Litigation Trends Add Heightened Vulnerability For Schools

Litigation Trends Add Heightened Vulnerability For Schools
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Litigation trends in education have continued to show troubling signs for schools in recent years. Overall, jury awards are increasing, and the costs associated with defending lawsuits are skyrocketing. 

One of the critical issues is litigation financing, an investment strategy by which private equity firms fund attorney fees on behalf of plaintiffs. They recoup their investment via a percentage of the settlement to receive the highest award possible. According to United Educators, in 2019, there was $9.5 billion committed to US litigation in this space, and only $2.3 billion deployed. As a result, there is a lot of money on the sidelines as these litigation finance firms look for the next big verdict. 

According to one insurer, they experienced a 340% increase in average Educators Legal Liability defense costs per claim from 2007 to 2015. Additionally, they are continuing to experience a significant increase in attorney fees and overall defense and liability expenses.
Ten years ago, litigation financing was not yet well known or well-publicized in the United States. Today, it is much more common and widely accepted in the legal community. A survey from Lex Shares found that 69% of lawyers included in the study were very familiar with this practice, doubling the number of lawyers who answered the same survey a decade prior. 

An article from Harvard Law's "The Practice" states that litigation finance can be traced back to Australia and the United Kingdom, both regions where litigation finance has been widely accepted since the 1990s. We will likely see a continued rise in litigation financing in the next decade, which is troubling for both insurers and insureds.

Questions?

Reach out to your RCM&D advisor today with any general liability coverage questions as we continue to monitor the ever-changing legal landscape in education. 
 

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