The Defense Intelligence Gap: Why Litigation Portfolio Values Are Accelerating in an AI Era

This is the first in a three-part Risk Insider series examining weaknesses in the capacity of insurers to successfully control litigation and settlement costs. The series will include concepts meant to shore up those weaknesses and produce better results for consumers and shareholders.

Introduction: The Illusion of External Forces

Nuclear verdicts, social inflation, and legal system abuse are now routine topics in executive discussions across the property and casualty industry. These forces are often described as external pressures — driven by juries, public sentiment, billboard advertising, or cultural shifts beyond carriers’ control.

That framing is incomplete. In this first of three articles we will explore how these pressures can be influenced by something we do control, how insurance litigation negotiation is managed and executed at scale.

The accelerating value of litigation portfolios is not solely imposed on the insurance industry. It is increasingly shaped by how litigation is negotiated, how intelligence is shared, and how consistently value is communicated across cases. At the center of today’s escalation is a widening intelligence gap — one that has quietly shifted negotiating leverage toward the plaintiff bar.

This gap is not theoretical, and it has practical consequences that compound over time.

The Plaintiff Bar’s Advantage: Negotiating with Coordinated Intelligence

Plaintiff firms today no longer negotiate cases in isolation. They negotiate with context.

AI has transformed how plaintiff-side intelligence is gathered, synthesized, and reused. Venue outcomes, judicial tendencies, jury behavior, carrier settlement patterns, and opposing counsel behavior are increasingly aggregated into reusable insight. Demand Package narratives are no longer purely rhetorical; they are calibrated for tone and effect, buttressed with evidence – and AI-generated.

This coordination does not require perfect data. Its power lies in repetition and reinforcement. Each settlement informs the next. Each verdict refines expectations. AI accelerates the feedback loop, allowing plaintiff counsel to adjust strategy faster than defense organizations can recognize that strategy has changed.

As a result, escalation is no longer speculative. It is informed by the very technology the plaintiff bar has chosen to invest in.

The Scale of Plaintiff-Side Investment in AI

What is often underappreciated on the defense side is the scale and intentionality of this investment. EvenUp Law’s capital raise of $385MM puts it on scale with full-stack insurers, like Lemonade, Hippo, and Kin. And they are just one of many emerging personal injury attorney solutions. No defense-oriented investments even come close.

Plaintiff firms are not experimenting with AI at the margins. They are embedding it directly into case valuation, demand construction, and negotiation strategy. AI is being used to standardize demand packages, surface venue-specific leverage points, and ensure that aggressive positions are applied consistently across large inventories of cases.

This matters because AI enables something the plaintiff bar is culturally willing to achieve: coordination at scale. Individual judgment is now reinforced by collective pattern recognition. Variance is reduced. Negotiation posture is disciplined.

Defense Fragmentation: Intelligence Without Line of Sight

Defense organizations operate under a fundamentally different structure.

Each carrier sees only its own litigation inventory. Each claims team sees only a subset of venues. Each defense firm sees only a narrow slice of plaintiff counsel behavior. Even well-run organizations lack a consolidated view of how values are shifting across our entire community.

This fragmentation produces three systemic weaknesses:

1. Uncertain Valuation Anchors
   Without shared benchmarks, claims professionals and defense counsel struggle to distinguish between fair evolution and inflated case valuation drift.
2. Delayed Pattern Recognition
   Abusive legal system tactics and aggressive demand tactics propagate across jurisdictions long before they are identified as trends.
3. Inconsistent Market Signals
   Variability in outcomes sends mixed messages to the plaintiff bar about risk tolerance and settlement posture.

The result is not merely higher settlements—but greater dispersion in settlement outcomes, which carries its own risk.

Litigation Value Acceleration Is a Portfolio Phenomenon

One of our industry’s most persistent blind spots is treating nuclear verdicts as isolated events. In reality, they are the visible extremes of broader portfolio dynamics.

When defense outcomes vary widely across materially similar cases:

• High settlements become reference points
• Outliers recalibrate future expectations
• Variance itself signals opportunity

Escalation does not require every case to inflate. It requires only enough inconsistency to reset anchors across venues.

