relating to the interest rate charged against defendants for judgments paid to plaintiffs. Prior to the new law, defendants were forced to pay a plaintiff an exorbitant 12 percent interest from the time the case was filed to the time the final judgment was paid. The new law makes it a variable rate, which is based on the existing federal prime rate, plus one percent

In addition, Gov. Walker signed into law a number of criteria courts must consider when determining attorney fees awarded in certain types of cases. Prior to the new law, these "fee-shifting" cases – where a plaintiff attorney can obtain court mandated attorney fees from the defendant – resulted in a cottage industry for some plaintiff attorneys who have walked away with hundreds of thousands of dollars in attorney fees for relatively small claims.

Wisconsin's newly enacted legal reforms will go a long way in protecting employers for unjustified legal costs. This in turn allows employers to invest in their business, boost current employee benefits, and expand their businesses, and most importantly, hire new employees.

In the end, it's about jobs. And the new legal reforms are helping to pave the way to a better business climate in our state.

-- Smith is Wisconsin director of the National Federation of Independent Business and Buchen is senior vice president -- government relations for Wisconsin Manufacturers and Commerce. Both are executive officers of the Wisconsin Civil Justice Council.

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Friday, December 16, 2011

What makes a local economy successful? Working together helps

By Tom Still
LA CROSSE – The 250 or so people who gathered this month for the 40th annual meeting of the La Crosse Area Development Corp. aren't without their differences. The crowd included business leaders and educators, Republicans and Democrats, "townies" and academic gowns, and even a few politicians who have butted heads in recent elections.

Fortunately for La Crosse, a picturesque Mississippi River city of 52,000 people, those differences aren't necessarily divisions.

With a jobless rate of 5.2 percent, more than 2 percentage points lower than the statewide rate, La Crosse and surrounding La Crosse County appear to be weathering the enduring economic storm better than many places in Wisconsin. The question is "Why?"

Perhaps it's the above-average education rate for its labor force. Or the low cost of living, which runs 10 percent or more below the U.S. average. Or its competitive health-care sector. Or the healthy mix of homegrown companies such as Kwik Trip, Trane, Logistics Health, Reinhart FoodService and City Brewing, which now has more brew house workers than the old G. Heileman Brewing Co. at its peak.

Or maybe it's simply that people in La Crosse understand how to disagree without being constantly disagreeable.

Getting along with its neighbors have been a consistent story line in La Crosse, where organizations such as LADCO and the 7 Rivers regional alliance have often looked beyond political boundaries to identify problems and offer solutions. One speaker at the Dec. 14 LADCO meeting was Jerry Miller, the mayor of nearby Winona, Minn., who talked about the prospects for improved passenger rail service across state lines. No Gopher-Badger rivalry there.

It's not that La Crosse is a boom town. Job growth has been less than 1 percent per year over the past decade, and worker skills and job openings don't always match. But it has proven more resilient than many Wisconsin communities – and it may offer lessons for parts of the state that continue to struggle with plant closings and job losses.

"There are a lot of examples of collaboration here with business, government and beyond, which is all the more important in this tough fiscal environment," said Jim Hill, LADCO's executive director.

While LADCO is focused in La Crosse County, the 7 Rivers Alliance includes 18 counties in three states (Wisconsin, Minnesota and Iowa) and assists with branding, marketing and other joint economic development goals.

Not everything goes smoothly, of course, especially when local governments compete over potential corporate additions to the property tax base. However, most observers agree the regional approach provides a foundation for work on knotty issues.

In addition to 7 Rivers, other regional organizations in Wisconsin include Thrive in south-central Wisconsin, Milwaukee 7 in southeast Wisconsin, NEW North in northeast Wisconsin, Centergy in central Wisconsin, Momentum West in west-central Wisconsin, and Grow North in the northern tier of counties. All are working with the Wisconsin Economic Development Corp., the public-private successor to the state Department of Commerce.

The challenges range from region to region – for example, central Wisconsin is coming to grips with continued losses in the paper industry – and so do the opportunities to build specific clusters.

Long a favorite of economists and business development professionals, economic clusters are generally defined as a concentration of interconnected businesses, suppliers and other institutions in a particular field. Clusters are sometimes geographic – and sometimes defined by trade patterns that cross state, national and even international borders. Companies in clusters most often act as competitors, but sometimes they're collaborators within a larger supply chain.

In Milwaukee 7, for example, there's interest in helping grow the water technology, design, medical research and energy technology clusters. In the Madison-based Thrive region, targeted sectors might be health care and life sciences, agriculture and food processing. In the NEW North, wind, biofuels, data centers, marine manufacturing and defense have emerged.

