2. LITIGATION MANAGEMENT POLICY
We employ a multifaceted litigation management program designed to minimize legal costs. The program is an integration of fixed resources and claims handling philosophies and procedures. The adjuster is primarily responsible for active case management of litigated files.
PCM believes the interests of the client and the self-insured clients are met when cases are brought to an efficient resolution by the integration of technical insight and economic judgment. This philosophy mandates a plan which emphasizes the management of litigation by objectives, and is achieved by early assessment, effective partnership with counsel, technically sound evaluations and strategic follow-through.
a. Pre-Litigation Handling
An effective litigation management program requires an approach designed to reduce the number of litigated files, economically settle those which should be settled and aggressively defend those cases which are legitimately in dispute.
Recognizing the vast majority of cases are settled rather than tried, we understand the importance of early investigation and assessment. Early assessment is necessary to identify those cases which are likely to settle, and those which are likely to be tried.
b. Selection of Defense Counsel
It is the client’s prerogative to designate counsel or to delegate this authority to PCM. We believe selection of counsel is most effectively administered with the approval of fewer and more select defense firms. Guiding this philosophy is the understanding that law firms must have substantial experience in the specialty area in which client’s litigation arises.
One of the principals of PCM is also a principal of Bonetati, Sasaki, Kincaid & Kincaid, Inc. It is the understanding of all parties that Bonetati, Sasaki, Kincaid & Kincaid, Inc. will also act as defense counsel in defending the insureds of the client.
Several objectives are addressed by limiting and selecting counsel. First, the client becomes a vital aspect of the law firm’s business and client’s needs are continually in the forefront. Second, attorneys become intimately familiar with the philosophy, directives, and business practices of client. Finally, limiting designated counsel assures that the client’s priorities and interests will be recognized as a matter of practice.
c. Assignment/Direction of Cases
Employing the established guidelines in the selection of counsel, cases are assigned to the attorney who is most qualified to handle and advise on the specific case under consideration.
The client’s goals are far more likely to be met when they are clearly conveyed to counsel at the outset, along with the specific litigation objective of each case. Communication problems and unnecessary legal expenses can be avoided through the use of clear and detailed case referral letters which give an assessment of the case, an outline of our investigation and its results, procedural requirements of client and approval of initial discovery.
Counsel is required to provide a legal assessment identifying alternative paths of resolution, as well as any complications or hindrances to the litigation objective. A litigation plan will accompany the attorney’s assessment, allowing the adjuster to make the appropriate economic judgment on the merits of each discovery or tactical recommendation.
As part of the litigation partnership, it is expected the adjuster will benefit from the legal talent of defense counsel. We require an approved litigation plan and budget, and pre-approval of all use of experts, legal research, and law and motion expenses. These measures ensure PCM maintains the responsibility for the economic decisions of litigation.
A dialogue between the PCM adjuster and counsel should be sustained throughout the term of litigation to reinforce and reassess the objective of the litigation. Reporting by the attorney is done not simply as a matter of calendar, but at any interval where significant facts or events may impact the litigation objective. Each report should indicate not only new developments, but also future strategy in order to fulfill the client’s objective. Counsel is required to provide their strategy at appropriate times in the litigation process to move the case to a resolution which will mitigate costs. Instances wherein we expect a strategy report from counsel include after depositions, pre-arbitration, post-arbitration, prior to status conferences and upon trial settings.
d. Alternative Dispute Resolutions
The client’s philosophy and preferences will dictate the use of mediation or other alternative dispute resolution methods. There are, however, many cases and situations where the consideration of those alternatives leads to a more cost-effective method of case resolution, either before or during the formal litigation process.
The following are examples where ADR might be effective:
Ê Cases where emotional issues drive the plaintiff’s demand, and/or where damages are either catastrophic or unreasonable which inhibits settlement. Mediation often creates an atmosphere where emotional issues may be aired and the settlement discussions may be focused on economic assessment.
Ê Many smaller exposure cases are “swearing matches” as to liability, where credibility of witnesses or presentation of disputed facts will turn the case on an “all or nothing” finding.
