Litigation funding and attorney advertising are two factors driving an increase in product liability cases. (Credit: HEMINXYLAN/Adobe Stock)
Product liability cases are on the rise, and verdict amounts are growing — making it increasingly important for companies to protect themselves, according to a recent Travelers and Constitution State Services webinar.
Product liability claims are increasing in number and growing larger, more complex and more expensive. In the National Law Journal’s list of the top 100 verdicts of 2024, one in every six cases was a product liability case. Of the top five verdicts, three were product related, including the second largest — a verdict of $5 billion.
Multiple factors over the years have driven a rise in cases, from attorney advertising to litigation funding. In addition to an increase in third-party litigation funding at the law firm level, consumers can now access payday loan-style funding to help pursue their case. On the ad front, more than 27 billion legal ads ran last year alone, potentially encouraging a societal expectation to pursue litigation.
“It certainly didn’t come about overnight, but it’s been an accumulation of legal, regulatory, and social changes that, in my opinion, have been pretty skillfully exploited by the plaintiffs’ bar over the past many years,” said panelist Elise Schreier, Travelers’ vice president of claim product liability. “It feels like it’s coming to a boiling over point right now, really accented by all these headlines of nuclear verdicts.”
The larger verdicts are also driven by a shift in jurors’ behavior. Panelists cited a study that found jurors were more likely to side with the plaintiff if the defendant engaged in wrongdoing, like burying product safety testing results, or behavior that didn’t align with their morals. Large verdicts are also being used as a way to punish companies for bad behavior, especially where regulations may have fallen behind.
“Studies indicate that jurors don’t trust corporations, especially the big ones,” said Reese Cann, assistant vice president, risk control, at Travelers.
Companies can protect themselves by getting serious about documentation as well as document retention. They should plan to keep documents and contracts related to a product even well after the product’s expected life, Cann said.
If a loss occurs, companies should respond promptly and with empathy. They should retain all evidence and take any steps necessary to prevent additional losses. Engaging legal counsel and insurers early is also key.
For companies that take the steps above and present their case well, an outsized settlement or verdict can usually be avoided, Schreier said.
“The risk of a nuclear verdict is increasing, but it remains true that a vast majority of companies will never see one, particularly if you’ve protected yourself,” she said.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.