Branding those regions and their clusters can be tricky, Hill cautioned.

"The piece of regionalism that is most attractive is marketing, but I think it's important to be careful about the brand you choose," Hill said. "It can't just be a feel-good exercise. You name your kids to feel good. You name your products so someone else around the world knows what it is and how to find you."

Thanks to a cooperative structure and people who make it work, the La Crosse area is doing a better job of getting found.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


Tuesday, December 13, 2011

House regs bill could help small businesses step on the gas

By Dan Danner
While creeping along in holiday traffic on the way to grandma’s house later this month, take comfort that despite detours and fender-benders, you’ll eventually get there. For millions of American small-business owners, arrival at their final destination, success, is not assured. The way is often blocked by complex federal regulations and cordoned off with red tape.

For years, small-business owners pleaded with Washington to reduce regulatory confusion and make rules more transparent. Research by both the National Federation of Independent Business and Gallup found that government regulations are causing the biggest bottlenecks small businesses face today.

Greater clarity and certainty could go a long way towards helping owners pull the nation out of its economic ditch and crank up meaningful job creation. But more often than not, government agencies create one-size-fits-all mandates that do more harm than good, ignoring Congress’ intention when it passed the Regulatory Flexibility Act over three decades ago.

America’s regressive regulatory process is not just discouraging and unmanageable for Main Street entrepreneurs, it’s costly too. Small businesses spend 36 percent more per employee per year to comply with federal rules and regulations than larger businesses, reports the U.S. Small Business Administration, whose research determined that the smallest firms cough up an estimated $10,585 for each worker annually.

But an opportunity to clean up the mess is coming. Congress is now considering legislation to provide a sensible approach to rule-making.

The bill, dubbed the Regulatory Flexibility Improvements Act, H.R. 527, has already passed with bipartisan support in the U.S. House of Representatives, and the Senate is expected to consider similar legislation soon. It would strengthen the process by making federal agencies conduct thorough studies of requirements to determine the economic burden they might dump on small firms. And, the bill would require all agencies to assemble Small Business Advocacy Review panels to help bureaucrats specifically understand how the regulations they craft affect small businesses. In addition, the measure would give SBA’s advocacy office authority to set firm standards for flexibility analysis.

As with each important legislative initiative, support strongly depends on the grassroots backing from folks back home. This offers an essential moment for owners and their employees to personally inform their representatives of the importance of this bill. NFIB has alerted Capitol Hill lawmakers that their decisions will be recorded as small-business key votes and fully communicated to voters in each congressional district.

There are few issues on which all members of Congress can agree these days, but helping jump-start small business’ ability to grow and create jobs is one that should have no opposition. Passing H.R. 527 would sweep aside long-standing regulatory barriers that are keeping America’s free enterprise machine in low gear and send a signal that Washington values the economic contributions of small business.

-- Danner is president and CEO of the National Federation of Independent Business, which represents 350,000 small-business owners in Washington, D.C. and every state capital.


At economic development summit, spotlight on rural broadband to create jobs

By Brian Rybarik
On Wednesday, the Public Service Commission will participate in a forum entitled "Broadband Mapping, Planning and Deployment for Rural Economic Development in Wisconsin," which will be showcased at the Governor's Northern Wisconsin Economic Summit in Minocqua.

The Summit is meant to stimulate discussion of key issues specific to northern Wisconsin including growing the economy, jobs and workforce development, technology, and small business development.

The mission of the Summit makes the discussion of rural broadband expansion all the more relevant. In order to help the private sector create jobs by extending high-speed internet to businesses and homes across Northern Wisconsin, it will take continued education, public-private partnerships, and targeted, cost-effective investments.

There are a variety of methods to measure the availability of broadband in any area, and I caution the reliance on any one method. However, the U.S. National Telecommunications Information Administration estimates that 79% of Wisconsin residents currently have access to the Internet, with 64% having access to broadband services. Their report identified that Wisconsin ranks 17th in the percentage of households using broadband. While we can look at these numbers in different ways, I believe that Wisconsin is heading in the right direction, and Northern Wisconsin presents some important opportunities and challenges.

Northern Wisconsin is a land of abundant opportunity since it is a great place to live, work and play. It is a region of inherent, natural beauty, but it also presents some particular challenges with respect to broadband because of the size and population density. These factors mean that significant investment is needed to reach the more sparsely populated areas of our state.

To help bridge the gap between these opportunities and challenges, the Public Service Commission has developed a broadband mapping and planning project called LinkWISCONSIN. LinkWISCONSIN started with the development of an interactive map, which is now available at the LinkWISCONSIN website: www.linkwisconsin.org. Using data from broadband providers, the map shows the availability of broadband services throughout the state and provides contact information for the providers. The map has many benefits. It can be used by consumers to find broadband providers in their area and broadband providers can easily find places where entry into the market might make the most sense.

