As usual, I had a terrific experience at DRI’s annual Insurance Coverage and Practice Symposium in midtown Manhattan, which was held last week. I had gone in many ways simply for two particular presentations, one on generative AI and the other on the impact of nuclear verdicts on insurance coverage and bad faith issues, although other presentations were informative and had value as well.

The AI presentation, ably presented by Lewis Wagner’s Meghan Ruesch and Melissa Fernandez of Travelers, was oriented towards the question of how AI would impact insurance, with discussion of new claims against insureds it may give rise to, how and whether such claims will be covered by standard industry policy language and how generative AI may be employed in, or otherwise affect, claims handling by insurers. On the first issue, the presenters emphasized the range of claims that can be expected to arise, running from the obvious – copyright infringement claims against insureds using generative AI apps or other tools to create media – to the less obvious, such as invasion of privacy by the creation of so-called deep fakes or through other AI driven activity. Your mileage may vary, but I think that any imaginative lawyer with a basic knowledge of how AI works can likely envision a nearly limitless range of potential claims against users of generative AI tools and distributors of AI crafted output.

What jumped out at me about this particular topic, however, wasn’t the range of potential claims but the extent to which the law itself – both statutory and common law – has a long ways to go before doctrines, evidentiary approaches, or the recognized elements of claims are in sync with the coming of claims based upon generative AI. We simply don’t know at this point what the elements of various causes of action should look like with regard to harms caused by generative AI, nor what new causes of action will have to be recognized to account for them. In effect, we are about to try to handle generative AI based claims with legal doctrines designed for, and resulting from, a much different age. It’s akin to the courts trying to handle claims arising from locomotives, cross-country railroads and automobiles, with a body of law still based on an agrarian society and the horse and buggy. The law eventually caught up, but it took a while. So too the law will eventually catch up here – but again, it will take time, and many judicial decisions, before the parameters of claims arising from the use of generative AI will be clear and widely agreed upon.

With regard to the presenters’ second issue, namely the extent to which such claims will be covered by standard policy language, of course the final answer to that question won’t be known until after the exact nature and elements of such claims have been at least substantially developed in future judicial decisions. However, the nature of insurance, obviously, is protection against the unknown, and thus both insureds and insurers will have to muddle through on the question of the scope of coverage even while the nature and elements of the claims themselves are still being developed.

For now, though, what caught my attention in this regard was the focus on the extent to which claims arising from generative AI may end up being shoehorned into the coverage granted by advertising injury insuring grants in policies. I believe it was all the way back in 1992 when I wrote an article for an insurance industry publication that I titled “The Expanding Scope of Advertising Injury Coverage,” addressing the extent to which, way back then, this coverage grant was being broadly read by courts to provide coverage beyond what the industry believed was its intended scope. The more things change, the more things stay the same I guess – back then, we didn’t even have iPhones but were discussing the propriety of a broad reading of the scope of this coverage, and today we are doing the same only with artificial intelligence, something that when I wrote the article in 1992 was the stuff of science fiction (shout out to Hal goes here).

At this point, one has to ask why the industry hasn’t revised the language of advertising injury coverage or removed it entirely from policies, rather than deal with the uncertainty of constant questions as to whether it provides coverage for the latest trend, this time of claims generated by generative AI. The only answer I can really come up with at this point is that, one, insureds expect such coverage to exist in their policies (or maybe their brokers do, as I have to think that only insureds with particularly sophisticated risk management departments give this particular coverage much thought at all when acquiring coverage), and, two, underwriters have long since figured out how to price this uncertainty into providing this coverage (of course, the underwriters who signed off on policies with sudden and accidental pollution exclusions in them a generation ago probably thought the same thing, and look how well that worked out for the industry).

