Itâs Not All About the Hats and Juleps: Equine Law in South Carolina, 0920 SCBJ, SC Lawyer, September 2020, #34
| Author | By Jim Ritchie |
| Position | Vol. 32 Issue 2 Pg. 34 |
By Jim Ritchie
“A horse is dangerous at both ends and uncomfortable in the middle.” -Ian Fleming.
The late author of the James Bond thrillers must have had a few difficult encounters with horses in his native Great Britain. While many South Carolina Bar members’ experience is the opposite, some attorneys may echo Fleming’s sentiments. Whether you grew up on horses or have yet to spend an hour in the saddle, understanding the basics of equine law will help you recognize an equestrian client’s issues and needs – or at least make you popular at a Kentucky Derby party.
South Carolina is home to a significant and diverse equestrian community. The popularity of equestrian events, competitions and horse-related businesses is growing in many areas of the state. A recent study by the University of South Carolina reported that over 73,000 horses and ponies reside in the Palmetto State.1 The equine sector of the state’s economy generates 22,500 jobs and produces an annual economic impact of $1.9 billion.2 The modern horse world involves substantial financial investment and carries significant legal risks. Trainers, owners, riders, breeders, barn operators and event organizers need to handle their business and legal matters in ways that prefect the new reality.
A key resource for meeting these challenges is an attorney who knows horses and who understands equestrian sports and equine-related businesses. An experienced equine law attorney will identify potential liability issues, help limit risk, and provide counsel on essential state laws. They also guide clients through complex insurance, business, transactional and employment matters. Just as a horse and rider create a partnership to achieve success, an equine law attorney and his client form a team to prevent legal problems and resolve disputes.
Each of us is familiar with Rule 1.1 of the Rules of Professional Conduct that requires knowledge and skill to represent a client competently.3 To meet this standard in the equine law field, attorneys need to understand the unique challenges and specific legal issues affecting the equestrian community. If you are not familiar with equine law or legal issues and a client comes to you for advice, it is important to learn the principles or collaborate with an experienced equine law attorney.
This article will introduce several basic legal issues encountered regularly in an equine law practice including asset and liability protection, transactions, business matters, and equestrian event issues. These are only a few foundational matters. Equine law clients also regularly need guidance on tax planning, land use, investments, and litigation.
Asset and liability protection
The first thing I recommend for my equine business clients is establishing an ownership structure that protects their assets. This means creating layers of protection—typically, the first layer is forming a limited liability company or corporation or both, depending on the circumstances. It is important that the client fully explain the ownership structure of the land, barn and riding facilities so that you can address the situation effectively. It is not unusual for one person to own the land and allow a family member to operate a boarding or lesson business on the property. This situation presents two challenges: first, the attorney must recognize that the owner and the operator will have differing interests. Be certain to clearly define who you are representing so there are no conflicts; second, make sure your client establishes an entity that protects his interests and spells out the material terms of the agreement. Often, an individual or group of investors owns a commercial barn and riding facility. In this case, it is a good idea for the owners to hold the land in one entity and lease the facility to a second entity that will conduct business with the public. The agreements between the owning and operating entities should provide for full protection of the entities and the individual investors.
The second layer is liability insurance. There are a variety of polices that insure real estate, businesses, and individuals, with substantial differences in coverages. Take time to review your client’s needs and help them get the right policy in place. Good insurance will pay for itself many times over and several insurers that work in the equestrian area provide guidance and consulting free of charge to help your client find the right polices.
The top tier of protection is attained by properly using statutory protections and creating well-crafted documents.
The Equine Activity Liability Act
South Carolina has three specific statutes that establish a liability protection framework for equine law matters. They comprise what is commonly known as an Equine Activity Liability Act (“EALA”).4 EALAs have been adopted in a majority of the states and nearly every state’s EALA is unique. The South Carolina EALA provides liability protections for certain activities and persons and lists several exceptions to the protections to hold bad actors accountable.5 The statutes work together as a cohesive body of law, but the grant of immunity is predicated on the last section...
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