And the most notable legal terms of the year were …

By Ken Bresler

The most notable legal phrases of 2023 weren’t coined in the past year. If they had been, it probably would be too soon to have noticed them and too soon to gauge their impact, longevity and usefulness. The criteria for 2023’s most notable legal terms, as in past years, are that they are fairly new, made news and are not in Black’s Law Dictionary.

Beginning the countdown, the most notable legal terms of 2023 and their definitions are …

No. 5. Texas two-step: Procedure in which a legal entity generally splits into two entities and assigns assets to one entity and liabilities to another, the latter of which then declares bankruptcy. Facilitated by the Texas Business Organizations Code and named for a dance step. Also called “divisive merger” or “divisional merger.”

What is probably the most prominent example of the Texas two-step involves Johnson & Johnson. After tens of thousands of plaintiffs accused J&J of selling talcum powder contaminated with asbestos, the company spun off its talc-related liabilities into LTL Management, which filed for bankruptcy.

The Texas two-step is “infamous” but not “inherently unlawful or improper,” declared a federal bankruptcy judge in New Jersey in 2022. In a 2023 ruling in the same case, In Re LTL Management LLC, the 3rd U.S. Circuit Court of Appeals wrote, “While some pejoratively refer to it as the first step in a ‘Texas Two-Step’ when followed by a bankruptcy filing, we more benignly call it a ‘divisional merger.’”

(If you think hard enough about “divisional merger,” it sounds like an oxymoron.)

No. 4. Tag jurisdiction: A court’s exercise of personal jurisdiction over an individual who is served, and thus “tagged,” while physically present in the forum. That definition is from a 2022 decision by the U.S. District Court in the Southern District of New York, Sokolow v. Palestine Liberation Organization. Synonyms for tag jurisdiction that are more established are “transitory jurisdiction” and “transient jurisdiction.”

The U.S. Supreme Court used “tag jurisdiction” for the first time in 2023 in Mallory v. Norfolk Southern Railway Co. It also used “the tag rule” in the same case to mean tag jurisdiction. In a concurrence in 2021, Justice Neil Gorsuch used “tag rule” for the first time in any reported decision, Ford Motor Co. v. Montana 8th Judicial District Court.

No. 3. Nuclear verdict: 1. Damages awarded by jury exceeding $10 million. 2. Damages awarded by jury seen as excessive and disproportionate.

The term is pejorative and is used by entities, lawyers and academics who excoriate tort lawyers. It appeared in, among other places, an end-of-2023 report by the American Tort Reform Foundation and a 2023 Supreme Court decision in a roundabout way: Justice Samuel Alito, in his concurrence in Mallory, quoted in a footnote a law review article with “nuclear verdicts” in the title.

Another phrase appeared in the ATRF report and Alito’s footnote in the same fashion (in a law review title) is “litigation tourism.” ATRF seems to define it as judges “swinging open their courtroom doors to out-of-state plaintiffs.” This phrase might or might not catch on.

The next term is about explosions but not nuclear ones …

No. 2. Exploding offer: Offer, such as a contract proposal, which has a deadline that is often short, such as hours, days or sometimes immediate, before the offeror withdraws it.

While the term is not spanking new — a 1997 law review article discussed law reviews making exploding offers to authors to keep them from journal shopping — the term did, well, explode onto the scene in 2023. Of the 12 judicial cases that have ever used the term, half of them were in 2023, Westlaw reports.

The six cases in 2023 came from the U.S. District Court for the Southern District of New York (three), the Delaware Court of Chancery (two), and the California Court of Appeal (one). Not all uses of “exploding offer” involve commercial contracts. The California case is about prosecutors offering plea deals to criminal defendants.

No. 1. Artificial intelligence and generative artificial intelligence: The first is “the capability of computer systems or algorithms to imitate intelligent human behavior.” The second is “artificial intelligence that is capable of generating new content (such as images or text) in response to a submitted prompt (such as a query) by learning from a large reference database of examples.”

Law and the world are being transformed. I don’t think that anyone has the words to adequately capture the importance of AI and generative AI.

One drawback to generative AI, at least now, is what are called “hallucinations.” Generative AI makes up stuff. In June 2023, a federal judge in New York fined two lawyers and their law firm $5,000 for, among other related things, filing a brief generated by artificial intelligence with artificial cases.

We’ll see what legal writers write in 2024.

Ken Bresler is a lawyer and writer.