As for the presenters’ third point – the extent to which the use of generative AI will affect claims handling – there can be little doubt that, at some point, a generative AI tool will be marketed that effectively does much of the basic factual work of claims handling and removes it from the province of adjusters themselves. I have to say, though, that in light of so-called hallucinations and the like, that day is not yet here. One of the presenters gave an example of having asked ChatGPT to summarize the My Pillow litigation, and it returned a summary with causes of action that were clearly and wildly inaccurate. Now imagine a claims adjuster handling a claim based on a similarly erroneous characterization of the underlying case against the insured generated by a generative AI product used by an insurer and you see the problem. Take for instance the adjuster’s job of deciding whether the company should provide a defense or not – the law in most jurisdictions requires that a determination of the duty to defend be based on the claims pled in the complaint, not on what ChatGPT might hallucinate those claims to have been.

But what about when there is eventually an effective, in the sense of being accurate, generative AI tool available to the industry, one that assumes much of the routine fact gathering and even potentially the evaluation of a claim? Bad faith lawyers will have a field day testing the analyses of such tools against the legal obligation of fair and reasonable claims handling imposed on insurers, and arguing over whether implicit biases, or overweighting of one factor or another in the software or underlying algorithm, or prejudice in the triggering prompt renders conduct by an insurer based on that tool unreasonable and in bad faith. The only saving grace I can think of right now in this regard is that this may be too subtle a task for many of the bad faith lawyers we see, who currently typically apply a much more formulaic approach to building out bad faith cases against insurers but give them time – they’re smart people and they will figure it out.

Bad faith claims, of course, are a common theme that make up part of almost every issue confronted by the insurance industry, and the discussion of bad faith in the context of generative AI flowed naturally into the discussion of nuclear verdicts by Wendy Stein Fulton of Kiernan Trebach and Sonia Valdes of Medmarc. I have written extensively about this issue in the past and handled the bad faith and intra-insurer disputes within a coverage tower that arose from a substantial nuclear verdict in Massachusetts, so I have my own particular interest in these issues and my views don’t necessarily align with those of other authors and speakers on the subject. That said, however, both speakers did a terrific job with the topic, demonstrating – statistically and convincingly – the rise in nuclear verdicts over the past decade. More interestingly, they recognized that most lawyers have never seen a nuclear verdict, or how one comes into existence. This is an important point because nuclear verdicts do not happen in a vacuum, nor are they the result of traditional approaches to calculating damages as most lawyers understand them (in the nuclear verdict in Massachusetts in which I handled the subsequent coverage and bad faith disputes, for instance, the approach to damages taken by the jury certainly did not correspond to the way I was taught as a young lawyer to calculate out the range of reasonably likely damages under the elements of Massachusetts’ wrongful death statute, nor with how most Massachusetts lawyers have done it since time immemorial). To account for that, the presenters gave a very detailed demonstration of exactly how the jury in a recent nuclear verdict calculated such a large number.

Their presentation was excellent, but I wanted to comment on one particular point where my thinking on nuclear verdicts departs from that of the presenters. No matter how many statistical data points are presented showing that nuclear verdicts are increasingly not outlier events, and no matter how many other factors are also present (I put a lot more stock on certain social inflation factors and the cultural impacts of ostentatious displays of wealth in this country as substantial contributing factors in this phenomenon than do most commentators), what I find in the cases in my own bad faith docket where either nuclear verdicts have occurred or the risk of one occurring has led to settlement is the existence of very unique, sui generis fact patterns that placed the insured (and thus the insurer) at great risk. This was true in particular of the example used in the speakers’ presentation to demonstrate the making, so to speak, of the sausage of a nuclear verdict – you wouldn’t find a repeat of that fact pattern in a court in this country in a thousand years.

My point in beating this particular drum, which is one I have been beating for years, is that understanding the unique confluence of factors that give rise to nuclear verdicts is crucial to accurate, thoughtful and proper claims handling during the time that a potentially explosive claim is pending, when the eventuality of a nuclear verdict can still be avoided. Trying to put Humpty Dumpty back together again after a jury has returned a nuclear verdict is a lot harder than evaluating and, if need be, settling a claim before that can happen. Avoiding a nuclear verdict, though, requires paying close attention to the details of the claim while it is progressing and being aware of whether it presents the type of scenario that might give rise, at trial, to a nuclear verdict. If you miss the warning signs, you also miss the opportunity to avoid the myriad problems for insurers that are triggered by a nuclear verdict, problems that only begin with paying off the judgment and spiral from there into bad faith and coverage problems.

