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The term “social inflation” refers to a phenomenon in which the cost of claims exceeds the rise in inflation. Social inflation can occur when jurors become desensitized to large numbers and susceptible to the machinations of plaintiff lawyers who seek to tap into their personal fears and general distrust of corporations. These conditions may encourage excessive jury verdicts and expensive settlements, or “social inflation.” Social inflation is one of the factors driving the rising cost of insurance as carriers increasingly bear higher claims costs. In fact, during the period from 2011 to 2020, the average ultimate severity of claims against 色多多视频Design Professional policyholders nearly tripled.

While no lawsuit is immune from social inflation, it is more pronounced in wrongful death and bodily injury claims in which juries are asked to punish corporate defendants for their conduct. For example, in December 2021, when one of its patrons drove from the bar drunk and killed a woman and her granddaughter. While the underlying events are incredibly tragic, there was no logical basis to support an award of this magnitude.

Reptile theory in action
An excessive verdict like this one is referred to as a “nuclear verdict,” and in a wrongful death case it’s often the result of a skilled plaintiff lawyer employing the “reptile theory.” Jury consultant David Ball and plaintiff lawyer Don Keenan laid out this theory in their book, Reptile: the 2009 Manual of the Plaintiff’s Revolution. The authors detail how a plaintiff lawyer can build a case in a way that appeals to jurors’ basic sense of safety—something found in the most primal, or reptilian, part of the human brain. When a plaintiff lawyer successfully employs the reptile theory, jurors are led to believe that if they don’t punish a defendant for violating a clear set of safety rules, then the same harm could be inflicted on them or their community.

According to Ball and Keenan, successful use of this theory has resulted in billions of dollars of additional damages above what plaintiff lawyers might have recovered if they had simply presented their clients as sympathetic plaintiffs to a jury.

In some cases, juries discount or ignore a defendant’s strong liability defenses and award high verdicts merely because someone suffered harm. Plaintiff lawyers focus their cases on defendants with perceived “deep pockets” and high insurance limits, regardless of fault.

When a plaintiff lawyer successfully employs the reptile theory, jurors are led to believe that if they don’t punish a defendant for violating a clear set of safety rules, then the same harm could be inflicted on them or their community.

Actions you can take
Social inflation is here to stay, but by doubling down on your internal risk management protocols, you can increase your chances of successfully defending against an attack by an overzealous plaintiff lawyer if misfortune strikes one of your projects.

Here are five ways you can safeguard against becoming the victim of a nuclear verdict:

1. Spend time on your contract. It’s crucial that your contracts expressly disclaim responsibility for construction means and methods and jobsite safety. Taking on contractual risk you would not otherwise have, like agreeing to defend your client from a third-party claim or guaranteeing a project outcome, can increase your liability exposure and compromise your professional liability insurance coverage.
   Your scope of work should clearly set forth your agreed-upon professional services and those that you will not perform. It should be written in a way that a layperson, like a prospective juror, can understand. An unclear or ambiguous scope of work makes it easy for a plaintiff lawyer to expand your potential liability before a jury. If a case is headed toward nuclear verdict territory, you don’t want to be perceived as responsible for someone else’s work.
2. Watch out for instant messages. Always keep your communications professional. That goes for all communications, including your emails, text messages, and Slack and other instant messages. While most firms understand that communications outside their firm should adhere to high standards of professionalism, some fail to appreciate that instant messages on platforms like Microsoft Teams are discoverable in litigation.
   A message to a co-worker about how stupid a contractor was for allowing a dangerous condition to exist can and will be used against you if there’s an accident. Even if you documented the unsafe condition properly, a forensic electronic discovery firm can search your texts and messages (even deleted ones) to see what you really thought. The next thing you know, the litigation will shift from whether your response to an unsafe condition was adequate to whether your demeanor was unprofessional—an accusation that can pique a jury’s interest.
3. Don’t assume responsibility for unsafe conditions. If an accident occurred at the jobsite, a plaintiff lawyer will scrutinize your response and seek to expand your liability by demonstrating that you could have done more to prevent the accident. Always report any dangerous condition you observe to the general contractor, never offer a solution, and immediately document the conversation in writing to your client, citing the section of your contract that disclaims construction means and methods and jobsite safety. If there’s an imminent threat of harm, speak up immediately. You should also establish standard procedures for your site representatives to follow if they observe unsafe conditions on a project site, including situations that pose imminent danger to others.
   Not only do you have a professional and ethical obligation to the public’s health, safety, and welfare, but you also want prospective jurors to conclude that everything you did was reasonable and you did your best to warn others.
4. Report potential problems early. If there’s a problem on your project, like a jobsite accident, schedule bust, or cost overrun, make sure you follow your internal reporting protocols and consider notifying your broker. Be cautious about everything you put in writing. Your internal emails are generally discoverable in litigation unless they are protected by the lawyer-client privilege (solicitor-client in Canada).
   Frequently, design professionals don’t report a potential problem because they believe that it’s not their issue and they don’t need to worry about it. They may not appreciate that in a high-damages case, like a jobsite fatality or massive project delay, many participants will likely be sued. Moreover, differences between a contractor’s general liability coverage and an architect or engineer’s professional liability coverage might mean that you’re the only party with the insurance dollars to pay for a certain type of loss, like a delay claim.
   By reporting potential claims, however, your insurance company can help. It can assign a specialist to help you prepare and, if needed, retain a lawyer to work with you behind the scenes at no cost to you. A lawyer can establish the attorney-client privilege early on and help keep your self-critical analysis from being disclosed to the other side.
5. Take advantage of your crisis event coverage. If catastrophe strikes, firms that can actively control the public narrative early on are the ones that can best protect their reputation—a strategy that can reflect positively on you in the courtroom. If a major accident happens on your project, speak with your broker about crisis event coverage, a premier benefit for 色多多视频Design Professional policyholders. If you believe your firm’s reputation could be adversely affected by a claim that your conduct was negligent, you may qualify for reimbursement of up to $30,000 for reasonable fees, costs, and expenses paid to a public relations firm responding to the crisis event.
   Expensive claims are here to stay, but by making a daily commitment to your risk management program, you can prepare for the catastrophe that everyone hopes will never come.

Note: This article relates to the legal climate in the United States. In Canada, construction cases arising from property damage or economic/financial loss are decided by judge, not jury. Bodily injury claims involving construction workers are almost always covered by provincial workers’ compensation insurance programs and not litigated.

About the author
Brett Stewart, J.D. is the Risk Manager for the Design Professional unit of 色多多视频色多多视频. He focuses on developing loss prevention and education materials for AXA XL’s architect and engineer clients with the goals of minimizing the frequency and severity of loss exposures, while focusing on increasing best practices. He can be reached at brett.stewart@axaxl.com.