Claims valuations are common in mass tort cases, and litigators often look to past resolved claims and verdicts to provide a benchmark for claim values. However, this can lead to erroneous valuations since using prior case verdicts as benchmarks fail to consider selection bias and its potential to distort claim values.
In a recent article for the American Bankruptcy Institute’s ABI Journal, Principals Paul Hinton and David McKnight and Associate Dr. Pietro Grandi detail important implications for estimating aggregate claim liabilities in mass tort cases. They examine the selection issues associated with using observed verdicts as benchmarks, and the risk of failing to adjust for the probability of success in litigation. They also discuss why careful analysis is necessary to ensure that benchmarks are appropriate, and that verdict values are properly adjusted to avoid misvaluing claims.
The full article, “The Verdict Valuation Paradox: Implications for Mass Torts,” is available below.