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Defamation for trade-related services is libel per se, which has a dramatically lower standard of proof than other sorts of defamation. As Jazz said, they're not always going to win, since truth is always a defense for a defamation suit, but it's a lot easier to just avoid the situation all together than to risk saying the wrong thing. In my opinion, the people it hurts more are people who want good recommendations after doing a good job but can't get them because of the same law. What a great system!
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