This is why social inflation must be understood as a portfolio-level phenomenon, not a series of unrelated shocks created exclusively by runaway juries. It is also why focusing solely on the largest verdicts misses critical signals hiding in plain sight — particularly in an environment where only one out of every 100 cases ever reach trial.

Inconsistent Defense Outcomes as a Contributor to Perceived Social Inflation

An increasingly consequential dynamic, especially in a world where the plaintiff bar is using AI, is the role defense-side inconsistency plays in shaping perceptions of social inflation itself.

When materially similar cases resolve at widely divergent values across venues, carriers, or even internal teams, those outcomes do not remain isolated. They become reference points. Plaintiff counsel, mediators, and courts infer meaning from variance, often concluding that the higher values represent a new baseline rather than an exception.

Over time, this uneven signal amplifies expectations, recalibrates anchors, and reinforces the belief that the civil justice system is inherently accelerating — when in reality, part of that acceleration may be a function of how defense negotiations are executed.

This presents a risk that our industry must be willing to confront.

Inconsistent or inflated settlements — particularly when driven by fragmented intelligence or uneven negotiation discipline — can unintentionally validate the very narratives carriers seek to resist. What is labeled externally as social inflation may, in part, be the market responding rationally to mixed signals from the defense side.

The First Industry Shift: Better Internal Communication About Value

The first implication of this analysis is organizational. That is to say, individual claim organizations must do everything possible to communicate case values across their own organizations.

This requires shared reference points so that negotiators (claims professionals) understand not only their own files, but how their decisions signal value to the market. This is not dissimilar to reserving discipline, where similar risks drive similar premiums. Uniformity is not the goal, but coherence is.

In today’s world of plaintiff bar data-sharing and AI, it is more likely than not that each claim organization has a profile in that community. What do they pay? When do they pay? How consistent are their settlement values?

The Second Industry Shift: Re-Examining Collective Intelligence

The second implication is industry-wide.  If plaintiff firms are benefiting from collective intelligence, our defense side must confront whether existing norms around isolation and lack of industry sharing are inadvertently widening the gap.

This raises difficult but necessary questions about contributory databases, shared benchmarking, and industry-level intelligence.  Other parts of the insurance ecosystem already rely on pooled data to manage risk. Litigation negotiation remains a notable exception.

Without some mechanism for shared visibility, defense organizations will continue to negotiate without context, while plaintiffs negotiate with it. This is problematic on its face.

The Third Shift: Using AI as a Counterweight, Not a Curiosity

The final implication spans both organizational and industry levels: On the defense side, AI must be used in the negotiation context deliberately. This is not about experimentation. It is about parity.

AI must support two functions:

First, structuring and deploying negotiation tactics in a more disciplined, modern way — using evidence-based advocacy, consistent anchoring, and early positioning, much like the plaintiff bar is already doing.

Second, harnessing collective intelligence — about venue behavior, plaintiff counsel patterns, and case valuation. This must be done in a way that strengthens judgment rather than replaces it.

When properly governed, AI becomes a force multiplier for consistency, proportionality, and professional control.

Closing: Control Is Not Lost — It Is Fragmented

The litigation environment feels uncontrollable to many because our control of it has been diffused. Focusing exclusively on external influences like social inflation, legal system abuse, and nuclear verdicts, exacerbates the problem by ignoring what we can control.

The reality is that defense teams still exert their greatest influence at the negotiation table. After all, they settle approximately 99 percent of all cases managed. That table is the battleground that helps to shape our environment the most. To not fall behind, our influence now requires coordination, shared intelligence, and disciplined execution.

Closing the defense intelligence gap is not about matching the plaintiff bar tactic for tactic. But it is about achieving parity with the tools they are using. And it is about striving for coherence, lessening valuation inconsistencies, and restoring balance at the negotiating table.

In the second article of this series we will explore our need to reinvest in, modernize, and promote the specific negotiation skills we bring to those negotiating tables. &