The impact of nuclear verdicts and social inflation on U.S. claims
U.S. liability landscape
According to Elaine Pohl, a partner with the Insurance Law Practice Group at the Plunkett Cooney law firm, several factors have contributed to the increase in nuclear verdicts. For example, plaintiffs’ counsel may rely upon the reptile theory legal strategy by creating fear and anger in the jury, to make jurors believe that the defendant's actions endangered the community by violating safety standards and turning minor safety violations into major concerns. This strategy can influence the outcome of the trial by capitalising on the emotions of the jury.
There are specific procedural rules governing the disclosure of electronically stored information, and emails alone make this a very thorny issue. Sometimes employees forget that emails are recorded and stored with the company and if the emails are not privileged or otherwise confidential, relevant emails must be disclosed.”
Other things to consider include:
- Corporate greed perception: Some people believe that companies prioritise profits over their employees and reward top executives with big bonuses, at the expense of the public or their own employees.
- Money's value: The prevalence of huge dollar amounts publicised in the media, for example lottery winnings or multi-million-dollar athlete salaries has raised expectations for compensation in legal cases.
- Litigation funding: The emergence of litigation funders provides plaintiffs with loans to pursue their cases. This adds another party to the mix and can discourage settlements, reducing risks for plaintiff lawyers.
- Tort reform changes: Efforts to increase the amount of money that can be awarded in lawsuits, broaden wrongful death claims, and the changing dynamics in a post-COVID world have weakened the legal reforms of the past.
How to mitigate the risks
To handle the challenges of nuclear verdicts and social inflation, you need a comprehensive approach. Says Pohl, “Valuable work is done by our partners at If and Liberty Mutual in underwriting risks, handling claims and providing resources for us to be able to consider and plan for these issues.”
“To prepare for a trial, utilise strategies like researching the jury, conducting mock trials, exploring alternative ways to resolve disputes such as through mediation or high-low agreements, and engage appellate counsel before trial so that all post-trial options will be available in an effort to lower nuclear verdicts,” Pohl states.
Hiring experienced lawyers who put in the effort to defend claims aggressively can make a big difference. If clients have access to legal support and approved lawyers throughout the U.S.
In contrast with the past, today plaintiffs’ lawyers are talking about settlement sums and numbers early on and often, as early as voir dire (the process where attorneys select, or more commonly reject, certain jurors from hearing a case). This is called anchoring, and it makes sense for the defense counsel to address the plaintiffs’ requested damages directly and even offer an alternate theory for damages during the trial.
It is a team effort
In the end, collaboration between insurers, brokers, and the parties involved is crucial for handling the risks associated with U.S. liability claims, including nuclear verdicts and social inflation.
By being proactive and by providing employee training, implementing safety programs, and practicing risk management to reduce the chances of claims, companies can prevent claims from happening in the first place. With robust procedures and transparent guidelines, all employees should be well trained and aware of potential risks.
The increase in nuclear verdicts and social inflation creates a tough situation for liability claims in the United States. To handle this, it is important for businesses, insurers, and legal experts to work as a team and understand what is causing these problems and how to deal with them. By joining forces and taking a comprehensive approach, we can better deal with and reduce the risks linked to these challenges.
In conclusion, Elaine Pohl counsels: “The increase in nuclear verdicts throughout the United States is caused by many factors, which means there is no easy solution. In my opinion, this trend is not going to change any time soon. However, it is important to recognise the trend and address it directly with the help of insurer partners like If and Liberty Mutual, as well as knowledgeable legal counsel in an effort to minimise the risks as much as possible.”