Are Recessions Good for Personal Injury Law Firms?

courthouse stormRecessions typically result in increased caseloads for Personal Injury Law Firms, however, some insurers attempt to take advantage of economic downturns with low-ball offers.

Slightly Less Motor Vehicle Accidents Occur:

Unless it’s highly specialized, the bread and butter of any personal injury law firm is motor vehicle accidents. With prior recessions, car accidents showed a marked decline.

A 2016 study on the National Library of Medicine’s website ( shows that for each percentage increase in the unemployment rate, motor vehicle fatalities decline by 2.9%. In fact, as the unemployment rate increases, fatalities decrease in incidents involving large trucks, speeding, drunk driving, pileups and urban collisions.

This data can change from study to study based on the years examined, especially during the economic slump which initially occurred during COVID-19.

Why are More Personal Injury Claims Filed?

If there are less motor vehicle accidents, why are attorneys busier?

A June 2009 article in Plaintiff Magazine, published during the “Great Recession“, features multiple trial attorneys with caseloads which have surged by as much as 25%. In the article, they claim the increased business came from “the increased number of people seeking legal help” and “the public’s willingness to pursue smaller legal matters”.

This bodes well with what we have heard from our clients. Today, one of them told us “the theory is that people during downturns are cash strapped and therefore more likely to file a claim and pursue a case to get a settlement.”

Settlement Amounts During Recessions:

Obviously, most insurers are going to throw out low-ball offers in hopes that the injured need money to resolve financial strains by settling their case.

Indeed, cash strapped individuals may be more likely to settle and accept a nickle now instead of a dime later.

While there is not enough data for me to conclude in this article average settlement amounts during recessions, it is safe to say that there is typically a decrease.

Jury Verdicts & Damage Rewards During Recessions:

After polling a few of our personal injury attorneys and reading a few commentator’s articles online, it is clear that there are a ton of different opinions on this topic. Some attorneys say that jury verdicts go down. Others say that jury verdicts go up. While I have no idea what the answer is here, I opine that there are simply too many variables in play to draw any type of conclusion.

In the article Jury Damage Awards in Times of Recession, some interesting points are made:

  • Recessions are good for plaintiffs due to anti-corporate sentiment / jurors upset with corporate profits, higher scrutiny of defendants
  • Recessions are good for defendants as some jurors are sympathetic to employers.

In that article, I personally agree the most with trial consultant Rich Matthews, who says “I reject the notion that there is one singular effect that the current economy has on damages verdicts.  Rather, I believe that the economy has an effect on just about every civil verdict, but that it is not one effect that is generalizable across all litigation nor even a whole category.

The Show Must Go On. Innovate.

While I am not an attorney, I personally owned an IT firm throughout the Great Recession. That business was significantly impacted. Business owners in my niche who focused on computer and network sales folded. I shifted focus to my passion of repairing and improving – while people were indeed cash strapped, or nervous, the repair business was excellent and benefited as people chose to spend $200 – $300 fixing things instead of spending $1,200 on replacing them. We grew. We spent more on advertising. We hired. We were busier than ever.

During COVID, running Optimize My Firm, we had attorneys choose to take on only high value cases. Other attorneys we work with chose to take on more of every case. Some pivoted into Family Law. Initially, some firms did “freak out” a bit, but that quickly shifted into the largest increase in online advertising we’ve ever seen.

I’m writing this while the stock market is near all time highs. Things are good right now. However, there will be another recession. When it comes, a personal injury law firm is going to be an outstanding business to own. Personally, I would pivot and innovate if necessary, then, market the firm aggressively. Yes, I am biased. I stand to benefit from attorneys marketing, as we provide SEO for personal injury law firms. But, when the dust settles, it is very likely that the strongest and most visible brands will benefit the most from both recessions and economic recoveries.