🏛️ What Is Legal System Abuse — And Why Should We Care?
You’ve probably heard the term “LSA” floating around — short for Legal System Abuse. It might sound like legal jargon, but the truth is, it affects all of us: the way we do business, the costs our customers pay, and the availability and affordability of insurance across the country.
Here’s a quick breakdown of what LSA is, why it matters, and how we’re helping lead the charge for a fairer, more balanced legal system.
🔍 LSAR, Explained in Plain English
Legal System Abuse Reform (LSAR) is about fixing the parts of the legal system by addressing the causes that are contributing to increasing costs for everyone. Think excessive lawsuits, outrageous jury awards (aka “nuclear verdicts”), and aggressive tactics used by plaintiffs’ lawyers that create unfair outcomes.
At its core, LSAR is about restoring balance to our courts, discouraging abuse of the system, and making sure litigation serves justice — not jackpot payouts.
💰 Why It Matters to Our Industry
As insurers, we’re on the front lines of these legal trends. When the system is abused, claim costs skyrocket. That’s not just a behind-the-scenes problem — it translates to higher costs for our customers and less affordable coverage for families and businesses. The Institute for Legal Reform (IRL) found that abuse of the legal system costs American households more than $4,200 per year in a ‘tort tax’.
📘 LSA Terms to Know
Here are some common LSA-related terms you might come across — in simple language:
- Tort Reform: Changing laws to cap or reduce excessive payouts in lawsuits.
- Nuclear Verdicts: Excessively high jury awards, those above $10 million, often far above actual damages.
- Nuclear Settlements: extremely large or “game-changing” settlement amounts resulting from legal cases, particularly in the realm of liability or tort claims. The term is often used to describe settlements that are unusually high, typically due to factors like nuclear verdicts or cases that involve significant public attention or liability exposure. These settlements can impact the insurance industry, as they can lead to higher premiums or changes in coverage due to the potential financial risks associated with such large settlements.
- Third Party Litigation Funding: Secret investors (like hedge funds and even foreign actors) investing in lawsuits, hoping to profit from the settlement.
- Venue Shopping: Filing a lawsuit in a court that’s more likely to favor plaintiffs, even if it has little to do with the case.
- Joint and Several Liability: A rule that allows one party to be held responsible for the entire judgment, even if they were only partly at fault.
- Punitive Damages: Extra money awarded to punish the defendant, beyond actual harm caused.
- Reptile Theory: A strategy that plays on jurors’ fears of safety, rather than actual factual evidence, to push for bigger verdicts.
- Class Action Lawsuit: A single lawsuit filed on behalf of a group of people with similar complaints.
- Contingency Fee: When a lawyer gets paid only if they win — usually as a percentage of the payout.
📚 Want to Learn More?
If you’re curious about how LSA affects our business and what reforms are being proposed, check out these trusted resources:
🚀 What’s Next?
Our company supports fair, commonsense reforms to curb legal system abuse and protect our policyholders. Stay tuned for more updates — and if you have questions or want to get involved in advocacy, reach out to the Legal & Government Affairs team.
Let’s work together to ensure our legal system fair — and our insurance accessible.