Until now, no aircraft disaster in history had spawned the amount of legal wrangling as the bombing of Pan Am Flight 103 over Lockerbie, Scotland, on Dec. 21, 1988, in which 259 passenger and crew members and 11 people on the ground were killed. There is no doubt in insurance industry experts' minds that lawsuits stemming from the Sept. 11, 2001, terrorist attacks in New York City and Washington, D.C., will dwarf all Lockerbie litigation, which spanned more than a decade.

"Just as it will take years as a nation to heal from this tragedy, it will take years to resolve all the financial issues," says Don Griffin, a spokesperson for the National Association of Independent Insurers (NAII).

Experts are reluctant to estimate the number of potential lawsuits that will no doubt arise from the tragedy. Out of respect for the victims and their families, the Association of Trial Lawyers of America (ATLA) has issued a memorandum to its members calling for a voluntary moratorium on civil lawsuits relating to the attacks. "There are more urgent needs that must be served at this time," says the ATLA. "Let this instead be a time for healing, with our focus on bringing to justice the terrorists who perpetrated this tragedy."

Another reason why experts are shy to go on the record about potential losses is that the situation is unprecedented and complicated. "The tragic events in the United States this week have generated the most complex set of insurance liabilities and interdependencies the industry has ever seen," says Lloyd's Chairman Sax Riley. "The situation is not statis. Quantifying our involvement in terms of an exact total number is meaningless at this stage."

Yet some members of the financial services industry, including Chubb Chairman Dean R. O'Hare have now estimated that losses may well exceed $20 billion.

Everyone named

There's little doubt that once the moratorium is over, the litigation numbers will be huge. "Lockerbie litigation spanned 12 years, cost hundreds of thousands of dollars, and that only involved a single airplane," says Garrett Moore, an attorney who specializes in aviation litigation with the Cheshire, Conn., firm of Moore, O'Brien, Jacques, and Yelenak. "This incident involves multiple airlines and multiple airports."

Experts say the list of potential defendants is long. "It will be really messy when we get into the negligence part of it," says Griffin. "Everyone will be named in the lawsuits and then it will be up to the courts to sort it out."

Potential defendants may include:

• Airline manufacturers
• American and United Airlines
• Building architects
• Building construction firms
• Security management companies
• The Federal Aviation Administration
• The Federal government
• The New York Port Authority
• New York City
• Westfield America Inc. (which recently acquired a 99-year lease to the World Trade Center from the New York Port Authority)

While the litigation could drag on for years, Moore says he expects most negligence lawsuits will be filed within two or three years, before any statutes of limitations expire. He doesn't see a big potential for any product liability lawsuits to arise out of this terrorist attack in the same way they did in the Lockerbie tragedy. In that case, Pan Am saddled the Swiss firm that made the timing device in the Lockerbie bomb with a $32 million insurance claim.

According to Moore, there's always a chance Congress could step in to move any stalled litigation along. "Who wants the country to have this open wound for the next 20 years?"

Others, however, are not so sure. "There will be a lot of lawyers out doing research to develop creative litigation theories," says Walter Olson, a senior fellow at the Manhattan Institute, author of The Litigation Explosion, and owner of Overlawyered.com, a Web site that says it is devoted to "chronicling the high cost of our legal system."

Olson says the community at large has not even begun to process the enormous magnitude of the number of claims and the potential for lawsuits. While losses will include loss of lives and property damage in the immediate area of the former World Trade Center, there is the potential for many claims occurring within a much wider radius of Ground Zero. "There will be arguments made for claims related to smoke and dust damage," says Olson. "Now they're saying there may be asbestos blowing around in the air."

While Olson can only speculate what may be the upshot of a crippling number of claims and lawsuits, he says, "It raises the question of what it will be like to buy an airline ticket in the future, half of which may be an insurance payment."

In the short term, insurers are likely to pay out in excess of $718 million to the victims' families. "Traditionally, airlines receive $2.7 million per passenger from their insurance companies within 10 days of a crash," says Gail A. Dunham, president of the National Air Disaster Alliance.

While insurers are definitely concerned about their exposure, says Griffin, the industry as a whole is well capitalized. According to the National Association of Insurance Commissioners, the insurance industry in the United States has assets of more than $3 trillion. Additionally, the airlines or the insurers may very well sue other companies as a way of recouping some of their losses in a process known as subrogation. This is exactly what happened when Pan Am sued the Swiss manufacturer of timing devices during the Lockerbie litigation.

Still, anyone who's a potential defendant in lawsuits arising out of the tragedy must be concerned about the size of today's jury awards. In 1999, Anna Lloyd was among the 136 survivors of a fiery American Airlines plane crash at the Little Rock airport that killed 10 passengers and the pilot. At trial, her attorney told the jury his client was physically fine after the minor injuries she suffered in the crash, but that the psychological scars of the experience had left her anxious, angry, and withdrawn. American Airlines offered Lloyd $330,000 in compensation to settle the suit, but Lloyd asked the jury for $15 million. The jury awarded her $6.5 million.