Negotiating smarter: Rediscovering our industry’s BATNA

Plaintiff attorneys are moving beyond traditional billboards, using AI and technology to target cases, tailor strategies, and maximize settlements. To stay competitive, the insurance defense industry must adopt data-driven tools to analyze risk, counter plaintiff tactics, and strengthen negotiations. The time to act is now—before the gap widens further.

ARE WE LOSING OUR COLLECTIVE BATNA?

As a veteran of the litigation defense community with four decades of experience, I’ve witnessed a variety of industry pressures firsthand. Early in my career I managed litigated files for insurance companies; now, my work is more macro, performing industry-wide studies with chief claim officers, heads of litigation, and defense counsel, and helping to design new products and tools that help our entire industry.

WE ARE THE WORLD’S LARGEST NEGOTIATION NETWORK

Our community operates the most extensive negotiation network globally. With more than 30,000 claim professionals assigning approximately one million files annually to about 30,000 defense attorneys, we’re unmatched in scale. Negotiation is the lifeblood of our industry, and we’re undeniably successful in terms of frequency – a staggering 97.3% of all litigated files settle before reaching a verdict.

However, frequency isn’t our only metric. We’re tasked with securing « good » settlements, and not “overpaid” settlements. This is where our challenges begin.

THE ELUSIVE « GOOD » SETTLEMENT

Defining a « good » settlement has always been a struggle in our industry. Did we overpay by $30,000 or $150,000? The difficulty in justifying settlement amounts has led to industry catchphrases like « a good file is a closed file. » But this oversimplification masks a deeper issue.

To truly define a good settlement, we must quantify the likely outcome of a verdict. This is because, in our world, this is the only alternative to a negotiated settlement. A verdict result is the Best Alternative to a Negotiated Agreement, or BATNA – the cornerstone of successful negotiation across all industries.

THE BATNA DILEMMA

Historically, our ability to predict BATNAs has been hampered by a lack of data. Our methodology for estimating verdict outcomes hasn’t changed significantly in 40 years. We rely on a polling process, seeking opinions from seasoned colleagues and experienced defense counsel. Based on this anecdotal input, we determine what we believe « the case is worth at trial. »

We then factor in the impact of the venue and the specific plaintiff attorney – critical elements in arriving at a BATNA. Unfortunately, this input is largely anecdotal as well. We might turn to some color-coded maps to see if the venue is favorable or unfavorable, or conservative or liberal.  Defense counsel will provide adjectives about the plaintiff attorney, like “scary,” or “good,” or “very competent,” or a few terms that frame our perception of attorney risk.

FLAWS IN OUR CURRENT APPROACH

This process is riddled with problems:

1. It’s primarily anecdotal, based on reputation and general feelings rather than actual track record and performance data.

2. Recency bias skews our perceptions, making us remember dramatic outliers (most recent nuclear verdict) while forgetting more common outcomes.

3. Without concrete data, we process qualitative descriptions inconsistently. Two « bad » venues might have a 20X difference in median verdict values, and two « scary » plaintiff attorneys could have a 15X delta in their ability to maximize non-economic damages.

THE PLAINTIFF BAR’S TECHNOLOGICAL LEAP

While we’ve been relying on outdated methods, the plaintiff bar has made significant strides. Their investment in technology, AI, and contributory data sharing is nothing short of revolutionary.

EvenUp Law is one example. With over 700 personal injury firms using their technology, they’re preparing 3,000 demands a month and claiming 30% higher settlement amounts. They are likely to hit unicorn status in the next year, funded by the industry’s most respected private equity money.

The plaintiff bar now has access to more objective data points and a contributory database, giving them more precise BATNAs. Their shared data includes settlement patterns – sometimes down to specific claim professionals – and verdict data. We’re no longer playing poker on equal terms; they can see far more cards than we can.

THE CONSEQUENCES OF INACTION

This asymmetry of information is leading to dire consequences. Many litigation executives have almost stopped trying cases, with some trying less than 0.5% of their cases annually. The common refrain is that the plaintiff attorney « gave them no choice. »

Settlement values are rising precipitously. I recently heard (from a plaintiff firm no less), of a litigation program where the standing order is to avoid all trials. Think their settlement values are rising?

RECLAIMING OUR BATNA

So many of my industry conversations revolve these days around social inflation, nuclear verdicts, and legal system abuse. Usually those conversations include reference to some insane nuclear verdict number that seems nuts (and is) to everyone. Defense litigation professionals seem to be under siege, under a constant bombardment of bad news.

But we are not victims here. I’m currently working with a company developing a range of data points to help us rediscover our BATNA. Access to filing rates, trial rates, verdict frequency, verdict results, case type experience, historical damage multipliers, venue demographics, and many more data points, help to establish fact-related BATNAs. Using this data would go a long way to curbing the social inflation we talk so much about.

Of all the new AI tools I’ve encountered, the most intriguing quantifies an attorney’s ability to maximize non-economic damages with juries. Comparing a plaintiff attorney’s reputation with their actual track record has been eye-opening. Seeing how this data changes defense counsel’s perspective on specific plaintiff attorneys is invigorating.

A CALL TO ACTION

We can and must find our collective BATNA again, but time is of the essence. The tools and data are available; we need to embrace them.

The litigation defense community stands at a crossroads. We can continue with our outdated methods and watch our negotiating power erode, or we can embrace a data-driven future that’s already here. By reclaiming our collective BATNA, we not only level the playing field but also reinvigorate our industry’s core competency – effective negotiation.

It’s time for us to step up, invest in the right tools and data, and reclaim our position as skilled negotiators. Let’s not just find our BATNA – let’s redefine it for the modern era.

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