Defining Insurance Defense Law Firms
Insurance defense law firms are companies that represent insurance companies in lawsuits. All the time, but especially when an insurance company evaluates a new claim – they want to know about their risk exposure. So, they turn to defense firms like ours to stay on top of all the latest cases and trends. The firms specialize in defending projects, companies and professionals for claims of negligence, breach of contract, breach of fiduciary duty, and fraud. Our clients include insurers from all lines of business – workers’ comp, general liability, and professional liability insurers . We also provide support and consulting services that allow our clients to maintain a competitive edge.
Insurance defense is a branch of law involved in defending the client (the insurance company) against personal injury and similar claims filed by an individual or entity against the clients’ policyholder. In these cases, the provider retains the law firm as a contractor to act on their behalf. Because the insurer is paying the law firm, they have oversight over what actions they can take. The primary responsibility of the law firm is to intelligently and responsibly defend the client against charges, while keeping in line with their budget and benefit the business overall.
Common Insurance Defense Law Firm Services
Insurance defense law firms cover a broad range of legal services. Most notable in their field is litigation, the legal process of taking legal action against a person or entity. Litigation typically begins with a complaint or claim being filed by one party to another. The insurance defense attorney then seeks a response from the defendant, and an answer from the plaintiff. The litigation may involve multiple pre-trial procedures that occur over several months. These procedures can include interrogatories (written questions answered under oath), depositions (live questioning under oath), and discovery (exchange of information between parties). At the conclusion of the pre-trial procedures the parties usually engage in settlement talks. If no settlement is finalized, then trial will occur. Litigation is a common, but time-consuming process for an insurance defense attorney. Apart from litigation, there are other practice areas served by this type of law firm. A policy coverage analysis can be conducted to determine if a claim will be covered or excluded by the terms or conditions of policy. An eminent domain case can be pursued, along with negotiations to acquire land. Insurance defense attorneys further handle in-person and telephonic negotiations with claimants and policyholders, and review and draft appropriate letters and communications with claimants and policyholders. Typical cases handled by an insurance defense law firm include mold molds, insurance coverage disputes, adverse possession, trespass, easement violations, injunctions, construction claims, and claims related to property damage or personal injury.
What is Insurance Defense?
Insurance companies depend on defense law firms to handle claims and protect their interests. Very often, insurance companies quickly find that the claimants that come to them are not at all who they appear to be. Fraudulent acts on the part of claimants can easily thwart legitimate insurance companies. It is therefore the very first step on the part of the insurance company to protect itself from these claimants. Further, when an insurance company is faced with a claim that is impossible to determine as fraudulent or not fraudulent, an attorney must prepare all of the arguments for and against the claim to be presented to a jury. All of the costs associated with presenting those arguments must be covered by the insurance company so it can properly argue an appropriate amount for the insured to have to pay for damages that were incurred.
To get ahead of the game on the information they would need to defend a claim, insurance companies are best off investigating the matter prior to the claimant bringing the action against its insured. That requires an attorney. Sufficient time must be available so the investigating attorney can properly represent the client.
Over the years, many insurance defense attorneys have learned all of the particular rules and nuances that might impact the best way to protect their client’s interest. Most of these attorneys have good relationships with judges so they can properly pre-try the case leading up to its actual trial. Insurance companies always benefit from an attorney who is able to prevent the case from going to trial and/or negotiating a fair settlement for their insured.
How to Find the Right Insurance Defense Firm
One of the most critical steps in ensuring quality insurance defense is choosing the right insurance defense law firm. Traditionally, most insurance companies have employed two or three insurance defense firms to handle their claims. In many instances, this has been a big mistake. We all know the statistics: partnerships and law firms break up (and sometimes shred the documents) with surprising regularity. Sometimes partners are forced to take "side trips" down other practice areas because of the lack of work in their principal line of work. These "side trips" often divert the firm’s focus and resources away from its core area of practice. Both reasons for abandoning the area of insurance defense are fatal to the insurance company who winds up with the "leftovers." The firm may fault the insurance company for the lack of work or the insurance company may fault the firm for the lack of quality of defense. In any event, the strained relationship will often times lead the insurance company to seek out the next firm to oblige the insurance company’s directive that they drop everything and represent the insurer in whatever case or cases notwithstanding the firm’s lack of knowledge of the case or the subject matter.
