Average costs of Directors & Officers claims, defense and payment

It is difficult to obtain metrics about the costs of litigation [but see my posts of March 29, May 1 and 4, 2005 on patent litigation costs.] Thus, when the Sullivan Group’s Autumn 2002 report shared some data on D&O suits (from a 2001 Tillinghast Towers Perrin study), I grabbed it.

The average cost of defending a D&O claim – back in 2000 – was $540,000. The average payment was $5,650,000. Thus, the ratio of defense costs to settlement or judgment costs was one dollar for every ten.