Navigating the Rising Tide of Nuclear Verdicts: Strategies for Corporate Defense

Understanding Nuclear Verdicts

Nuclear verdicts, defined as exceptionally high jury awards that exceed what most would consider reasonable, are becoming increasingly common. Paul Horgan, head of U.S. national accounts for Zurich, highlights that these verdicts are driven, in part, by aggressive and effective plaintiff's attorneys. The commercial trucking industry, for instance, has seen a nearly 1,000 percent increase in average awards related to trucking incidents when considering verdicts of more than $1 million from 2010 to 2018, according to the American Transportation Research Institute (ATRI).

The Broader Context of Runaway Litigation

Nuclear verdicts are part of a larger trend that includes increases in class action suits and litigation funding. Litigation funding, where third-party investors assume the cost of a lawsuit in exchange for a percentage of the settlement, has turned into a $39 billion global industry in 2019, according to Bloomberg. This trend, along with other aspects of runaway litigation, contributes to 'social inflation,' where claims and losses rise faster than general inflation, leading to more expensive insurance for businesses and consumers.

Strategies for Mitigation and Defense

Defense counsel are beginning to employ some of the same techniques as plaintiffs' attorneys, but more is needed to address runaway litigation. Horgan emphasizes the critical need for corporations to exert pressure on their state and federal legislators to put an end to this. At Triple-I's Joint Industry Forum, a panel dedicated to the topic of runaway litigation will discuss its impact on claims and losses, and potential solutions. Participants include Sherman 'Tiger' Joyce, president of the American Tort Reform Association (ATRA), Rick Merrill, founder and CEO of Gavelytics, and Michael Menapace, partner with Wiggin and Dana and Triple-I Non-resident scholar.

For readers, it's advisable to stay informed about legislative changes and trends in litigation funding. Engaging with industry forums and leveraging data analytics can also provide valuable insights for corporate defense strategies.