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Infographic: Legal system abuse
A proactive approach to understand and address the issue of legal system abuse
Infographic: Legal system abuse
© Tetra Images / Getty Images
Consumers, businesses, and insurers are increasingly fraught by the impact of legal system abuse and the resulting skyrocketing verdicts. Legal system abuse, often referred to as social inflation, applies to a variety of tactics the trial bar uses to initiate more lawsuits, drive up litigation expense costs and settlements for defendants, and secure higher verdicts.
Average household pays due to abusive litigation that raises costs of products and services¹
Rise in Nuclear Verdicts® in 2019 from annual average 2001-2010²
Typical days to close claims with attorneys, compared to 168 days without attorneys³

Drivers of legal system abuse

Several social, political, legal, and economic drivers contribute to making legal system abuse one of the major emerging risks the insurance industry faces today.
Desensitization to large verdicts
Needed repairs to the civil justice system
Diminished value of money
Class action lawsuits
Litigation funding
Social media and legal advertising
Public distrust of corporate defendants/attorneys
Generational shift in jury pools
Increase in medical expenses
Jury anchoring
Venue shopping

Nuclear Verdicts®

“Nuclear Verdicts” are defined as verdicts over $10mn. A new term emerging – “thermonuclear” verdicts – are  far exceeding the $10mn threshold and can only be explained by emotional or punitive juror motives.

Top 10 states by cumulative Nuclear Verdicts (>$10mn) 2010-2019

Source: Institute for Legal Reform. 2022.4

Largest jury verdicts of 2022

Source: VerdictSearch. 2023.5

Litigation funding

Third-party litigation funding (TPLF) is surging, with more than $11bn of capital invested in the United States.6 This driver of legal system abuse is an arrangement where a funder that is not a party to a lawsuit provides funding  to a plaintiff or law firm in exchange for an interest in the potential award in a lawsuit. Plaintiffs do not have to repay  the funding if their lawsuit is not successful.
Litigation funding
1 Cary Silverman and Christopher E. Appel, Shook, Hardy & Bacon L.L.P. 2022. Nuclear Verdicts: Trends, Causes, and Solutions. Institute for Legal Reform. Retrieved: January 26, 2023. (
2 Pain, D. 2020. Social Inflation: Navigating the evolving claims environment. Geneva Association. Retrieved: January 23, 2023. (
3 Insurance Research Council. 2022. Public Attitudes on Litigation Trends and the Role of Attorneys in Auto Insurance Claims. Retrieved: January 26, 2023. (
4 U.S. Chamber of Commerce Institute for Legal Reform. 2022. Nuclear Verdicts: Trends, Causes, and Solutions. Retrieved: January 22, 2023. (
5 VerdictSearch. 2023. Featured Verdicts. Retrieved: January 24, 2023. (
6 American Property Casualty Insurance Association. 2023. Legal System Abuse Hurts Families and Affects Jobs. Retrieved: January 23, 2023. (
Maura Freiwald
Maura Freiwald
Head of Casualty
Munich Re US