New York — A recent report from the Insurance Information Institute indicates that a significant uptick in attorney advertising, mass tort litigation, and third-party funding for lawsuits is closely linked to rising insurance costs in the United States.
Research by the American Tort Reform Association reveals that legal service providers allocated over $2.5 billion to 26.9 million advertisements in 2024 alone, marking a staggering increase in advertising across television, radio, and outdoor platforms since 2017. Television ad placements hit a peak in 2023, totaling 16.4 million — a 44% increase since 2017. Radio advertisements exceeded 6.8 million in 2024, reflecting a staggering 261% rise in the same period. Outdoor advertising, including billboards, also surged by more than 260%.
The rising advertising expenditures, which have escalated by 39% since 2020, are partly driven by higher digital marketing costs. Industry experts caution that the increasing prevalence of legal ads, often financed by third-party litigation funders, could lead to abuses within the legal system. This trend may drive up insurance claims and delay the resolution of cases, creating an even larger burden on insurers.
Sean Kevelighan, CEO of the Insurance Information Institute, notes that attorney advertising has transformed into a lucrative industry in the U.S. He points out that the surge in multi-district litigation is partly fueled by advertisements that urge individuals to join often frivolous lawsuits related to various products, from earplugs to weed killers. These ads, typically backed by litigation funders, create a sense of urgency and frequently make unrealistic promises about potential outcomes, attracting claimants who might not have initially sought legal recourse.
The report titled “Legal System Abuse and Attorney Advertising for Mass Litigation: State of the Risk” outlines several risks associated with attorney advertising. It can create a misleading urgency, pushing individuals toward hasty legal decisions without fully considering their options. Additionally, these advertisements can exaggerate the likelihood of substantial settlements, fostering unrealistic expectations that may further complicate case resolution timelines.
The report also highlights the role of third-party litigation funding (TPLF), where investors provide capital for lawsuits in exchange for a share of any settlement or judgment. Analysts indicate that the injection of external funding enables law firms to expand their legal efforts significantly, particularly through extensive advertising campaigns aimed at recruiting plaintiffs. The report noted that TPLF assets under management reached $16 billion, with about 74% allocated to legal budgets, which can include expenses for plaintiff acquisition.
Research conducted by Yehonatan Givati and Eric Helland establishes a direct link between the volume of advertising and the number of plaintiffs involved in multi-district litigation cases. Their findings support the assertion that the increase in case filings reflects a genuine rise in the number of claimants, rather than simply heightened competition among attorneys.
Kevelighan emphasized that TPLF contributes to the burgeoning legal industry. He cautioned that increased access to legal resources through such funding could exacerbate existing systemic issues, especially as insurers adjust their risk models and premium calculations based on this evolving landscape.
As attorney advertising and TPLF reshape the legal field, stakeholders are calling for policymakers to strike a balance between ensuring access to justice and maintaining the integrity of the legal system. The report warns that without increased transparency and oversight, the combined effects of mass tort advertising and external funding may further strain the insurance market, inflate premiums, and undermine public confidence in the civil justice system.
Kevelighan concluded with a call for greater tort reform, highlighting the necessity to reign in what he describes as excessive tactics by attorneys who are capitalizing on the situation and driving up costs for essential consumer goods and services.
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