Driverless cars will clip litigators

Personal injury lawyers beware; the driverless car will likely wipe out automobile litigation as we know it today.

Automobile litigation has long been a bread-and-butter business line for small and Main Street law firms. Sure, it’s not like it was in the 1970s, when a quick letter to an insurer threatening to sue could reap immediate rewards.

Thanks to no-fault insurance in Ontario and the insurance lobby push to limit recovery for whiplash, automobile litigation has become much more complex and there are a number of plaintiff-focused boutiques that have arisen, specializing in things such as catastrophic claims.

By the same token, a number of insurance defence boutique firms have grown to focus on the steady diet of cases that come with insuring cars.

Chances are, all that goes away by mid-century at the latest.

Automobile litigation will be disrupted by driverless cars for a couple of reasons.

First, experts predict fewer accidents once we hand off control to sensors and algorithms, which means fewer lawsuits. In a seminal 2017 paper in the Michigan Law Review on autonomous vehicles and liability, University of South Carolina law professor Bryant Walker Smith writes that automated driving systems “are likely to be safer than human-driven vehicles.”

He premises that on the fact that driver error plays a role in 94 per cent of motor vehicle crashes and about 35,000 Americans die each year, with another four million injured.

In Canada, the numbers are less staggering but still concerning. According to 2015 figures from Transport Canada, there were 118,404 accidents resulting in personal injury or death. That works out to 324 crashes per day. Car crashes killed 1,858 people — five a day — and 161,902 people were injured, including 10,280 who suffered “serious” injuries that required hospitalization.

Consulting giant McKinsey & Company, however, predicts that driverless cars could reduce accidents by a stunning 90 per cent and shave billions of dollars off the medical costs related to crashes. That’s a lot of litigation files that won’t see the light of day.

Second, and most important, motor vehicle litigation will move from a system where accidents are assessed based on driver negligence to a products liability system, where manufacturers bear more of the burden for failure of things such as sensors and warning systems. Product liability litigation is often the preserve of plaintiff class action lawyers and large Bay Street defence firms, not Main Street law firms.

Robert Love, a products liability lawyer at Borden Ladner Gervais LLP, says, “There is going to be massive change to the way the insurance industry has traditionally responded to motor vehicle claims.

“There is definitely going to be an increase in product liability claims,” he says, which can be complex and take time to settle compared with traditional motor vehicle lawsuits.

However, this transition won’t happen overnight, and Love expects that there will actually be a temporary uptick in automobile litigation as we transition to a driverless world.

There are six levels to autonomous vehicles and we are currently at the early levels. The challenge, Love says, is when we have a hybrid system where drivers are interacting with autonomous vehicles on the road. Questions of fault will involve a blend of driver and manufacturer negligence and need to be worked out in the courts.

Once we reach level six, however, claims will focus purely on product liability, and driver negligence will be removed from the equation.

Already, some auto manufacturers have come forward to say they will accept liability for accidents when cars are in autonomous mode.

Of course, there are no regulations yet governing autonomous vehicles, so it’s difficult to say what the ultimate compensation system will look like.

However, the insurance industry is quick to note that people injured in accidents can’t wait for a long and complex product liability case to play out in the courts.

The insurance industry is also working on a framework for automated vehicles.

Many are looking to the United Kingdom for guidance. It’s the first country to introduce draft legislation on liability for autonomous vehicles — proposing a single-policy model covering drivers when a car is in either regular or self-driving mode.

Insurers will pay for damages and then seek to recover from the responsible parties, including manufacturers.

There is also the threat that insurers could get squeezed out of the mix if the manufacturers band together and create a self-funded liability pool.

Even if manufacturers don’t do that, auto insurers will be hit hard, which will negatively impact defence lawyers.

KPMG predicts that autonomous vehicle technology will have a major impact on the insurance business, shrinking the sector by 71 per cent or US$137 billion by 2050.

By then, most lawyers practising today will be long gone or in their twilight years.

However, if your retirement plan includes selling your motor vehicle litigation practice in 25 years, don’t count on it. There likely won’t be much left to sell.

Jim Middlemiss is a principal at WebNewsManagement.com.