This is a terrific article by Crowell and Moring’s Paul Haskel on the use of alternative fee arrangements, particularly contingency fee arrangements, by large law firms to supplement the revenue generated by traditional billable hour defense work. The author makes three points: first, that large firms have been doing this for years but it is now growing (and in my view, larger firms are now more open about it than they used to be); second, the tactic can significantly boost firm revenue in years where a case returns a recovery, but creates inconsistent revenue streams because in other years, no revenue is generated from the cases; and third, some firms are using litigation finance to smooth out the impact on revenue of that volatility.

Most of my work has always been based on the billable hour, and much of it has always been in the capacity of a defense lawyer. However, I have always been open to, and in many ways preferred, alternative fee arrangements, whenever they are feasible and the client is interested, including flat fee arrangements. I like the extent to which they align client and attorney interests, result in both having “skin in the game,” and allow me the freedom to closely investigate or study strategies or theories that might not pan out without concern that I am impacting the client’s finances by doing so since the flat fee or other alternative fee arrangement has already capped the client’s financial responsibilities.

Much like the scenario presented in Paul Haskel’s article, I have often used contingency arrangements when representing plaintiffs in ERISA litigation, and have found that, as Paul notes, they can significantly boost firm revenue in years where there is a recovery. As Paul also hints at, however, the key is being very good at evaluating and selecting the cases to bring, so that the odds of eventual recovery are sufficient to justify the time invested in the action and the carrying cost of that investment.

In ERISA actions, though, there is one additional variable that comes into play, which is the availability of a fee award to a prevailing plaintiff. If properly factored in by counsel at the outset, the possibility of such an award can allow for different ways of structuring alternative fee approaches to representing plaintiffs, beyond simply traditional contingency fee awards of the type addressed in the article.

A significant fee award can also reduce the impact on the plaintiff or plaintiffs of a contingency agreement. In at least one case I handled on contingency, the attorney fee award, combined with pre- and post-judgment interest, resulted in the plaintiffs recovering over one hundred cents on the dollar of their losses, even after paying counsel. Granted, that’s a “perfect storm” type scenario, but it can happen, although only thanks to the fee shifting provision of ERISA.

This is a very interesting tale about an unusual outcome that shouldn’t actually be all that unusual. I know – with that lead in, now you may be expecting some sort of Edgar Allan Poe tale, like “The Tell-Tale Blog,” or something similar.

But that’s not the type of tale I have for you today. Instead, I have an excellent article from Massachusetts Lawyers Weekly (subscription likely required, but you can find the case discussed in the article here) about a Massachusetts Appeals Court decision holding that an insurer did not engage in low ball settlement tactics, or violate Massachusetts’ consumer protection act or its unfair insurance claim practices act, when it only offered $15,000 in settlement on a case where a jury later returned a much larger verdict – $225,000 – against the insured. As the article makes clear, the Court reached that finding despite the disproportionate relationship between the offer and the eventual judgement because the insurer’s process in reaching that settlement offer was fair, reasonable and objectively appropriate.

The ruling is correct on that evidence, and this is exactly how the insurance settlement bad faith system, governed by Massachusetts’ Chapter 93A and Chapter 176D, is supposed to work. But here in the real world, the simple fact that an insurer’s offer turned out to be only a small percentage of an eventual jury verdict is often, for all intents and purposes, outcome determinative in bad faith settlement cases against insurers or, if not outcome determinative, is at least the most important fact in finding against an insurer on such a claim. As a result, there is an incentive in Massachusetts for insurers to not try the underlying case, or else to overvalue the settlement offer itself, simply to avoid the risk of that scenario occurring. We are all much better off, and insurance costs to all of us over time will be much lower, if insurers do not approach decisions about settlement, or about whether to try a case, from this perspective, and instead objectively make these determinations. But unless and until there are more rulings of this type at the appellate level reinforcing that insurers are safe from exposure under these statutes – regardless of the size of a particular jury verdict – so long as the original decision to try the action or the original settlement valuation was based on sound investigation and evaluation, insurers will likely not consider that the safest approach.

