TLA Feature Articles and Case Notes

4. Juror de-sensitization to large dollar awards.

5. Litigation finance, which is thirdparty investment in lawsuits in exchange for a share of the recovery. The relatively high rate of return has led to both the amount of investment and the number of firms offering these types of investments to grow at a staggering rate—more than 400% between 2013 and 2017.3 Litigation financing has contributed to an increase in lawsuits which have increased insurance companies’ average expenses over the last decade.4

The factors that contribute to nuclear verdicts contribute to a litigation environment where verdicts, generally, are rising. As a consequence, settlement amounts are increasing. This, in turn, is a significant factor in rising insurance rates for motor carriers. Insurance premium costs per mile have increased by 47% for trucking companies over the last ten years5 —an amount significant enough to put smaller operators out of business. Small fleets (between 1 and 20 trucks) pay more than twice as much per mile for insurance than large fleets (101 to 1,000 trucks), and large fleets are already paying twice as much per mile for insurance than very large fleets (greater than 1,000 trucks).6

As a result of increased insurance costs, many trucking companies have increased their deductible/retention.7 As noted by ATRI, the average deductible/retention for trucking companies with fleets between 100 and 1,000 power units is $242,857, which is more than 50% of the average settlement payment found in ATRI’s study of small settlements.8

One growing trend that is particularly affecting payments made on small claims is the rise of specialized plaintiff’s law firms known colloquially as “settlement mills.” There are many large plaintiff’s personal injury firms operating on a volume-based business model, processing tens of thousands of claims each year, often with little client interaction and without filing suit.9 Many of the claims settled by these so-called “settlement mills” focus on minor vehicle crashes. It is not uncommon for demands of five times the true medical costs for the soft-tissue, non-severe injuries in these cases, regardless of fault.10

Against this backdrop, let’s take a look at statistical analysis of a sample dataset of sub-$1M verdicts and settlements.

What Does a “Small” Case Look Like?

In trucking litigation, cases that can be expected to settle or result in a verdict of less than $1M generally don’t involve fatalities or multiple claimants. Some cases involve an accident which is seemingly innocuous—such as a very low-speed sideswipe in stop-and-go traffic—but which may result in a claim with some teeth due to the carrier not responding to the incident quickly to preserve evidence, etc Issues such as spoliation, bad driver history, improper document retention by the motor carrier, poor safety record, etc. may be unrelated to the particular motor vehicle accident giving rise to a claim, but skilled plaintiff’s attorneys can make those issues the focal point of the litigation, turning a weak case into a valuable one.

Given the unfavorable landscape for trucking companies, some practitioners would argue that there is no such thing as a “small” trucking case. There is general agreement in the industry that truck crashes should be treated equally in the sense that they should be quickly investigated, and reasonable steps should be taken to preserve evidence and testimony. All other things being equal, the difference between a small trucking case and a large one is often related to pre-litigation activities, such as maintaining an excellent driver training and safety program and rapidly investigating incidents.

In the section below, we present a summary of excellent statistical work done by ATRI to analyze a dataset of sub-$1M verdicts and settlements. Given that the payments in these cases were less than $1M, it is reasonable to assume that the cases generally involved less-severe injuries or significant defenses for the motor carrier, as claims with serious injuries and