Legal Definitions - deep pocket

A deep pocket refers to an individual or, more commonly, an organization that possesses substantial financial resources. In legal contexts, this term is often used to describe a party that is perceived as having the ability to pay a significant monetary judgment or settlement if found liable in a lawsuit. Plaintiffs and their attorneys often seek out "deep pockets" because such parties are more likely to be able to satisfy large financial awards, making them an attractive target for litigation.

Here are some examples illustrating the concept of a deep pocket:

• Example 1: A global technology corporation is sued by a former employee alleging wrongful termination and discrimination. The corporation has billions in annual revenue and a vast legal department.

  Explanation: The global technology corporation is considered a deep pocket because its immense financial resources mean it has the capacity to pay a large settlement or judgment if the former employee's claims are successful. This makes the corporation a more appealing target for a lawsuit than, for instance, a small startup with limited assets.

• Example 2: A prominent real estate developer, known for their multi-million dollar properties and extensive personal wealth, is involved in a negligence lawsuit after a poorly maintained property they own causes injury to a tenant.

  Explanation: In this situation, the wealthy real estate developer is the deep pocket. Their substantial personal assets and business holdings indicate a strong ability to cover significant damages, medical expenses, and legal fees that might be awarded to the injured tenant, making them a primary target for the lawsuit.

• Example 3: A small local business is sued for product liability after a faulty item it sold causes harm. The business itself has modest assets, but it is insured by one of the largest national insurance companies.

  Explanation: Here, the national insurance company acts as the deep pocket. Although the local business is the direct defendant, the plaintiff's lawyers will often focus on the insurance company's substantial assets and policy limits, knowing that the insurer has the financial capacity to cover large claims and judgments on behalf of its policyholder, effectively acting as the ultimate source of funds.