This is because, when a case against an insured is tried to verdict, the amount of that verdict can be doubled or trebled as bad faith damages if the Court believes there was a low ball settlement offer before trial. This makes it extremely risky for an insurer to try a case to verdict or to make a settlement offer that might later be seen, in hindsight and by comparison to an eventual jury verdict, as too low. If you take the example of the case I am discussing here, if the Court had concluded that the $15,000 settlement offer was too low to be reasonable or to satisfy the insurer’s obligations, the Court could have awarded double or treble the $225,000 jury verdict as damages against the insurer for bad faith settlement efforts by it. That’s a big hit simply for arguably getting a settlement valuation wrong, remembering, as most tort lawyers and claims people will tell you, that settlement valuation is an art, not a science.

It’s interesting. I spoke in my last post about the possibility of using ERISA and employee benefits to alter the course of economic inequality, referencing that pensions might be a better choice to accomplish that but they aren’t coming back. If they are, even in just isolated circumstances, it will be as a result of unionization or other job action to get them. Shortly after publishing my last post, this excellent article from Maryland attorney Barry Gogel showed up in my feed, explaining Brooks Robinson’s role in a 1972 job action by major league baseball players to force team owners to use a pension plan surplus to increase future pensions. It is always interesting to note the central role pensions played in the labor/ownership relationship in the years before defined contribution plans replaced them, and Barry’s article is a nice window into that dynamic.

It’s also interesting, though, to notice something else in this story, which is that the labor dispute is over the use of a funding surplus. It remains fascinating to me how often, even today, surplus capital in retirement plans play a role in business decisions, as well as in the ongoing relationship between employees and their employers. In my own practice, it often seems to me that access to and control of funding surpluses plays a bigger role in questionable or disputed decisions than funding shortfalls themselves ever do.

How are these two stories related? The first concerns a Nobel Prize winning economist’s proposition that the taxation and political structure of the United States plays a central role in the downward mobility of the American middle class, while the second concerns an investment fund that intends to purchase companies from their founders and eventually turn them over to their employees (in other words, presumably take the profits out of them for years while slowly transforming the companies into ESOPs). The relationship is that the second, if successful, is an example of using employee benefits in a manner that addresses the problem identified in the former.

ERISA and the employee benefit structure it governs are rife with opportunities to address the limitations on wealth accumulation among those born without it and who instead rely on the workplace to make their way in the world. Better employers already use it that way, and have long done so by such mechanisms as matching contributions and ESOP participation. But simple revisions could greatly expand the efficacy of ERISA plans as a means to address economic inequality and the problems it engenders by making simple changes that would increase the wealth of plan participants and beneficiaries.

ERISA plans and the benefits provided to workers under them are an open invitation to counter the long standing trend by which wealth has moved away from workers, as they can be used to move money and wealth in the opposition direction, in other words towards employees. All it would take is some thought about tax treatment, both of the benefit provided by the employer and of the benefit received by the employee, to provoke it. For instance, and here is a simple one, what if you changed the tax status of employee 401(k) contributions (and the earnings on them) from tax deferred to tax free? Short of reverting back to the long lost world where employees received pensions, it is hard to imagine anything that would more quickly increase the retirement wealth of workers.

If you like that one, I have a million more such ideas. Every time I run into something in my practice that increases the taxes, reduces the earnings or complicates the administration of benefit plans, I think of another thing you could change that would put more money into the bank accounts of employees by use of ERISA governed plans.

I like to call my shots when I can. So for instance, I am on record as saying Gunnar Henderson will win an MVP award within five years, the Orioles will win the World Series this year and that neither Bill Belichick nor anyone on his coaching tree will ever win a playoff game now that Tom Brady is retired (okay, I admit it, this last one is a “hot take” included simply in the hope of generating “clicks,” although in my defense I do note that I am the only ERISA lawyer ever quoted by Peter King in MMQB). Today I want to call a different shot, which has to do with social inflation, the increasing risk to employers of being held liable on individual employee claims of varying types and the growing dollar value of such claims.

