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Litigation: Litigation insurance for class action defendants

Companies that cannot fund a proper defense may end up settling even baseless lawsuits

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.

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Judy Selby

Judy Selby has more than 20 years of experience in large scale first- and third-party complex insurance coverage matters, providing a full range of services...

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