The Cost and Other Advantages of an Early Offers Reform for Personal Injury Claims Against Business, Including for Product Liability

Abstract

Many observers have concluded that the personal injury liability litigation system (including for product liability) needs improvement. Such cases are extremely complicated, requiring proof of the defendant’s faulty conduct or product cause injury, and determination of not only economic but noneconomic damages. Some claimants who are injured through another’s fault receive significant awards or settlements, but almost always after long delay. In addition, the current system entails formidable transaction costs, so that substantial shares of the liability insurance premium dollars go to litigation expenses on both sides. Although some states have enacted product liability reforms, such as statutes of repose, the “early offers” reform reported on here should have a much more fundamental effect on liability litigation than such reforms. The analysis presented indicates that the early offers system is likely to generate significant savings, including a reduction in attorneys’ fees for both sides. These savings should allow a substantial reduction of premiums for such personal injury liability insurance. Ultimately, injured parties, providers of goods and services, consumers, employers and the public generally should benefit from the reform.