Litigation: Litigation insurance for class action defendants
It seems that at every opportunity, the Supreme Court sets the bar higher and higher for class action plaintiffs.
August 01, 2013 at 04:20 AM
5 minute read
The original version of this story was published on Law.com
It seems that at every opportunity, the Supreme Court sets the bar higher and higher for class action plaintiffs. Nevertheless, plaintiffs' attorneys continue to file class action lawsuits at a record pace, even where the merits seem questionable.
Despite the continuing prevalence of class filings, being named as a class action defendant can be a momentous event for any company, particularly one that is not accustomed to litigation, in part because the costs required to gain dismissal of even groundless lawsuits can be substantial. A defendant's inability to fund a vigorous defense can make it susceptible to agreeing to a quick settlement, thereby perpetuating the cycle of baseless lawsuits. For these reasons, immediately upon receipt of a class action complaint, defendants must remember to take a step back and examine whether they have insurance that might provide coverage for the lawsuit.
The value of available liability insurance for class action defendants cannot be overstated. In fact, from a practical standpoint, coverage for defense costs is likely to be the most critical function of liability insurance for most class action defendants. For this reason, liability policies may well be considered “litigation insurance.”
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