and standards for outside counsel. I have been lucky in my
career to have worked with coverage counsel who all have
spent time at independent law firms, developing their legal
skills, trial skills, relationships within the legal community,
and analytical mind set, thus while they might be employees,
the background they bring and their ability to see both sides
of an argument serve the claims division well.
The arguments and challenges against the use of salaried
employees/staff counsel in representing third-party insureds
are well settled. Additionally, the ethical challenges to using
salaried employees/staff counsel have also been scrutinized
carefully by the various state courts, with the findings generally opining that the use of staff counsel by insurance companies is ethically permissible.
Litigation staff counsel for insurance companies, however,
differ starkly from in-house counsel. While in-house counsel have the responsibility of handling day to day coverage
matters, foster corporate culture, set the tone for the ethical culture of the claims division, assist in selecting outside
panel counsel and assist with various claims division projects, they are fully cognizant that they are employees of a
corporation. There are no conflicting alliances, which allows
them to focus on their one and only client, their employer.
Litigation staff counsel, no matter how ethical and focused,
have an inherent conflict of interest as there are constant
conflicting alliances in their positions. We ask them to dili-
gently and ethically defend our insureds, ignoring what may
be their best legal judgment in favor of an expedited result to
achieve the goals and objectives affecting the very profitabil-
ity of the group. As every claim professional knows, we are
called upon year after year to reduce the cost of litigation,
improve efficiencies, exceed the results of the previous year
and continue to protect the assets of the corporation dili-
gently. Litigation staff counsel, no matter what walls are built
to protect their independence, cannot help but be privy to
the goals and objectives set out for the claims division. It is
discussed at staff meetings; it is discussed in one-on-one ses-
sions; it is discussed at claim/litigation strategy roundtables;
it is discussed at the coffee machine. For litigation staff coun-
sel to not be aware of the goals and objectives surrounding
litigation metrics is a near impossibility. For litigation staff
counsel to not allow the pressures of divisional goals and
objectives to influence their strategies and performance also
falls into that category of near impossibility.
Relationships between claim professionals and independent
panel counsel have evolved over the years. Panel counsel
are chosen for their skills and expertise, not because they fit
within a certain profile developed by the Human Resources
Department. No longer do claim professionals feel uncomfortable challenging panel counsel nor do they feel that
simply because counsel advised something that the topic is
closed for discussion. All good claim professionals, along
with good panel counsel realize that those in the insurance
industry are not in the litigation business — we are in the
resolution business. Collaboration with panel counsel is key
to outstanding results, but it is incumbent on the claim professional to set clear and unambiguous expectations. Rather
than merely sending all cases to litigation staff counsel, our
job is to choose the right attorney for the job.
Independent panel firms offer distinct advantages to insurance companies beyond the breadth of experience they
bring to the litigation process. Resources at independent
firms are usually greater than those at an insurance company. Colleagues are available for consultation, and all firms
know not to charge for bouncing ideas off of their colleagues.
Independent panel counsel is perceived differently by the
legal community than staff counsel, whether that is a fair
assessment or not, often perception is reality. Independent
counsel has spent years in their legal community building
relationships and establishing good will. All claim professionals appreciate how those local contacts and relationships can affect their results in the community when they
must take a case to trial. Independent panel counsel today
not only understands the practice of law, but the business of
law and that is of great advantage to the claim professionals
they work with on a daily basis. Claim professionals today
understand litigation management and all that it entails, and
that is the advantage they bring to the insurance companies
looking to improve results.
In each issue of Litigation Management,
we’ll address two sides of an issue or initiative.
If you have a topic you’d like to see addressed,
please contact firstname.lastname@example.org.