Columbia, SC – South Carolina is at risk of seeing fewer jobs and less economic growth if the S.C. General Assembly fails to address and reform the state’s egregiously unfair civil liability system, which forces businesses to unfairly pay legal claims for damages they did not cause. The findings come from a new report by the South Carolina Policy Council (SCPC), the Palmetto State’s longest-serving free market research organization.
“In many states, if you cause someone harm, you pay your share of damages – no more, no less. But not in South Carolina,” said Bryce Fiedler, senior policy analyst at SCPC. “It’s time for South Carolina to join other states and assign fault based on actual damages caused, not because someone has money. Our current system is unfair and unjust, and it is putting local job creators, particularly small businesses, at risk.”
Currently, South Carolina businesses can be forced to pay entire legal verdicts even if they were only partially at fault for an incident, a concept known as “joint and several” liability. Small- and medium-sized companies are at particular risk under this law, and there is concern it will deter them from locating or doing business in our state.
- In South Carolina, a defendant in a civil case who is partially at fault for an injury can be forced to pay 100% of a court’s verdict. Select businesses are often targeted because of this law, many of whom face disproportionate and unfair damage awards.
- Rising insurance rates and a poor legal climate will harm South Carolina’s ability to compete for jobs in the future, putting recent economic progress in jeopardy.
- Small- and medium-sized businesses are at particular risk in our state, as many cannot afford or are unwilling to bear the legal costs necessary to operate in a precarious legal environment.
- A pair of House and Senate bills (H.3933 & S.533) would address problems with the current law and help reduce the number of businesses forced to pay unfair damage awards in civil cases, but would not entirely fix the underlying problem. Another bill (H.3053) would completely repeal joint and several liability and hold each party liable based on their percentage of fault, while allowing allocation of fault to nonparties.
A damaging economic impact
- South Carolina’s liability system was ranked 37th in the nation by the Institute for Legal Reform (ILR) in a 2019 report. It was ranked 34th by ILR just two years prior, showing a trend for the worse.
- Eighty-nine percent of businesses indicated that a state’s litigation environment is likely to impact their business decisions, including where to locate, according to a survey as part of ILR’s 2019 report. Half indicated that it is very likely.
- According to a 2022 IRL report, South Carolina’s tort costs are an astonishing 2.6% of the state GPD, which can be measured as a cost of $3,181 per household. The South Carolina Chamber of Commerce notes that Palmetto State businesses are often paying for these costs through high insurance premiums and litigation expenses, which are passed on to the consumer.
- A whopping 87% of S.C. Republican primary voters indicated support for civil liability reform and answered “yes” to the following ballot question in 2022: “In a situation where there is more than one person responsible for damages in a lawsuit, do you support changing South Carolina law so that each person should pay damages based on that person’s actual share of fault?”
“With other states continuing their efforts to improve their legal environments, South Carolina must take swift action to reform its civil liability law or risk being left behind. Addressing joint and several liability is a good place to start,” said Fielder. “The Policy Council urges the Legislature to repeal joint and several liability and replace it with a pure several liability model, under which a defendant is only financially liable for their percentage of fault.”