The plaintiff bar’s adoption of artificial intelligence (AI) has emerged as one of the industry’s top-cited threats, with more than 80% of claims executives describing it as moderately or significantly concerning, according to findings from CLM’s latest Litigation Management Study. No executives indicated that these developments do not fundamentally concern them.
“That unanimity, from an industry that rarely speaks with one voice is, itself, an important finding,” says Taylor Smith, president, Suite 200 Solutions, which conducted the survey on behalf of CLM. “Plaintiff-side AI platforms are being recognized as more than drafting tools; they are being appreciated as strategic weapons for profiling defense negotiation behavior, building carrier intelligence databases, and driving case selection. These are the things that drive up indemnity costs.”
Four industry leaders joined Smith on stage in March at the CLM 2026 Annual Conference for a conversation about what the study’s findings mean for the road ahead. The panel included Kate Dombrowski, vice president, claims general counsel, Selective Insurance; Chris Fusco, managing partner Callahan & Fusco, LLC; Matt Morrison, vice president of litigation, American Family Insurance; and Amy Jenkins, attorney, McAngus Goudelock & Courie, LLC.
Fusco and Dombrowski opened by examining the widening gap between plaintiff bar capabilities and the defense ecosystem, focusing on the asymmetry in technology adoption and the plaintiff bar's willingness to share intelligence freely while the defense side continues to operate in silos. Jenkins and Morrison then addressed who should fund AI investment at the firm level, “a question that the study suggests will have an impact on speed of adoption,” says Smith.
According to Morrison, “Generative AI is going to change the way all of us work, so we need to invest and work together to determine best ways to utilize and support use of AI.”
Notably, 78.7% of executives have yet to agree to pay for any AI tools their defense counsel is using or seeking to adopt. Half of respondents believe firms should bear the cost, while the other half say that they are working on resolving the issue. No executives believed the claims organization should pay for AI tools used by defense firms. Meanwhile, 50.8% report they have rarely or never been approached by defense attorneys to discuss their firm’s use of AI.
“Asking the constituency most disincentivized in an hourly billing model to adopt powerful and efficient tools seems like the absolute slowest path to adoption. If plaintiff bar AI adoption…is truly the greatest threat…it will have to be litigation leaders who drive the adoption (and pay for) the requisite and responsive technologies,” states the report.
Key Findings
Overall, the 2026 Litigation Management Study paints a picture of an evolving litigation landscape. The key findings point to a litigation environment that is not only growing increasingly complex, but also increasingly misaligned in how it is managed. Several themes emerged, including rising litigation volume and costs, changing strategies, misalignment in billing practices, talent shortages, and growing concerns around data and technology—especially as the plaintiff’s bar accelerates its use of AI.
Rising Litigation and Represented Claim Volume
Litigation is increasing in both volume and frequency, signaling a shift in how claims are being contested. Nearly six in 10 carriers (59.4%) report managing more litigated files than three years ago. Meanwhile, 68.1% of respondents report that “the percentage of all claims with attorney-represented claimants has also increased, with only 4.3% reporting a decrease—a net directional signal of +63.8 points, among the strongest in the study.” This indicates that not only are more claims attracting attorney representation, but also more are entering formal litigation as well.
Furthermore, 63.8% of executives report that the percentage of total files in litigation has increased in the last three years, and 85.2% of respondents report an increased frequency of policy limit demands over the past three years—an 18% increase from the 72% who indicated this in 2023.
Compounding Cost Pressures
Cost pressures remain one of the industry’s most persistent challenges, with increases in both indemnity and defense, the findings suggest. “Eight in 10 respondents (80.6%) report that average indemnity paid in settled litigated files has increased over the past three years.” Furthermore, three in four (75.8%) report rising average legal fees and costs per litigated file, a figure essentially unchanged from the 76% who said so in 2023, suggesting pressure that is continuous.
File Resolution Methodologies
While litigation volume has increased, the number of files resolved by verdict has decreased, which has “important implications for negotiation strategies, case valuation, trial skill erosion, and identifying the BATNA (Best Alternative to a Negotiated Settlement), which has critical implications for case valuation,” the report states. On average, 9.8% of cases are dismissed (separately from verdict or settled). In other words, 96.8% of non-dismissed litigated cases are settled.
Billing Alignment
Despite ongoing and growing concerns over billing, models have largely remained the same, exposing a persistent gap between intent and action. “In the lowest score across three studies, executives rate the hourly billing model at 52 out of 100 in terms of aligning behavior with the carriers’ interests,” down eight points from 60 three years ago. However, 94.9% do not use any kind of outcome-based compensation with firms, and executives report that non-hourly compensation is only used in a small fraction of their files.
