'They're just killing us': Defense Bar confronts rise in nuclear settlements
"The No. 1 cause of nuclear verdicts is plaintiffs lawyers," said Robert Tyson, who has sought to rally the defense bar against rising verdicts and settlements.
Editor’s Note: This is the fourth installment of a multi-part series examining the factors affecting the rise in nuclear verdicts across the insurance and legal industries, and is published in conjunction with our sister publications on ALM’s Law.com websites.
The plaintiffs bar is obtaining nuclear settlements through skillful manipulation of juries, said Robert Tyson, who has sought to rally the defense bar against rising verdicts and settlements.
Since most cases settle rather than go to trial, plaintiffs lawyers have become adept at leveraging nuclear verdicts to obtain nuclear settlements, said Tyson, a trial lawyer-turned-strategic managing partner at Tyson & Mendes in San Diego, California.
“The No. 1 cause of nuclear verdicts is plaintiffs lawyers,” Tyson said. “They are manipulating juries through psychology. They’ve changed the way they try lawsuits, and the defense industry has not changed the way we try lawsuits. So they’re just killing us.”
Settlements rising
Data from VerdictSearch supports the trend in which the average and median settlement amounts have increased by more than 65% and more than 70%, respectively, within the last decade ending in 2022.
Nuclear settlements are either in excess of $10 million or are settlements in which non-economic damages, like pain and suffering, greatly exceed economic damages, such as medical bills, according to Tyson. He added that the real power of these nuclear settlements might arise from their sibling’s playbook: nuclear verdicts.
Tyson said plaintiff lawyers cite substantial verdicts, even if it wasn’t their case, to jurors in subsequent proceedings to make the jury think such an outcome is typical. He said that in talks with a mediator, settlement judge, insurance company or defense counsel, plaintiffs lawyers substitute the nuclear verdict with a massive settlement with the same aim.
It is a concept coined “social inflation,” according to the DRI, which represents civil defense attorneys.
Pushback against defense’s explanations
But the institute’s “social inflation” claim has pushback from the Consumer Federation of America, and the Center for Justice and Democracy, which said the concept is merely a means to higher insurance premiums and to advance restrictions on consumers’ legal rights.
“It takes two sides to settle a case,” said Joanne Doroshow, who co-authored a related report and is the executive director of the Center for Justice and Democracy.
“So let me get this straight — corporations are complaining that they and their insurance carriers are voluntarily settling cases for amounts that are too high?” Doroshow said. “If they really believe that, they should fire their apparently incompetent lawyers.”
The authors of the report claim that corporate and insurance lawyers have used the term “to cover a number of wildly disconnected things” to justify a loss.
The report cites “#MeToo and child sexual abuse claims; lawyer advertising and case funding; securities class actions; millennials as jurors; and verdicts in worsening truck crashes.”
Meanwhile, while plaintiffs lawyers have learned new ways to score bigger verdicts and settlements, defense lawyers have largely failed to alter their strategy in trying a case, said Tyson, an expert and published author on the topic.
“Sometimes, clients aren’t letting them change,” Tyson said. “But the reality is, there are things that we can do as the defense, insurance companies and defense lawyers, to stop nuclear verdicts today.”
Correlation between spiking verdicts and settlements
But Tyson conceded that even his law firm is not immune from some nuclear settlements. In a Chicago personal injury lawsuit, for instance, his law firm was defense counsel, and the plaintiff’s counsel obtained a $91 million settlement.
In that matter, a driver plowed into a man standing in front of a 7-Eleven store, resulting in the amputation of both legs because the person stepped on the gas pedal instead of the brake. The settlement came soon after a jury returned an $87 million verdict to the plaintiff’s lawyer in a similar case.
“Large verdicts drive the settlement value of cases,” said Thomas Kline, a founder of Kline & Specter in Pennsylvania who has obtained dozens of eight-figure verdicts. “It’s as simple as that.”
Meanwhile, the media coverage of these substantial verdicts “get tossed into the pond of information that’s out there that lawyers are using to evaluate their cases,” John C.S. Pierce, chair of the Public Policy Committee within the Center for Law and Public Policy at DRI, said in its report.
Pierce said the Center for Justice and Democracy analysis was flawed because it focused on data about litigation during the pandemic years, while DRI looked at litigation patterns over a broader period.
“Ninety-seven percent of cases settle,” Pierce added. “When you see an increase in verdict numbers, it’s a natural corollary that we’ll see an increase in settlements.”
Related:
Litigation funding blamed for spiking insurance settlements – but is that really true?
‘$10 Million? You don’t blink at that anymore’: Are lawyer billboards affecting juries?
Keeping verdicts from running away: Attorney Bob Tyson addresses nuclear verdicts
‘Look what Texas is doing’: States with biggest insurance settlements – and those pushing back