5 Myths You Need to Stop Believing About Litigation (and 7 Ways to Avoid It)

5 Myths You Need to Stop Believing About Litigation (and 7 Ways to Avoid It)
December 5, 2025 4 mins

5 Myths You Need to Stop Believing About Litigation (and 7 Ways to Avoid It)

5 Myths You Need to Stop Believing About Litigation (and 7 Ways to Avoid It)

Litigation from workers’ compensation and liability claims is not inevitable. Discover common myths and seven practical strategies using prevention, documentation, and AI to help avoid lawsuits and protect your organization.

Key Takeaways
  1. Litigation isn’t inevitable: Proactive claims management, clear communication, and modern tools like AI can help prevent workers’ comp and liability claims from escalating into costly lawsuits.
  2. Myths can cost you: Believing common misconceptions—like “insurance covers everything” or “quick settlements prevent lawsuits”—can leave your organization exposed to unnecessary risks.
  3. Strategies make the difference: By combining prevention, thorough documentation, and AI-powered insights, Risk Managers and CFOs can reduce litigation risks, protect their budgets, and safeguard their reputation.

Litigation from workers’ compensation and liability claims can drain your budget, disrupt operations, and damage your reputation. But here’s the good news: it’s not inevitable.

Risk Managers and CFOs have more power than they think to prevent claims from escalating into lawsuits. With the right strategies—and the help of modern tools like artificial intelligence (AI)—you can take control, reduce risks, and protect your bottom line.

5 Myths About Litigation You Should Stop Believing

Misconceptions about litigation often lead to missed opportunities for prevention. Here are five myths that might be holding your organization back:

  1. Myth: “Litigation is unavoidable.”
    Reality: Many claims can be resolved before they ever reach a courtroom. Early intervention, clear communication, and proactive risk management (including AI tools) can make a big difference. Thinking litigation is inevitable often leads to inaction, but taking control early empowers you to reduce costs and improve outcomes.
  2. Myth: “Insurance covers everything, so litigation isn’t a big deal.”
    Reality: Insurance doesn’t cover everything. Policy exclusions, limits, and conditions can leave you exposed. Plus, legal defense costs and reputational damage can add up fast.
  3. Myth: “Strong safety protocols mean no workers’ comp lawsuits.”
    Reality: Even with great safety measures, accidents happen. What matters most is how you handle incidents after they occur.
  4. Myth: “Quick settlements prevent lawsuits.”
    Reality: Rushing to settle claims without proper investigation can backfire. If claimants feel their concerns weren’t fully addressed, disputes may resurface later.
  5. Myth: “ADR (Alternative Dispute Resolution) solves everything.”
    Reality: Mediation and arbitration can help, but they’re not foolproof. Poorly managed ADR can lead to delays, extra costs, or unresolved issues.

7 Simple Strategies to Avoid Litigation

Avoiding litigation doesn’t have to be complicated. Here are seven practical steps to reduce your risk:

1. Be Proactive with Claims Management
  • Set up clear, timely reporting procedures for workplace injuries and liability incidents.
  • Investigate claims quickly and thoroughly to prevent escalation.
  • Keep communication open with employees and claimants to resolve issues early.
2. Invest in Safety and Prevention
  • Provide regular safety training and conduct workplace audits.
  • Fix hazards before they lead to claims.
  • Involve employees in safety programs to create a culture of prevention.
3. Document Everything
  • Keep detailed records of incidents, communications, and corrective actions.
  • Make sure your documentation is accurate, complete, and easy to access if needed for defense.
4. Understand Your Insurance
  • Review your policies to know what’s covered—and what’s not.
  • Consider additional protections like indemnification clauses or third-party waivers.
5. Use AI to Spot Risks Early
  • AI tools can analyze claims data to flag high-risk cases before they escalate.
  • Look for patterns like claim complexity, communication gaps, or medical treatment issues.
  • Act on these insights to prioritize high-risk claims and resolve them early.
6. Leverage Alternative Dispute Resolution (ADR)
  • Use mediation or arbitration to settle disputes before they turn into lawsuits.
  • Train your team to recognize when ADR is the right option.
7. Review and Assess Regularly
  • Analyze claims data to spot trends and areas for improvement.
  • Work across departments to address systemic risks.

Litigation doesn’t have to be part of doing business. By challenging outdated myths and adopting proactive strategies, Risk Managers and CFOs can reduce the risk of workers’ compensation and liability claims turning into costly lawsuits.

The key is prevention, clear communication, and smart use of technology like AI to stay ahead of potential issues.

The best claims management strategies combine prevention with advanced technology. Aon’s AI-powered Litigation Risk Diagnostic helps you identify claims at high risk of attorney involvement, so you can act early and improve outcomes.

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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