I have written and spoken in the past on the question of social inflation and the – at least anecdotally or impressionistically – astronomical increase in jury awards in the tort context. Others have argued for a number of underlying factors, but I believe one overrides them all, namely a broad shift in social norms around wealth and, in particular, the increasing prevalence of its ostentatious display. As I have written before, I have become convinced, from my work on the insurance and bad faith aftershocks of large jury awards, that jurors have begun rejecting traditional, more conservative measurements of economic and related injury that both kept awards down and were heavily relied on by defense lawyers, in response to the increasing wealth they see paraded all around them. Years ago, a friend who moved to Massachusetts from upstate New York commented – with some but not complete exaggeration – that every third car on the Mass Pike on his morning commute was a Porsche SUV. Members of future jury pools see that dynamic too, and many more displays of wealth just like it. Given that social environment, it is not surprising that traditional formulations of damages, pitched for generations by defense lawyers in closing arguments, that placed a high six figure or low seven figure number on damages in wrongful death or significant personal injury cases are not being accepted anymore by jurors.

A similar dynamic is beginning (and this is where I am calling my shot) to display itself in the context of individual, one-off type disputes in the employment context. Section 510 of ERISA bars retaliation or similar employment actions against employees who exercise their rights under ERISA. For years, such claims –speaking impressionistically with regard to the universe of such disputes – lacked legs. As both a lawyer for plan sponsors and administrators, as well as for executives and other employees, it was always clear to me that such claims were the red headed stepchildren of ERISA and related cases. Indeed, in the First Circuit’s leading decision on deferred compensation, the Court effectively downgraded one part of the dispute from a deferred comp argument to the separate realm of a Section 510 claim. Recent decisions, such as this one, suggest that this dynamic is well on its way to changing, and that recovery under Section 510 is a risk that plan sponsors and their lawyers now have to take seriously at all times.

Two similar jury verdicts relating to executives and professionals returned by Massachusetts juries in recent weeks suggest the same, both brought in by very good plaintiffs’ lawyers who happen to be friends of mine. In one, Chuck Rodman of Rodman Employment Law and his team obtained a multimillion dollar jury verdict on behalf of a doctor who was retaliated against for whistleblowing and in the other, Matt Fogelman of Fogelman Law obtained a multimillion dollar jury verdict for a university administrator who was discriminated and retaliated against.

I don’t think these are isolated incidents but instead reflect a shift, similar to the impact of social inflation on tort verdicts, in the way juries are coming to view the power dynamic between employers and employees. The media coverage of executives who think that employees, in a full employment environment, have become either “arrogant” or “lazy” or both, and similar stories are the social inflation in this context, and I believe are leading juries to no longer give employers the benefit of the doubt in these types of cases.

My point today isn’t just to call my shot in this regard or to either praise or criticize this development, but instead to point out that employers and plan sponsors need to be aware that this is happening and temper their approaches, both in and out of court, accordingly. Any lawyer who doesn’t take this risk seriously when counseling employers and plan sponsors isn’t paying attention. Likewise, any lawyer for executives or other employees with ERISA claims who doesn’t look closely at these possible avenues to recovery also isn’t paying close enough attention.

I started writing years ago on the litigation and insurance questions posed by climate change, focusing on two particular issues, namely: (1) the role of litigation in response to climate change issues; and (2) the response of insurers to increased risk exposure as a result of climate change. When I started writing on these topics, they were outliers (kind of like the every 100 year floods that now happen three times a year in many places) but two themes were already apparent. First, that the litigation theories to be pursued were an open question but the odds were that such suits would eventually find a footing. Second, that the insurance industry’s response to those same climate change risks was more fundamental as well as predictable in the long run (and I don’t mean predictable in a bad way, only in the sense of it being predictable to anyone who understands that insurance decisions are driven by underlying underwriting concerns and, at the end of the day, hard numbers).

The news today makes two things clear. The first is that the insurance industry pullback from the increased risks attributable to climate change is not going away and is accelerating, as discussed in this excellent summary. For those of us who have always thought that responses to climate change will become more serious only once the economic impacts become clear, this clearly appears to be a tipping point in that regard. I have often written that the insurance industry is often the canary in the coal mine with regard to many aspects of American economic life, and that is clearly the case here. The second is that the courtroom, as a forum for tackling these issues beyond simply disputes between regulators and industry, is having its day in, well, court, and we will be seeing the development in the near future of a robust body of law governing this type of suit.

