Smoke and mirrors: when lobbying groups lead small business astray

Entrepreneur, July, 1996 by Janean Chun

JACK LOUGHRIDGE started the day tending to his Pensacola, Florida, printing shop and ended it participating in one of the state's most controversial legal brawls. The transition came in the innocuous form of a fax, which turned out to be sent from Florida's largest lobbying group warning that a new law could have damaging effects on businesses. Loughridge expressed his support for the law ... until he later found out the group had misleadingly persuaded him to side with the tobacco industry.

Loughridge, whose father died of emphysema caused by smoking, was appalled that he had been unknowingly lumped with an industry he despised. "It was explained strictly as legislation that could harm business--it was misrepresented to me," says Loughridge. "I felt I was hoodwinked into siding with the tobacco industry."

Lobbying groups' efforts can trick a small business as easily as that fax seeped into Loughridge's office. And when lobbyists' aggressive and sometimes deceptive tactics intersect with entrepreneurs' political blind spots, small-business owners are often thrown into a panic.

Directly soliciting support from entrepreneurs, even if that means leaving out crucial facts, "is a very common tactic [among lobbyists]," says Christo Lassiter, an associate professor at the University of Cincinati College of Law. "It's part of the harm in using the courts to establish public policy in this country."

It's the nature of the beast, agrees Jordan Leibman, a professor of business law at Indiana University in Indianapolis. "Telling somebody the law is going to have a certain result and leaving out details that would qualify what you said--that goes on all the time," Leibman says. "That's what lobbyists do; that's what politicians do. That's the name of the game."

The lobbying group that approached Loughridge implied that if the tobacco industry were sued, small retailers selling cigarettes could also be liable. In reality, Lassiter says, when large industries are involved in big liability suits, the chances that the liability will trickle down to small businesses are slim to none.

"I'm not aware of any individual stores [being held liable for selling cigarettes]," says Lassiter, who notes that a similar effort, in which lobbying groups attempted to pass a law that would hold bullet manufacturers and retailers liable for murders and wrongful killings, went nowhere.

Lassiter points out, however, that such overblown threats are often used to frighten business owners when controversial issues are involved. "Serious issues ought to be dealt with in an honest fashion," he says, "but when advocacy is too zealous, that doesn't happen."

As elections approach, entrepreneurs should beware not only the threat of legislation but also the threat of lobbying groups. If you are approached by a lobbying group, Lassiter recommends asking your lawyer if its claims are true before you take action or pledge your support.

Leibman also suggests joining trade organizations or small-business associations--some of whom have their own lobbyists--to protect you from unscrupulous lobbying efforts and inform you of legitimate legislative threats. Though the tobacco industry's assertions of small-business liability are "a real stretch," Leibman says, they are not beyond the realm of contemplation.

"If you're a small-business owner who's interested in doing the right thing and also protecting your own economic interests but don't have the time to become sophisticated [in these matters], you at least ought to join a trade group and read their articles on a regular basis," Leibman adds. "That's just part of doing business."

As for Loughridge, his brush with lobbyists, big industry, and the legislative system have left him some-what bitter. "I wish it wasn't the case," he says, "but it's gotten to the point where I consider politics a dirty word."