This paper is hitting the presses on the heels of one of the largest personal-injury verdicts to come out of the state of Texas, ever. On Monday of last week, a jury returned a verdict in the amount of $352,772,000.00. The verdict did not include an award for punitive damages. The plaintiff’s attorney had asked for between Five Hundred Million and One Billion dollars. The defense argument implored the jury to be reasonable and return a verdict between $25M and $30M. What used to be unheard of as an award, has now even become unattainable for a defendant seeking “reason.” The news hit the legal community with responses such as “one for the good guys!”, “Congratulations to a deserving family” and “Man, if that’s not amazing and inspiring, I don’t know what is” followed by “#greatwork #goals.” There is no offense. No shock. No complaints of lawsuit abuse… Just unadulterated praise. Corporate Defendants are the unwitting victims of what has now been coined as “Social Inflation.” This paper discusses the efforts being made to recognize it and proposes ways to stop it.
Technically a “nuclear verdict” is any verdict that is returned surpassing ten million dollars, but it really means any verdict that is so large as to be completely unexpected. However, these are coming at such an alarming rate, they hardly seem “nuclear” any more. Stephanie Fox of Verisk, notes this: “when considering verdicts of more than $1 million, the average size increased nearly 1000 percent from 2010 to 2018 – rising from $2.3 million to $22.3 million. Further, in 2019 alone there was a 300 percent increase in verdicts of $20 million or more when compared to the average from 2001 to 2010. An 8-figure award may soon no longer be considered nuclear. These verdicts are becoming prevalent for any number of reasons, but primarily due to the efficacy and use of The Reptile Strategy. Way too much attention has already been given to this strategy. But to understand how to stop it, one just understand where it comes from, we must recognize the validity of a now oft-used and new to the conversation-phrase, “social inflation.”
Corporate mistrust. Corporations are often no longer seen as the backbone of the American economy. In fact a recent study done by Litigation Insights found that over 39% of jurors have negative views and perceptions of corporations. This is in large part due to the rise in publicity of all things sensational that the corporate community is responsible for. Media attention focusing on the “bad acts” of a few corporations has caused a substantial rise in the feeling of mistrust for large corporations. Consider the evidence displayed in the media from the involvement of large pharma in the opioid crisis, the repeated stories of large airlines and passenger inequities. Recall a doctor being dragged off a plane? We are seeing general feelings of being taken advantage of by large institutions. People are poised to take the position that they must police institutions that won’t police themselves.
Lack of control. Additionally, people are reporting feeling less able to maintain control over their lives. Certainly the recent advent of the COVID 19 virus had added to this. The feeling in general of being victimized is prevalent throughout communities. One study reported that only one fifth of people polled felt the system worked for them. While the others reported feeling the system worked against them. The locus of control is found to work against them. Thus, it is easy to extrapolate this loss of control into why juries increase awards. When people feel like they are a victim of circumstance, they more readily sympathize with a plaintiffs’ perspective; and by awarding large amounts to them, are somehow able to right the ship for themselves as well. If jurors already feel victimized, a defendant’s conduct can and does seem more threatening and therefore invites stronger punishment.
Those darn millennials. Millennials now make up the majority of the work force. As such, they also tend to make up the vast population of most juries. Millennials see jury service as a way to enact social change. Lawsuits can right social wrongs, redistribute wealth and challenge the status quo. A verdict for plaintiffs is a way for millennials to fulfill these goals. Plaintiffs’ attorneys have been known to open a case by telling a jury that they have been selected because they were the ones who seem most ready to change the world. Intoxicating words for a community frightened by the corporations who want to addict their children, destroy their pets and force them out of employment.
Is there a way out of this? Communicate. Communicate. Communicate. Fortunately, companies are beginning to take the reptile and it’s victimhood strategy quite seriously. Many companies have begun training their employees at all levels to recognize these tactics and push back against them well before an incident becomes a claim or worse a lawsuit. There is an inherent distrust of big corporations and therefore a dangerous but palpable prejudice against them. Thus immediate and tangible efforts are being made to dismantle that prejudice. This starts with early outreach and communication. A little compassion goes a long way to upend the suspicion held against companies. At the very beginning of a claim, immediate reach out should be accomplished. Phone calls from adjusters not just “checking boxes” can be seen as a way to start saving the company money. These reach-outs must be seen by the claimant as calls to inquire on the well-being of the claimant and potential plaintiff. Every day without communication is a day that a claimant’s frustration builds. A lack of communication is the foundation of a nuclear verdict. Empathy regardless of fault must be communicated. Many companies make the mistake of withholding contact as a means of protecting a perceived admission of fault. The opposite is the actual effect though. A lack of contact can absolutely backfire. Nothing could be more important than listening to and understanding the claimant’s position. Connecting to the claimant can go a long way to eliminating that foreign stranger bias. This is so important; many Companies are employing empathy training at every level of claims handling.
Medical Management. Although not always possible, medical management can be an effective way to balance and reign in the value of a claim. Taking steps to pay for medical care up front, before the plaintiff contracts with a litigation funding company can be a huge benefit. Many Plaintiff’s firms contract out the expenses in cases now through litigation funding companies. By attempting to get a claimant to allow the corporate defendant to pay for medical care, it establishes trust and avoids the excessive billing that can exponentially increase the value of a claim.
We’re all human. At the end of the day, going out of the way to demonstrate humanity and care is the single best way to eliminate the danger of nuclear verdicts. If a claimant knows that there are people behind the corporate “levers” that are counting and measuring their recovery, then it is likely that their recovery is seen as more than a line item in a budget, and in fact, the defense efforts are being made to truly help a Plaintiff recover. With this in place, the threat of the trial will be eliminated and thus the absence of the threat of nuclear verdict is secured.