It is one of my favorite words – spoliation. It just slides right off of a litigator’s tongue. I have been litigating, either as direct claims over destruction of evidence or as an evidentiary inference, the concepts of spoliation for decades. If memory serves, the first time I handled it was defending a direct claim against an insurer over the insurer’s destruction, through testing, of a significant piece of evidence it had taken hold of from its insured after an accident, thereby (allegedly) interfering with the injured party’s ability to prove his tort suit against the insured. Later, I would litigate it in various forms as an evidentiary issue, including whether spoliation inferences were warranted, in a variety of types of cases. In my view, spoliation of evidence claims have been taken more and more seriously over the years, at least in Massachusetts state and federal courts, with the trend moving from great skepticism on the part of judges to such arguments, to grudging acceptance, to taking the issue quite seriously. Personally, I think both the increasing acceptance by courts of spoliation arguments and their increasing prevalence are due to the same thing, namely technology – texting, emails, Facebook, tweeting (or Xing, if that’s the new word for it) and the like have made evidence both more ephemeral than ever and also more likely to vanish (whether accidentally or deliberately).

I think this story on the subject in Massachusetts Lawyers Weekly fits this history and development to a T. You see in it the seriousness of judicial response to the issue at this point, after more than a decade of substantial judicial evolution concerning the issue, as well as the essential role technology plays in the issue.

When I recommended in a recent pair of blog posts that insurers and plan sponsors should make it a universal practice to try excessive fee class actions to conclusion, I wasn’t being flippant. I have probably spent 25,000 hours over the past thirty years advising insurers on when to try cases to conclusion – or to instead settle, or to litigate a coverage or bad faith action, or the like – and another 25,000 hours litigating a broad range of ERISA disputes. So if there is anything to Malcolm Gladwell’s claim that it takes 10,000 hours to become an expert at something, I am more than sufficiently qualified to comment on whether an insurer should take an ERISA breach of fiduciary duty action to trial. As I explained in those posts (which you can find here and here), the dynamic underlying the rise in such suits, combined with the merits of many of the actions and the realities of how courts were handling them on dispositive motions, pointed towards favoring trials over settlements.

Lo and behold, it only took a few weeks for my views to be vindicated, when Yale University prevailed at trial last week on one of the most significant ERISA excessive fee class actions ever filed – a statement I do not believe is hyperbole when one considers the plaintiffs’ counsel, the bellwether nature of the action in relation to all of the other similar actions filed against prominent universities, the brand name of the defendant, the circuit and, yes as well, the publicity. It also should not be overlooked that this was not just a trial, but a jury trial, with the jury returning a verdict in favor of the plan sponsor rather than in favor of the university’s employees, despite the concerns voiced in some corners of the ERISA bar over having a jury, rather than a judge, decide the case.

I have a lot to say, both directly on the Yale jury verdict and on its relationship to my previously expressed views on the best way for plan sponsors and their insurers to respond to these types of claims, but the place to start is obviously with the decision itself. I won’t rehash it here but will instead refer you to reporting by others who have already done a terrific job with that undertaking, such as this piece by Bloomberg Law’s Jacklyn Wille (subscription may be required) and this extensive post by the Fid Guru blog’s Daniel Aronowitz. From my end, I am most interested in addressing certain ideas and topics that the jury verdict highlights, particularly as they relate to my prior recommendation that defendants and insurers should try these types of cases to conclusion.

First, there has been extensive discussion already in the media on the question of whether it mattered that there was a jury. Some corners of the ERISA defense bar had originally expressed a decided lack of enthusiasm over the Court’s decision to allow a jury to decide the action but I never shared that concern. The worry expressed by many observers was that a jury would by definition favor the plaintiffs but this concern was, to me, always overstated – and frankly, while I don’t know, I suspect it wasn’t a huge concern for the defense team in the Yale case itself, who I suspect, like most trial teams, considered the existence of a jury to be one of many variables (although an important one) to be accounted for in bringing the case to trial.