The LinkWISCONSIN project also involves the facilitation of broadband planning through nine regional planning teams.

The teams bring together local representatives with backgrounds in the local industries that rely heavily on broadband including health care, education, energy, tourism and agriculture. Other local leaders participate as well as broadband providers (which are non-voting members). The teams have worked to validate the mapping information, identify broadband investment priorities for that region and to identify the strategies, data, resources and leadership needed to implement the broadband expansion plans.

This work is intended to prioritize potential investment. Keeping in mind the substantial investment that is necessary, the regional teams provide a forum and process to identify the most pressing needs so that investment can flow to projects that have a business case and local buy-in behind them. In today's economy, every major investment needs significant justification. The regional teams are helping to build the case for the priorities throughout Wisconsin.

As we all work together to create new jobs and facilitate business growth in Wisconsin, identifying targets for broadband deployment and investment is a good place to start. I look forward to a continuing discussion of these issues at the Governor's Northern Wisconsin Economic Summit.

-- Rybarik is the administrator for the telecommunications division at the Public Service Commission of Wisconsin. For more information about the Governor's Northern Wisconsin Economic Summit, visit http://www.northwoodssummit.com/.


Thursday, December 1, 2011

Geron’s move highlights hurdles to bringing stem cell therapies to market

By Tom Still
The decision by a California company to halt its study of a stem cell-based treatment for spinal cord injuries is less about whether such therapies will work than the monumental regulatory and financial hurdles that stand in the way.

In a move with implications for Wisconsin researchers and companies working with embryonic stem cells, Geron Corp. announced in November it will stop spending $25 million a year to bring a stem cell treatment to market.

The reasons are clear: It would have taken up to 10 years to develop a treatment that meets with U.S. Food and Drug Administration approval, so Geron’s executives decided to put their money behind other experimental products that could get to market faster.

Geron executives and researchers outside the company remain confident in the science behind the spinal cord treatment, which has worked in laboratory animals, but the long and arduous pathway to win FDA approval appeared to be too much to overcome.

The Menlo Park, Calif., company had long been viewed as the leader in stem cell therapies, thanks to patents on technology used to grow, manipulate and inject embryonic stem cells into the human body. Stem cells are cells capable of morphing into any one of more than 220 human cell types. Many of the patents licensed to Geron were the result of work performed at the UW-Madison, where researcher James Thomson and his team first isolated embryonic stem cells in 1998.

Is Geron’s decision a setback to the U.S. stem cell research industry? Not necessarily so, because most research is still funded through academic channels. Also, Geron was focused on a specific therapy – mending damaged spinal cords – while companies elsewhere are developing other uses for stem cells.

Cellular Dynamics International, a Madison company founded by Thomson and others, is a ready example. Thomson has long insisted that stem cell “cures” or treatments were years in the future, given the revolutionary nature of what is still a very young field of science. His company has focused instead on using stem cells for disease modeling, testing new drugs, diagnostics and other research applications.

“For us, it validates the basic business plan: Steer clear of therapeutics for the foreseeable future,” said Dr. Tim Kamp, director of the stem cell medical program at the UW-Madison and a co-founder of CDI.

Business plans for any U.S. company involved in seeking biotechnology cures, treatments or diagnostics must include seeking necessary approvals from the FDA, which regulates development of drugs, medical devices, biologics, vaccines and more. Increasingly, however, the bioscience industry has complained about the FDA’s regulatory pace. For example, the president of the national Biotechnology Industry Organization, former member of Congress Jim Greenwood, called on federal lawmakers to “build a 21st century FDA” or risk losing U.S. competitiveness in the life sciences.

“The Geron experience underscores how broken the FDA process has become in this country,” said Carl Gulbrandsen, managing director of the Wisconsin Alumni Research Foundation. WARF is the private, non-profit group that handles UW-Madison patents and licenses them to potential users.

Others say the FDA is simply being cautious in the wake of some high-profile drug failures and because its regulators, like others in the field, are new to stem cell research. Still, skeptics say the system has become so cumbersome that innovation is being stifled.

“Geron spent about $45 million to prepare its IND (Investigational New Drug application) alone. There aren’t many companies that can afford to do that,” Gulbrandsen said.

For many years, the biggest threat to stem cell research came from opponents who questioned the ethics of how the cells themselves were derived. Today, it appears, an emerging challenge may be the possibility that researchers and investors frustrated by paperwork and costs go outside the United States to develop stem cell therapies that should be kept home.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


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