Trial Magazine

Roads are not yet filled with driverless cars, but with all of the action taking place to clear the way for them, it’s a good idea to start planning for the future. The last few years were filled with various federal and state bills focused on relaxing regulations to allow for a future of driverless cars.¹ The technology and auto industries are courting states with the promise that they will be the nation’s technology innovation leaders.² But whether legislators will prioritize attracting driverless car companies over protecting the safety of human drivers and passengers remains an unanswered question.

The driverless car industry promises a safer future by reducing or eliminating the most common cause of all traffic collisions—the human driver. In 2016, 37,461 people in the United States were killed in ­automobile crashes, an increase from 2015.³ According to the most recent National Highway Traffic Safety Administration data available, 94 percent of all traffic collisions are caused, at least in part, by the human driver.⁴ The ­driverless car industry claims that ­driverless cars could reduce crashes by 90 percent.⁵

While the prospect of safer roadways is promising, through our work as trial lawyers we know that the auto industry consistently puts profits ahead of safety, often choosing less expensive alternatives over protecting product users. Absent a dramatic change in this set of priorities, the likelihood of driverless cars reducing injuries and deaths to the extent claimed by the industry is hopeful at best.

However, if the industry can make a significant dent in traffic injuries and deaths, the ramifications of dramatically safer roads will affect many businesses, including our own. Driverless cars likely will have the most significant impact on the $259 billion automobile insurance industry.⁶ As the driverless car industry grows, a major shift is expected in who owns vehicles—from individuals to “shared” or fleet-owned vehicles.⁷

Research and computer modeling indicates that as many as 23 million fully autonomous vehicles (out of more than 250 million cars and trucks registered in the United States) will be traveling on U.S. highways by 2035.⁸ If most of those driverless cars are not owned by individuals and the roads are safer due to less driver error, the business model of individual automobile insurance coverage may not survive. This is important to the auto industry and attorneys representing people injured in auto collisions.

According to a 2017 insurance industry forecast, a drop in individual premiums—due to decreased private ownership of vehicles and to safer vehicles—will begin as early as 2026 when large numbers of autonomous vehicles begin to appear; it could be as much as a $25 billion loss for insurers by 2035.⁹

Other industries expected to be affected by the introduction of driverless cars and the shift away from individual ownership are the $121 billion automotive finance market, the $381 billion automotive aftermarket, and the $100 billion parking industry.¹⁰

Driverless vehicles’ threat to U.S. workers is also very real. It is estimated that more than 4 million U.S jobs could be at risk from this technology, and in 2016, the Obama administration said that between 1.3 million and 1.7 million trucking jobs could be threatened.¹¹

Whatever the estimates, the potential consequences are serious: the elimination of one of the few remaining middle-class jobs that doesn’t require a college degree. While there has been some talk about “retraining,” no one seems clear how so many workers could be retrained and what they would be trained to do.

Regardless, technology businesses and auto manufacturers are charging ahead. It would be wise for us to do the same and consider now how these changes will affect liability, our practices, and our clients.

The Road Ahead

If driverless cars take over the roads, and if they successfully reduce the number of injuries and deaths from auto collisions, how does that impact auto tort practice? Assuming that at least some injuries or deaths continue to occur due to some wrongful act, what will be the theories of liability? Will this change if individual vehicle ownership is not the norm? Will these cases be filed as decentralized individual claims or as mass torts? These are serious, pressing questions that we will need to address in the coming years.

That said, we can already predict a few potential likelihoods. There is a good chance that general negligence cases may be displaced by common carrier, products liability, or crashworthiness cases. Claims with significant damages may be removed to federal court as defendants must be hailed from out of state.

The number of potential defendants also may multiply given the vast number of hardware, software, and cybersecurity companies involved in the manufacture of driverless cars. As the number of potential defendants grows, so will the finger-pointing among them about who is at fault given the complex nature of these automated systems.

Despite the push for deregulation of driverless cars, the shift to their dominance on our roadways likely will be gradual. It should be years before fully driverless vehicles appear on U.S. highways in significant numbers, and they likely will coexist with traditional human-driven vehicles and a host of semi-autonomous variations for decades.¹² Attorneys practicing in the auto injury area should have some time to adjust and react, but it is never too soon to plan for the driverless future.

Diversifying Your Practice

Auto insurers and other potentially affected industries are already thinking of ways to maintain their businesses in this new reality. Potential growth areas identified by the auto insurance industry include cybersecurity, products liability, and infrastructure insurance.¹³ It is estimated that these areas could generate $15 billion for the auto insurance industry through 2025 and could more than offset the losses in premiums expected through 2050.¹⁴

Like the auto insurance industry, auto tort firms should start thinking about ways to diversify. Firms can continue to conduct business as usual, or they can change their thinking and their business models to adapt for the future. Every firm should look at the types of cases it handles and make sure they vary.

