For the Garden State, civil justice reform would truly be the gift that keeps on giving. The holiday season is a crucial time for small businesses, with some making 65% of their annual sales between Thanksgiving and New Year’s Eve.
Politicians often remind residents to “shop small” during these months, but support for Main Street requires more than a seasonal slogan.
If Trenton lawmakers truly want local businesses to thrive, they must address the growing difficulties of owning and operating a business in New Jersey, starting with reforming one of the most expensive and unpredictable liability climates in the nation.
Excessive litigation costs put pressure on over one million small businesses across the state. Independent retailers struggle to absorb escalating liability expenses and are left with few options but to raise prices and hire less people.
Worse, with almost $19 billion per year in added costs shouldered by businesses throughout the state, the economics just don’t make sense, and some are forced to close their doors. Shuttered shops mean fewer jobs and less money circulating in local economies. The impact becomes clear during the holiday season, with fewer neighborhood shops and limited options for families that rely on convenience and familiar storefronts.
The Garden State’s notoriously hostile legal environment also discourages new businesses from opening. An Institute for Legal Reform survey finds that 89% of business leaders consider a state’s liability climate when making decisions on where to locate or do business.
New Jersey’s proximity to major markets, its highly educated workforce, and its legacy of innovation should make it a hotspot for new commercial development. Instead, lofty liability costs drive companies to seek more stable environments across state lines. With fewer entrepreneurs relocating to New Jersey, communities lose out on local job opportunities and increased consumer choice. The economic consequences extend far beyond business owners.
New Jersey’s liability system ranks 43rd nationally, when measured as a share of state GDP, meaning legal fees, settlements, and litigation-related costs are consuming an exorbitant portion of the state’s economic output. These expenses ripple throughout the supply chain, influencing the price of everything from groceries to rideshare services to visiting a local restaurant. New Jersey households incur more than $5,500 in hidden costs annually due to the out of control liability environment.
For families already struggling with high housing prices, property taxes, and rising inflation, these lawsuit-driven expenses function as a hidden tax on daily life. Reforming the state’s civil justice system would ease this financial pressure.
Despite clear evidence that excessive lawsuits stifle economic vitality, civil liability cases have increased by 20% in recent years. Aggressive attorney advertising and lawyer-driven litigation encourage more frequent claims and inflated jury awards. This trend has resulted in more nuclear verdicts — jury awards exceeding $10 million — that while not the target of the underlying lawsuits, disproportionately impact small businesses by contributing to increased insurance premiums and higher operating costs. Consumers are keenly aware that lawsuits drive up prices, with nearly 90% agreeing that reducing unnecessary litigation is essential to controlling the cost-of-living crisis. And a majority of people say the government has a responsibility to fix the problem. To support local retailers during the holiday season, lawmakers should commit to reforming New Jersey’s civil liability system. Measures to curb unnecessary lawsuits and reduce avenues for profiteering litigation would make the state a more affordable place to do business and put down roots.
The Garden State is consistently ranked as one of the least affordable states, currently placing 49th nationwide. In her campaign, Governor-elect Mikie Sherrill promised to make the state more affordable. Delivering on that commitment requires advocating for a legal environment that protects — not punishes — family-owned stores, independent service providers, and neighborhood retailers. A fair and predictable civil justice system will attract new residents, support local entrepreneurs, create jobs, and increase the state’s competitiveness. Right now, businesses are thinking twice about setting up shop here, and for good reason.
Small businesses are essential to local communities and the well-being of the state’s economy, but New Jersey’s overly litigious and costly liability climate threatens their stability. To ensure these employers continue to thrive and to keep the state affordable for everyone, our leaders in Trenton must restore balance to its civil justice system and rein in the Garden State’s dubious designation as a hotbed for lawsuits.
Elissa Frank is president of the New Jersey Civil Justice Institute, the Garden State’s only organization solely focused on protecting business and taxpayers from excessive litigation.
