Ads for lawyers seem to show up everywhere these days – from billboards to websites, social feeds to TVs. That’s because plaintiffs’ lawyers now have far more resources to devote to convincing potential clients they can win big payouts. Hedge funds and other investors help drive this shift. Investors fund litigation for the right to keep a sizable portion of any court winnings that plaintiffs eventually may be awarded.
Assets under management for third party investment in litigation, where the investor is not even a party to the lawsuit, were estimated at $22 billion globally in 2023, up 30% from 2021.1 To them, the lawsuits were just an investment opportunity. Much of the money they invested went to court fees, expert witnesses and other litigation costs, while helping fuel $2.6 billion in legal services ads to lure in litigants.2 Remarkably, despite the size and the impact of this investment industry, it is essentially unregulated.
Playing on Juries’ Sympathies
The barrage of ads does more than help lawyers find clients. The ads also subtly influence jury pools. When potential jurors regularly see and hear about huge verdicts, the idea that massive payouts happen frequently becomes normalized.
The pervasive impacts of advertising are mixing with another changing social sentiment – a prolonged, nationwide rise in anti-corporate feelings.3 The American public in particular holds businesses in lower esteem than in the past. This shift in attitude has made it easier for lawyers to sway already-biased jurors against businesses. Instead of looking to ensure that an injured claimant is properly compensated for an injury, plaintiffs’ lawyers position verdicts as a way to send a message to corporations.
By reinforcing the perception that huge verdicts are common and that businesses must be punished, plaintiffs’ attorneys have been successful at convincing jurors to be more receptive to awarding unjustifiably large awards.
The Cost of Big Verdicts
In the legal world, $10 million is a milestone. Verdicts of $10 million or more are commonly called “nuclear verdicts.”4 The name reflects the fact that the dollar amount is exceedingly high, often much higher than the amount that would seemingly be justified based on the injuries sustained and the facts of a case. They’re happening more often. There were 135 lawsuits against corporate defendants that led to a nuclear verdict in 2024, according to Marathon Strategies. That represents the highest number of cases in a single year, and a 52% increase over 2023. The total sum of nuclear verdicts in 2024 was $31.3 billion, a 116% increase since 2023.5
The fallout from nuclear verdicts goes beyond the courtroom. When businesses must pay large legal judgments, it can force them to raise prices to recoup their losses. This phenomenon is called “social inflation,” because price increases are not based on underlying economics, but on the way that social sentiment influences verdicts and judgments, which in turn drives up costs for everyone.
Keep in mind that verdicts and judgments are a big slice of the economy. All told, the U.S. tort system cost an estimated $529 billion in 2022, according to The U.S. Chamber of Commerce Institute for Legal Reform, with a sizable portion coming from nuclear verdicts.6 That equates to around $4,200 a year per American household, and tort costs are equivalent to 2.1% of national GDP.7
Costly for Plaintiffs
The costs may be high, considering who really benefits. While lawyers, their ads and outside investors claim plaintiffs win big, the reality is different. Compensation to plaintiffs typically represents only about half of the total size of the tort system, with the rest going toward legal costs and other expenditures.8 That profit margin is three times the average stock market return.9
At the end of the day, injured parties can be left with less money, sometimes substantially less, than if they had settled their claim and had their injuries paid for directly without attorneys or funders involved.
Reforming the System
When someone is responsible for an accident, the legal system aims to make those injured in the accident whole for their damages and injuries. The system does not aim to be a profit-making opportunity for investors, which is exactly what third-party litigation funding does. When we allow verdicts to be treated like a commodity market, it has a bad ripple effect on society and the economy.
Legal system abuse reform can eliminate some of the excessive costs these lawsuits generate. The Hartford supports and works closely with several organizations that are calling for greater transparency and accuracy in legal advertising. We’re also advocating for increased transparency in third-party litigation funding, with additional state legislatures such as Georgia and Kansas passing Third Party Litigation Financing reforms in 2025.
Legal system abuse reform isn’t merely an insurance issue. It’s a broader societal issue that desperately needs reform, especially since we all end up paying for the increase in costs.
Legal system abuse reform isn’t merely an insurance issue. It’s a broader societal issue that desperately needs reform, especially since we all end up paying for the increase in costs.
For more insight on the latest industry trends, read our 2025 Risk Monitor Report.
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The information contained on this page should not be construed as specific legal, HR, financial, or insurance advice and is not a guarantee of coverage. In the event of a loss or claim, coverage determinations will be subject to the policy language, and any potential claim payment will be determined following a claim investigation.
Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. listed in the Legal Notice.
The Hartford Financial Services Group, Inc., (NYSE: HIG) operates through its subsidiaries under the brand name, The Hartford, and is headquartered in Hartford, CT. For additional details, please read The Hartford’s Legal Notice.
The information contained on this page should not be construed as specific legal, HR, financial, or insurance advice and is not a guarantee of coverage. In the event of a loss or claim, coverage determinations will be subject to the policy language, and any potential claim payment will be determined following a claim investigation.
Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. listed in the Legal Notice.
The Hartford Financial Services Group, Inc., (NYSE: HIG) operates through its subsidiaries under the brand name, The Hartford, and is headquartered in Hartford, CT. For additional details, please read The Hartford’s Legal Notice.
1 “Revisiting the Impact of Litigation Finance on US P&C Insurers,” Evercore ISI, March 2024.
2 “Legal Services Advertising in the United States – 2020-2024,” American Tort Reform Association, March 2025.
3 “Historically Low Faith in U.S. Institutions Continues,” Gallup, July 2023.
4 “What Are Nuclear Verdicts?” U.S. Chamber of Commerce Institute for Legal Reform June, 2024.
5 “Corporate Verdicts Go Thermonuclear,” Marathon Strategies, 2025 Edition.
6, 7 “Tort Costs in America: An Empirical Analysis of Costs and Compensation of the U.S. Tort System: Third Edition,” U.S. Chamber of Commerce Institute for Legal Reform, November 2024
8 “Tort Costs in America: An Empirical Analysis of Costs and Compensation of the U.S. Tort System," U.S. Chamber of Commerce Institute for Legal Reform, November 2022.
9 “Average Stock Market Return: A Historical Perspective and Future Outlook,” Business Insider, Jan. 2, 2025