Making careful strategic decisions about your firm's operating model will be the best way to thrive in a driverless environement.

For some lawyers, the idea of learning new practice areas may be a frightening concept, but making careful strategic decisions about your firm’s operating model will be the best way to thrive in a driverless environment and ensure that you can change course in time to help your future clients.

Elise R. Sanguinetti is a founding partner of Arias, Sanguinetti, Wang & Torrijos in Oakland, Calif. She can be reached at elise@aswtlawyers.com.

Notes

1. SELF DRIVE Act, H.R. 3388, 115th Cong. (2017); AV START Act, S. 1885, 115th Cong. (2017); Cal. Veh. Code §38750; Cal. Code Reg. tit. 13, div. 1, ch. 1, art. 3.7; S. Res. 17-213, 71st Gen. Assemb., Reg. Sess. (Colo. 2017); Fla. Stat. §§316.85-86, 319.145; S. Res. 219, Gen. Assemb., Reg. Sess. (Ga. 2017); S.B. 151, 110th Reg. Sess. (Tenn. 2017); S.B. 2205, 85th Leg. (Tex. 2017); Mich. Comp. Laws §§257.2b, 257.601a, 257.602b, 257.606b, 257.643, 257.643a, 257.665, 257.665a, 257.665b, and 600.2949b; Nev. Rev. Stat, ch. 482A, ch. 372B, §§484A.080.
2. Larry Alton, States Are Competing to Get Autonomous Vehicles on the Road—but Should They?, The Next Web (Mar. 21, 2018), https://thenextweb.com/contributors/2018/03/21/states-competing-get-autonomous-vehicles-road/.
3. Nat’l Highway Traffic Safety Admin., 2016: Fatal Motor Vehicle Crashes: Overview (Oct. 2017), https://crashstats.nhtsa.dot.gov/Api/Public/Publication/812456.
4. Nat’l Highway Traffic Safety Admin., Critical Reasons for Crashes Investigated in the National Motor Vehicle Crash Causation Survey (Feb. 2015), https://crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/ 812115
5. Driverless Cars Could Reduce Traffic Fatalities by Up to 90%, Says Report, Science Alert (Oct. 1, 2015), www.science alert.com/driverless-cars-could-reduce-traffic-fatalities-by-up-to-90-says-report.
6. IBIS World, Automobile Insurance—US Market Research Report (Dec. 2017), www.ibisworld.com/industry-trends/specialized-market-research-reports/advisory-financial-services/specialist-insurance-lines/automobile-insurance.html.
7. Tim Higgins, The End of Car Ownership, Wall St. J. (June 20, 2017), www.wsj.com/articles/the-end-of-car-ownership-1498011001. 
8. Lawrence Karp & Richard Kim, Accenture & Stevens Inst. of Tech., Insuring Autonomous Vehicles: An $81 Billion Opportunity Between Now and 2025 (2017) www.accenture.com/t20170530T040532__w__/pl-en/_acnmedia/PDF-53/Accenture-Autonomous_Vehicles.pdf.
9. Id. at 3.
10. Anthony Gambardella, Auto Leasing, Loans & Sales Financing—US Market Research Report, IBIS World (Mar. 2018), www.ibisworld.com/industry-trends/market-research-reports/finance-insurance/credit-intermediation-related-activities/auto-leasing-loans-sales-financing.html; Automotive Aftermarket Suppliers Ass’n, Size of the Automotive Aftermarket (Oct. 25, 2017), https://automotiveaftermarket.org/aftermarket-industry-trends/automotive-aftermarket-size/; Aashish Dalal, The Future of the $100 Billion Parking Industry (Mar. 2014), Parking Today, www.parkingtoday.com/articledetails.php?id=1600.
11. Ctr. for Global Policy Solutions, Stick Shift: Autonomous Vehicles, Driving Jobs, and the Future of Work (Mar. 2017), http://globalpolicysolutions.org/report/stick-shift-autonomous-vehicles-driving-jobs-and-the-future-of-work/; Exec. Off. of the President, Artificial Intelligence, Automation, and the Economy (Dec. 2016), https://tinyurl.com/y7vbqek6. Bus drivers (both transit and school), delivery service drivers, taxi drivers and chauffeurs, and self-employed drivers are all at risk. Id. at 17 tbl. 2.
12. Jeff Plungis, Self-Driving Cars: Driving Into the Future, Consumer Reports (Feb. 28, 2017), https://www.consumerreports.org/autonomous-driving/self-driving-cars-driving-into-the-future/.
13. Karp & Kim, supra note 8, at 5.
14. Id.