Most experienced trial lawyers have a nuanced view of the strengths and weaknesses of both juries and judges as decisionmakers at trial, and account for that in both their recommendations to their clients and in their trial strategy. Any decision to try a case, or for that matter to place a settlement value on a case, should account for those issues, but doing so has to involve much more than just factoring in the simple question of whether the case is being tried to the bench or instead to a jury. Years of close study of verdicts as part of my practice suggests to me that the Court’s decision to submit the Yale case to a jury was likely among the less significant factors affecting the outcome of the case – I suspect that it turned out to be much less important than the concrete facts of the case or the performance of particular witnesses, for instance.

This is all a long way of saying that you should not overstate the significance of the jury to the outcome of this case, or be misled by the role of the jury here into seeing the verdict as a one off rather than as evidence that trying these types of cases to judgment – as I have suggested in the past – is the right default approach for plan sponsors and their insurers. To me, this outcome – whether it had been after trial to the bench or instead to a jury – is one more fact showing that the best industry wide approach to these types of claims is to say “prove it” and force plaintiffs’ counsel to do so at trial, without regard to whether it will be tried to the bench or instead to a jury.

Second, I was struck by the extent to which the jury ruled in favor of the defendants on the basis of causation, having found – on their special questions – that the plaintiffs had proven a breach but not that the plaintiffs suffered any losses from that breach. Causation is an interesting issue in the context of jury trials, and many, many trial lawyers have walked into courtrooms with entire defenses built solely around causation issues, even to the extent of stipulating to liability so as to be able to focus the jury’s attention solely on the question of causation.

I recorded a podcast recently with Business Breaks’ Dante Healy and financial educator Doug Lutkus on causation as a defense in the context of excessive fee and similar breach of fiduciary duty claims, and discussed my view that plan sponsors should rely more heavily on causation defenses, in different guises, and less on arguments over whether a breach has actually occurred. There are a number of reasons for this, but one of them is that it moves the conversation – whether at summary judgment, at mediation or at trial- off of the question of whether the plan fiduciary could have done something better (i.e., committed a fiduciary breach) and onto the question of whether the plan fiduciary had done enough (i.e., whether the fiduciary’s conduct as a whole, including any fiduciary breaches, was good enough that no losses should be seen to have arisen from it). Certainly, the jury verdict in the Yale action drives home the value of focusing on this defense.

A third aspect that struck me about the jury verdict, and how it relates to my prior recommendation to try these types of cases if you are a defendant, was the relative complexity of the special questions form answered by the jury. Years ago, I adopted some of the tenets of behavioral economics and particularly choice architecture for constructing jury forms of this type, the idea being that you need to be aware of whether the design of the jury questions risks pointing the jury subtly in the direction of a particular resolution. The jury verdict form here certainly did the plaintiffs no favors in this regard, and also suggests to me that plaintiffs may well have put in too complicated a case involving too many claims. It reads almost as if plaintiffs put in the same case, and asked the jury to make the same determinations, as plaintiffs would have done had they been trying the case to the bench – and if I am right on that, then that may have been a significant error. It is a lot different to ask a judge and his or her clerks to spend months drafting complex statements of facts and rulings of law on multiple and highly complex claims than it is to ask a jury to effectively do the same work only through the tool of jury questions. Plaintiffs’ lawyers in excessive fee cases may want to think very hard about whether a jury is actually preferable to a bench trial in cases where they intend to put into evidence a multitude of different theories and claims; alternatively, if they still believe, after this verdict, that a jury is preferable, they may want to think about giving the jury a much simpler case than they would have tried to a judge.

All of this considered, where does this leave my prior recommendation that insurers and plan sponsors make it a practice to try these types of cases to verdict? Keep doing it, but now with more nuance. I explained before that the growth in the filing of these types of suits will not end as long as the class action bar continues to believe there is “gold in them thar hills” and that the easiest way for plan sponsors and their insurers to tamp down that belief is to universally force plaintiffs to try these types of cases to verdict. With the significant and widely publicized jury verdict in Yale now in the bank, there is no longer a need to try every action to verdict to send the message that a vigorous defense will be put up to any such filing – the Yale verdict has already done a lot of the work of communicating that recovering on these cases will not be easy.

