Doug Marcello
That phrase appears in Sedgwick’s Summer 2026 liability litigation report — attributed originally to the Institute for Legal Reform — to describe what nuclear verdicts produce beyond the courtroom: a perception of risk that inflates settlement values in cases.
Two data sources now converge on the same problem.
WHAT THE VERDICT DATA ACTUALLY SHOWS
The prior Sedgwick report captured a decade of closed litigation outcomes. Of the cases that reached a verdict — already only 1.8% of the total — 75.4% came in below the last settlement offer extended before trial. Only 21.7% exceeded the pre-trial offer.
ATRI’s analysis of trucking cases found that approximately 50.3% of settled cases had awards exceeding $500,000. Only 31.5% of verdict cases reached that level. Defendants who settled paid at high levels more often than defendants who went to trial.
The defense industry behaves as if trial is the dangerous option. The data says otherwise.
THE 2026 SEDGWICK DATA ON WHERE SEVERITY IS BEING CREATED
Sedgwick’s 2026 report — drawn from Sedgwick’s own claims portfolio — adds a severity trajectory that makes the problem concrete:
- Verdict severity grew approximately 3.7% annually over the last five years in Sedgwick’s data — roughly in line with inflation.
- Settlement severity grew 12.6% annually over the same period — more than three times the verdict rate.
- In 2025, only 1.25% of bodily injury litigated cases in Sedgwick’s portfolio went to verdict — down from 12% in 2016.
- Time-limited demands in auto cases have grown 45% annually since 2021 in Sedgwick’s data.
Sedgwick’s conclusion: “The data indicates that severity escalation is being driven more by voluntary settlements than by jury verdicts.” And: “defense decision-making appears to be shaped by fear and distorted perceptions of jury behavior rather than empirical trial outcomes.”
THE TORT REFORM PIECE
Nuclear fallout settlements are partly a market distortion created by nuclear verdict fear — which means the tort reform agenda that reduces nuclear verdicts also matters to the settlement problem.
But reform operates at the macro level. It moderates the conditions. It does not resolve the individual settlement decision.
That resolution requires the defense community to develop and use the willingness to try defensible cases — backed by the data showing that trial outcomes are more favorable to defendants than the settlement calculus assumes. Credible trial readiness changes negotiation dynamics. Sedgwick says so directly in its conclusion.
THE QUESTION
Before every settlement: are we paying what this case is worth — or what we are afraid a jury might do?
The gap between those two numbers is, based on Sedgwick’s claims data. That is the cost of fear.