Ê In more complex cases where multiple parties must rely on the accumulation of technical documents from various sources, some of which are not forthcoming, the expense of a mediator to facilitate issue resolution may be economically sound.
e. Settlement Negotiations
We believe attorneys are retained to perform the legal work needed to resolve litigation; however, it remains the responsibility of the adjuster to complete all work that does not require an attorney. An essential element of this is the recognition that adjusters are often better trained for, and usually more experienced in, evaluating cases and negotiating settlement. Therefore, except in unusual circumstances when strategy dictates otherwise, the adjuster will prepare an independent evaluation of the case, secure settlement authority (if required by client guidelines), and proceed to negotiate a settlement. The file will reflect the basis of the evaluation and document all offers and counter-offers. Consideration of economic alternatives should be addressed in the evaluation, along with the issues of liability and damages, leaving the prerogative of economic settlement decisions to the client.
f. Trial Preparation
Counsel will be expected to draft a pre-trial report 45 days prior to trial. This report will provide an assessment of liability and damage issues and an outline of the projected course of the trial. The report will also include witnesses for both sides, experts, anticipated testimony, cross examination issues, jury verdict range, chances of prevailing at trial, and the identification of potential hazards and costs. Additionally, the pre-trial report will address motions in limine and applicable jury instructions, as well as information regarding the abilities of opposing counsel.
The client will be provided daily updates during trial.
A post-trial report will be provided by counsel, with any comments on issues which altered the outcome of the trial and recommendations on the satisfaction or appeal of the judgment.
g. Managing Litigation Expense
Litigation expense cannot be adequately managed without strict adherence to a policy of planning and assessment at all stages of the litigation process. Effective litigation cost control requires recognition and settlement of liability exposure cases prior to or early in the litigation. The second line of defense is strategic planning and constant re-evaluation for settlement and cost savings.
No expense should be incurred without an objective, and no course of action undertaken that will not move the case to the objective. It remains the critical responsibility of the adjuster to carefully review all legal bills for accuracy and compliance with the budget. Unauthorized activity should not be included. The bill should reflect the plan and the budget and variances will be immediately discussed with counsel and documented.
Recognizing our role with counsel is a directed partnership, billing questions will first be treated as professional inquiries with formal documentation of the action taken. Unresolved issues and repeated occurrences of discrepancies will be addressed formally, with appropriate recommendations made to the client.
To achieve this we will:
• Comply with any litigation management special handling procedures
• Attempt settlement of the lawsuit or seek an extension of time to respond, if appropriate, before assigning to defense counsel
• Use mediation or arbitration, when appropriate
• Monitor defense counsel activities
• Develop strategies with defense counsel
• Perform additional investigation, as appropriate, during discovery
• Actively seek opportunities to open settlement negotiations resulting in cost-effective resolution
• Require defense counsel's adherence to billing and reporting guidelines
• Audit legal bills for accuracy and compliance with billing guidelines
• Negotiate hourly rates or alternative fee arrangements with counsel
• Use designated vendors resulting in cost savings from negotiated fees
Efficient claim disposition requires that all claims be accurately evaluated in light of the facts, policy provisions, prevailing law and equity. These claim handling guidelines will be as follows:
• Evaluate early in the claim whether a settlement will be owed
• Review reserves and authority levels
• Settlement authority is obtained when appropriate
• Pursue any necessary medical report needed to evaluate settlement
• Determine the settlement value of the claim and document the reasoning
• Comply with any special handling instructions on informing accounts or obtaining authority
• Acknowledge all lawsuits to the insured as soon as practicable, but always within five business days
• All claim discussions and negotiations will be conducted in good faith with the insured, claimant or their legal representative
• Inter-company arbitration, special arbitration and other forms of alternative dispute resolution will be used in resolving disputes on appropriate cases
• Structured settlements will be used, when appropriate
• Final settlement of claims are accompanied by legally appropriate releases
We will identify, investigate and aggressively pursue all cases involving possible subrogation, third-party contribution, indemnification or offset. Sound judgment is used in determining whether the amount involved would justify the cost of pursuing the recovery.
Recoveries are optimized by:
• Obtaining complete information via a thorough investigation
• Interviewing witnesses
• Collecting material evidence
• Promptly placing responsible third-parties on notice
• Utilizing the special investigations unit
• Aggressive use of inter-company arbitration forums, other alternative dispute resolution forums, vendors, or take legal action to maximize recoveries
Aggressive pursuit of recoveries results in:
• Recovery of loss dollars, including deductibles
• Recovery of legal dollars
• Reduction of loss payments
• Reduction of legal payments
• Favorable impact on future insurance costs