Instead, the better approach for plan sponsors and insurers is to build on that win by cementing the idea that recovery on these cases is and will continue to be a hard road. This means evaluating all cases for settlement or trial solely on their merits, without regard to whether, given the very high costs of defending these types of claims, settlement would be cheaper than going to trial. If the merits of the case warrant settlement at a figure acceptable to the plaintiff class, then fine, proceed to settle. But if not, then try the case to conclusion, regardless of the costs and the risks. Do this every time, and before you know it, only the most meritorious cases, filed by the best plaintiffs’ shops, will be brought – likely eliminating at least half or more of the cases that would otherwise be filed and that, on current trends, are being filed.

And before my friends in the insurance industry object, I know this goes against many principles of the industry, particularly cost benefit analysis of particular claims. Why, after all, should an insurer pay to try a case that could be settled for much less than trying the case would cost – particularly when the settlement will remove the risk of having to pay off a large verdict if the trial goes south on the defense? Likewise, I am well aware that in many states, trying a case to conclusion when a reasonable settlement offer is on the table can raise a host of potential statutory or common law bad faith issues for insurers. I am deliberately leaving these issues for another day and perhaps, more importantly, for consideration by counsel for insurers on a case by case basis.

However, if you leave those issues aside and make the goal only to put an end to the ever increasing industry exposure to these types of claims, this approach is the right one – now more than ever with the backdrop of the decision in the Yale case.

People often ask – well, sometimes ask – why I am still on Twitter, and the answer is it’s for the dog videos. But every now and then you come across something smart that is worth thinking about, and for me that happened today, when I read an appellate lawyer’s tweet that:

FWIW, I have more and more come to the view that appellate judges should write to resolve the dispute between the parties in the crispest, most understandable, and least interesting way, and then stop.

There are times when this is right, and credit to Raffi Melkonian of Wright, Close & Barger for the observation. However, there are times when this is wrong, and I am not referring to politically charged issues but instead to decisions related to certain realms of legal practice where broadly applicable guidance would be important. Note that I don’t mean to suggest that Raffi is wrong, as I highly doubt that he meant that tweet to be a categorical imperative applicable to all types of cases.

However, his comment jumped out at me because it summed up one particular aspect of my thirty years of insurance coverage practice in Massachusetts, and especially one particular frustration in the earlier years of my career. For many years, under one particular make up of the appellate and state supreme court benches in Massachusetts, decisions related to insurance issues were consistently written exactly as Raffi suggested in his tweet: they were very fact specific and thus extremely hard to treat as categorical declarations of controlling law for other types of factual circumstances. However, that was a great frustration and a limitation on their value, because disputes over particular aspects of insurance policies or practices repeat themselves time and again, only under slightly different factual scenarios. The preference of the appellate bench at that time for issuing very fact specific, closely cabined decisions made it very difficult to say conclusively that the insurance coverage rule or the interpretation of a particular policy term enunciated in a particular decision applied equally to later disputes. It gave the decisions limited significance on a day to day basis, and left open for debate in future cases issues that probably could have been foreclosed by more broadly written appellate decisions. As a young lawyer practicing insurance law at the time, it was particularly frustrating because clients would want – and you would want to provide – clear prescriptive advice on how to proceed based on prior rulings, but the narrowness of the appellate decisions – even if issued on very similar policy language – often foreclosed that and instead forced you into the role of Harry Truman’s least favorite type of advisor, one who said on the one hand this, and on the other hand that.

Over the years, that has ceased to be the case in Massachusetts with regard to appellate decisions in this area of the law, and instead such decisions tend to strike a very good balance between only making those proclamations needed to decide the case at bar and making further pronouncements to the extent needed for insurers, policyholders and their lawyers to decide how to conduct themselves in the future. That change has, in my view, soundly improved the practice of law in this realm and the business relationship among insurers and their customers.