2013 Construction/Environmental/ADR/AFA Mini-Conference
November 8, 2013 – Anaheim, California
Defining a “Win” in Construction Defect Cases
This session will explore what it means to “win” a construction defect case in the
eyes of the carrier and client. The panel will explore the importance of reaching an
early and agreed upon action plan and financial evaluation and the impact those
tasks have on setting accurate reserves. The panel of management level claims
handlers will be asked by the moderator to explore when to hold em, when to fold
em, and when going to trial can be a win. The panel will also discuss how each of
these action plans can be “wins” as long as counsel’s work is consistent with the
agreed upon strategy and expense expectations for a particular file. The panel will
also look at how a good result on its face is sometimes “losing.”
The first area of inquiry: why are attorneys from Mars and claims handlers from
Venus? This discussion will focus on the execution of a plan failing when there is
poor communication between the attorney and adjuster, including why attorneys
and claims handlers don’t speak the same language and the impact this has on
successful claims handling. Similarly, this area of concern will also look at
miscommunications caused by attorneys and adjusters talking past one another.
The second area of inquiry will be a discussion of the “Biggest Complaints”
claims staff has of its counsel. Lawyers often write reports, send emails, and talk
with claims, but often the discussions or reporting never gets to the point by
failing to answer three obvious questions: (1) so what?; (2) what does the
information mean for my reserve?; and (3) what does the information mean for our
action plan going forward? In Search of Consistency in Insurance Claims
Handlings: Discovery of Insurance Companies’ Files on Reserves and Other
Policy Holder Claims, 2007 Privacy and Data Security Law Journal 1040.
Building on the last topic, the third area of inquiry will be a discussion on
“winning” and “losing” financial and legal evaluations. This topic will focus on:
1. The importance of early financial evaluations;
2. The importance of being less emotional about the money;
3. The importance of creating an early plan and implementing it;
4. The importance of not billing and bailing - aka pre-trial panic; and
5. The impact of attorneys not understanding the actuarial needs of the
insurer.
Id.; See also Insurance Regulation in the United States: Regulatory Federalism
and the National Association of Insurance Commissioners, 26 Florida State
University Law Review 625 (1999).
The fourth area of inquiry will involve a basic misunderstanding attorneys have
when they report, which is that perfect information is unnecessary to “win.”
Attorneys do not need to turn over every stone to “win.” What is actually
important is to figure out a case’s approximate value as soon as possible, knowing
that the information may not be entirely complete at the time, to allow the insurer
to post reserves early and accurately. Climate Change and the Transformation of
Risk: Insurance Matters, 55 UCLA Law Review 1559 (2008). Attorneys need to
get to a conclusion as quickly and efficiently as possible and if liability is clear
what is the case worth and how are we going to get the case settled promptly. If
liability is less clear, is the case currently ripe for settlement or trial? There must
be better focus on promptly gathering the information needed to resolve cases,
while avoiding the common mistake of making bad assumptions.
Next the panel will focus on communication where the motto is - communicate,
communicate, communicate - clearly please!
Counsel needs to cater
communications to what the adjuster needs, not everything the attorney knows.
Attorneys need to provide analysis and should never just regurgitate everything
they learn during discovery. Discussions about “the beautiful view” from a home
or the color of a witness’ suit if irrelevant to valuation should not litter a report.
Attorneys should also remember to meet with their client. This is an obvious but
often overlooked first step in a case where key information that was sitting at your
fingertips is often missed. In addition, never stall at providing meaningful
information. If you know something useful, communicate it even if the
information is not fully developed. If the information is available and may impact
case value - report it! Adjusters also need to play a role in this process by being
active and aggressive along with solid communication with their counsel. Finally,
email has a purpose, but creating case strategies with the adjuster should be done
by phone.
So now that you’re reporting and communicating properly, what are “winning”
and “losing” settlements? Counsel and the adjuster need to remain focused on
settling within the parameters of the prediction. In other words, what did you
predict for indemnity (within a reasonable range) and expenses because this is how
the reserves were set. Were the expenses out-of-line with the outcome (unless
there was no way out – but did you look for a way out)? Also, always keep in
mind that early resolutions are usually wins because files are more expensive the
longer they last. Adjusters and counsel should also be mindful to not turn a
defense file into a second claim against the company.
Finally, the panel will discuss the A-word – the law firm audit. Auditing Your
Efforts, 38 American Bar Association Law Practice 6 (2012). Here the panel will
discuss how attorneys and claims handlers are evaluated once a file closes,
including a post-mortem analysis of legal bills compared to results and the workproduct in the file. Auditing Attorneys' Bills: Legal and Ethical Pitfalls of a
Growing Trend, 74 The Florida Bar Journal 14 (1999).
Cited References:
1. Climate Change and the Transformation of Risk: Insurance Matters, 55
UCLA Law Review 1559 (2008)
2. Insurance Regulation in the United States: Regulatory Federalism and the
National Association of Insurance Commissioners, 26 Florida State
University Law Review 625 (1999)
3. In Search of Consistency in Insurance Claims Handlings: Discovery of
Insurance Companies’ Files on Reserves and Other Policy Holder Claims,
2007 Privacy and Data Security Law Journal 1040
4. Auditing Attorneys' Bills: Legal and Ethical Pitfalls of a Growing Trend, 74
The Florida Bar Journal 14 (1999)
5. Auditing Your Efforts 38 American Bar Association Law Practice 6 (2012)