Texas has landed on the American Tort Reform Association’s “Watch List” in its latest Judicial Hellholes report, marking a concerning development for a state once known for its business-friendly legal climate.
The 2025-2026 report identifies Texas as one of six jurisdictions warranting special attention for what ATRA describes as “expansive liability” and troubling trends in its civil justice system. This designation comes amid what legal observers say is an alarming rise in “nuclear verdicts” — eye-popping judgments that can reach tens or even hundreds of millions of dollars.
A State of Nuclear Verdicts
How bad has it gotten? Between 2009 and 2023, Texas led the nation with 207 verdicts exceeding $10 million, totaling more than $45 billion in damages. These staggering numbers represent a significant shift for a state that once prided itself on reasonable tort outcomes.
The report suggests that Texas courts have developed increasingly pro-plaintiff leanings, creating an environment where massive verdicts have become more commonplace. This trend has caught the attention of business groups and legal reform advocates who warn that such outcomes could ultimately drive up costs for consumers and limit economic growth.
“Nuclear verdicts don’t happen by accident,” said one legal analyst familiar with the report. “They’re often the result of specific tactics that have found fertile ground in certain jurisdictions.”
The Anatomy of Massive Judgments
What’s driving these enormous payouts? The Judicial Hellholes report points to several factors, including inflated awards for non-economic damages — those harder-to-quantify harms like pain and suffering.
Another tactic highlighted is “anchoring,” where plaintiffs’ attorneys suggest astronomically high figures to juries, effectively shifting the baseline for what constitutes a reasonable award. The report also criticizes the inclusion of “phantom damages” — unpaid medical expenses that exceed what insurance would actually cover but are nonetheless presented as legitimate costs.
Critics of the report counter that these large verdicts often represent appropriate compensation for genuine harms caused by corporate negligence or misconduct. They argue that the Judicial Hellholes designation primarily serves the interests of businesses seeking to limit their accountability.
Questions About the Attorney General’s Office
Beyond the courtroom verdicts, the report raises concerns about Texas Attorney General Ken Paxton’s legal strategies. It alleges that Paxton has increasingly relied on outside counsel with personal connections for industry-targeted lawsuits, rather than utilizing the AG’s in-house attorneys.
These arrangements have reportedly included instances of high one-day billings charged to the state, raising questions about the efficient use of taxpayer resources. The Attorney General’s office has not yet responded to requests for comment on these allegations.
The Watch List designation doesn’t place Texas among the worst “Judicial Hellholes” in the country — those dubious honors went to other jurisdictions. But it does signal that the organization sees troubling patterns that could worsen if left unchecked.
For a state that has long marketed itself as a haven for business, with predictable legal outcomes and reasonable liability risks, the designation represents a warning shot across the bow. Whether Texas heeds that warning or continues down its current path remains to be seen.