About 30% of executives say they are open to an alternative structure because they want more aligned incentives, and another 39% say that they are “sort of” open to the idea depending on specifics. Less than one third are not open to the idea. At the same time, 89.8% indicated it is very rare for firms to propose alternative billing arrangements of any kind.
This inaction—despite an openness to change—is one of the study’s most persistent disconnects and may suggest that meaningful billing innovation will need to be driven from the carrier side.
“We need more small-group (‘safe space’) discussions about what is working and what is not for both sides,” Fusco noted during the panel discussion. “I am concerned that we are talking past each other on the issues of rising costs.”
Satisfaction With Outside Counsel Relationships
The results show that relationships between carriers and firms are under strain, suggesting disconnects around expectations, communication, and performance. “The percentage of carriers reporting ‘stronger’ relationships with their panel firms has declined from 71% in 2015 to 43.1% in 2026, while those reporting weaker relationships has grown from 3% to 17.2% over the same period,” the findings show.
When it comes to dialogue about firm performance, most carriers (96.4%) indicate they would share performance data with a firm that asked for it; however, 96.6% say firms do not ask for it often enough. “While the numbers have changed in scope over the past few studies, the disconnect between carriers saying they would share data and firms not asking for it, is unchanged,” the study notes.
Previous studies have shown a focus by respondents on “inside baseball” issues between claims executives and defense counsel, while larger industry issues received less attention. However, this year, according to Smith, the top friction points for carriers have shifted toward outcomes and results.
“Eighty-one percent of executives are seeing increases in indemnity costs, 76% report that defense costs have increased, 85% report an increase in policy limit demands, and 68% report an increased percentage of claims with represented claimants,” says Smith. “They’re no longer focused on invoice disputes—they’re focused on these critically important trends,” results which show up across the study.
A Shared Talent Crisis
Talent shortages on both sides of the aisle are no longer a looming concern—they are actively impacting litigation management today. Seventy-five percent of carriers report it is more difficult to find qualified claim staff than it was three years ago, up from 51% in 2015 and 67% from 2023. Almost all respondents (96.7%) are aware of the defense firm talent shortage, and 79% indicate that it has at least somewhat affected their litigation management program. “In the past six months, 38.7% of carriers report that at least one panel firm has asked for a pause or halt on new assignments due to staffing constraints, a finding that would have been virtually unheard of in prior study cycles.”
Jenkins discussed what defense firm staffing pressures look like from the inside, drawing on the CLM Litigation Management Task Force survey of defense firms, while Morrison and Fusco reflected on the parallel talent strain playing out on the carrier side and what each constituency might learn from the other.
“The talent crunch is hitting law firms and carriers alike, and it is another area we must work collaboratively to address,” says Morrison. Fusco concurs, adding that “The lack of new talent in the industry is a red blinking light. There is opportunity here given the poor job market for young graduates. Investment and outreach into younger professionals are badly needed.”
Managing Measurements
Regarding how organizations track and measure crucial litigation data, gaps in data tracking reveal that many organizations still lack the strategy needed to manage litigation proactively. Data points of note include:
- 56.7% do not track the number of policy limit demands made against them.
- 66.1% do not track the number of policy limit settlements they make.
- 82% do not track who on the defense team specifically extends a settlement offer.
- 93.5% do not formally maintain dossiers and data points about specific plaintiff firms.
- 86.4% do not track the number of files where third-party litigation funding is present.
- 84.5% do not have a process for tracking files where medical financing is suspected.
- 59.3% do not track the number of files on which they receive time-limited demands.
- 63.5% report that they don’t track conflict waiver requests.
- 43% do not track the timing of their payments to defense firms. Another 10% are not sure.
These statistics indicate that although firms and carriers understand the importance of data tracking, it remains inconsistent in practice.
C-Suite Visibility Has Rebounded
The conditions for investment and change are more favorable than at any point in this study series, states the report. At the C-suite level, litigation management is gaining renewed attention.
“After declining to 60% in the 2023 Study—down from 77% in 2015—the share of litigation executives reporting that their CEO has discussed the effectiveness of the litigation management program in the past 12 months has rebounded to 79.0% in 2026, surpassing the prior high-water mark,” the data shows.
At the same time, 67.7% respondents reported that senior management is giving litigation management more attention than three years ago, and notably, zero respondents said it is receiving less attention. This may indicate that the function has regained—and perhaps strengthened—its organizational standing.
Without collaborative action, the trends identified in the study are likely to continue, further widening the gap between rising litigation demands and the industry’s ability to respond. “Overall, there must be a comprehensive industry action plan,” says Fusco. “Where are the quality ads that counter the constant and desensitizing plaintiff's bar commercials? Where is the outreach to young professionals? One firm and/or one carrier isn't enough.”