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Lawyers have a professional responsibility to uphold the law. The law says that people who are injured by the actions of others have the right to be compensated for their losses. Some of those losses are easy to calculate because they are expenses incurred as a result of an injury. Other compensable losses involve placing a value on the quality of human life, and the amount of compensation can often be as high as a jury can be persuaded to go.

Under an adversary legal system, lawyers also have the responsibility to zealously advocate on behalf of their clients. They are required to seek the results most advantageous to their clients. However, it seems some plaintiff attorneys have become a little too zealous in obtaining the most advantageous results – results that might not be obtained entirely to benefit a client.

Multi-million-dollar jury verdicts in personal injury cases have skyrocketed in recent years. Damage awards have increased so significantly that insurance company premiums have not kept pace with the tremendous increases in claims costs. Rising claims costs are not just an insurance company problem. They negatively impact both businesses and consumers.

What is Legal System Abuse? 

Using the legal system for something other than seeking justice is legal system abuse. The legal system is designed with fairness in mind. It’s about a balance of rights in an attempt to ensure order is maintained in society. It is not intended to be an avenue for disproportionately rewarding one party at the expense of another. 

Yet what is happening is that the legal system is, in fact, being used to transfer significant amounts of wealth, perhaps going well beyond what is fair and reasonable, to compensate plaintiffs (and their attorneys) for alleged injuries and other damages. As jury verdicts in personal injury cases continue to get bigger and bigger, expectations of huge payouts are feeding a growing miscarriage of justice that is not ultimately desirable or sustainable.

The Rise of Nuclear Verdicts 

A nuclear verdict is a verdict that exceeds $10 million. Nuclear verdicts are so named for the devastating effects they can have on businesses, industries, and society. Nuclear verdicts drive up the cost of goods and services, affect the cost and availability of insurance, and compromise fairness and predictability in the legal system. 

A recent study showed nuclear verdicts are increasing in both size and frequency. Of nearly 1,400 nuclear verdicts between 2010 and 2019, the median nuclear verdict increased by 27.5% from $19.3 million to $24.6 million – far outpacing general economic inflation. The largest component of nuclear verdicts tends to be non-economic damages such as pain and suffering or punitive damages. 

Across the U.S., the following causes of personal injury and wrongful death claims result in the most nuclear verdicts: 

• Product liability – 24%
• Auto accident – 23%
• Medical liability – 21%

Florida barely edged out California as the state producing the most nuclear verdicts during the years studied. In addition to having the highest number of nuclear verdicts, Florida also had the most nuclear verdicts per capita. With about half of the population of California, Florida generates almost twice as many nuclear verdicts per hundred thousand people. Florida nuclear verdicts are also more likely than any other state to include an award of punitive damages.

Investing in Lawsuits – Third-Party Litigation Funding 

It’s not surprising that with potentially so much money at stake, investors have looked for ways to get in on the action. Litigation can be expensive, so third-party litigation funding is a way for lawsuits to proceed when the cost might otherwise be prohibitive. Third-party litigation funders advance money to plaintiffs and / or law firms to cover the costs of litigation in exchange for a cut of the expected settlement or verdict. 

Though not a party to the litigation, third-party funders may influence the outcome and encourage inflated damages awards. Third-party funding entices plaintiffs to litigate claims that may not have merit because there is no obligation to repay the loaned funds if the case is lost. 

Few states regulate third-party litigation funding or require that third-party funding arrangements be disclosed. Third-party funding has been criticized as an abuse of the legal system for the following reasons: 

• Independent funding can prolong litigation and costs
• Having more fingers in the pie can lead to going after a bigger pie
• Justice is subverted in favor of profits for speculative investors
• Litigation involving third-party funding may raise ethical questions for attorneys

The Effects of Increased Insurance Claims Costs Due to Legal System Abuse 

Across many lines of insurance, legal system abuses are resulting in unprecedented increases in lawsuit verdicts that have little relation to appropriate compensation. Perhaps contrary to popular opinion, these wildly inflated verdicts affect more than just the insurance companies having to pay them. 

The businesses affected by these verdicts may have to slow operations, limit expansion, or close their doors entirely. Consumers will have to pay more for goods and services with fewer options. Trust is eroded in a legal system that delivers arbitrary justice without regard to fairness or predictability. 

Insurance companies will have no choice but to raise premiums and reduce coverage in an attempt to reign in runaway exposures. Some insurers may choose not to cover certain exposures that are deemed too risky to underwrite. The overall effect is to cause constriction in the economy.

Don’t Let Legal System Abuse Leave You Stuck with an Inflated Verdict 

Plaintiff attorneys may try any number of tactics to persuade a jury to return an extremely high verdict. The job of defense attorneys is to help a jury understand the meaning of adequate compensation and direct their focus toward appropriate considerations when arriving at a verdict. Juries are not just playing with free money. There are broader societal consequences that should be taken into account when determining compensation awards. 

Florida juries return some of the highest verdicts in the nation, and it takes an experienced insurance defense lawyer to make sure a jury verdict is not inflated for reasons that have nothing to do with suitable compensation.