Some of the factors an insurance company should consider in selecting an insurance defense firm include: Historically, to ensure a good working relationship, insurance companies would contract their favored firm(s) and then send retaining letters advising the firm of the covered matters, the nature of representation, and the general arrangement to pay hourly rates and expenses. To ensure quality representation, attendance at seminars, workshops, and CLE’s have been required . In addition, the insurers would meet with the firm on a quarterly, biannual, or annual basis. These communication procedures were routinely followed and the insurance companies became satisfied their representation was in good hands. Over the last several years, those days are gone. Now, in many instances, the insurance company sends a form retention letter to the firm. The firm must send back another similar form letter affirming it has read the guidelines and will adhere to them. If there are any disagreements, they must be raised before the firm will be deemed to be in compliance with the guidelines. While the procedure itself does not seem to be unreasonable, in practice it has become so. In fact, the defense firms are usually surprised, if not aghast, at the limited issues the insurer seeks to raise for further discussion. This premise is based largely on the insurance company’s belief current counsel are experienced and well versed in defending the policyholder. In addition, the insurance companies seem to be of the belief that they have little to do with the finances of prospective defense counsel. They merely review bills and determine whether they want to accept them at all, much less at the recommended or submitted amounts. As a result, it seems the quality of the representation is not of the utmost concern by the insurance company. It simply wants to know the invoices are submitted timely and reviewed promptly. Furthermore, even though attorneys have by and large already met the CLE requirements, they seem to be of little concern to the insurance company. As a result of this neglect in checking and balancing the insurance company’s selection for insurance defense counsel, many insurers are unknowingly choosing the wrong law firm to defend their insureds.
Insurance Defense Law Firm Challenges
These law firms are also faced with other challenges that could make their work more difficult. For one thing, insurance defense attorneys have to frequently stay updated on the many different kinds of laws present throughout the country. They need to know what laws apply in each situation and what kinds of defenses are possible. Another issue is that the attorneys need to maintain an awareness of any new regulations that are emerging. These could impact how policies are written, as well as changes to certain statutes.
Insurance defense attorneys have to regularly balance their practices with the demands of their clients. This requires them to keep their schedules in order while being flexible enough to adjust their plans if something unexpected should occur. In addition, they need to understand the goals and interests of their client. The attorneys also have to make sure that any large case loads are managed properly.
There are many other issues that insurance defense attorneys need to stay on top of. While they need to be masters in their craft, they also must be diplomats. When there are different interests at play, they often have to resolve even the broadest differences among the various parties.
They need to constantly hone their skills as negotiators. In addition, insurance defense attorneys need an understanding of courtroom procedures and rules. They need to know where they can turn for answers to even the most obscure legal questions.
The Future of Insurance Defense
As with most areas of law, insurance defense is not without its next evolution. Technology, industry trends, and regulatory changes often drive these evolutions. From electronic evidence to data security and beyond, legal technology is evolving at a rapid rate. Law firms already use virtual assistants or document review software instead of paralegals, have trial presentation software that can kill time at trial, and file electronically. Nonetheless, software continues to get smarter – "predictive coding" uses software to allow more files to be coded and on a quicker time-line and artificial intelligence can even analyze case law. It is only natural, as these processes become more efficient, that firms continue to enhance their own skills to remain competitive. This, in turn, has led to the rise of industry certifications, awards, and publications that demonstrate increased expertise in a specific area . Beyond software, the insurance industry itself is rapidly changing both its fundamental products, including the new wave of cyber insurance, and the way in which it evaluates claims. For example, State Farm now has a system to evaluate less severe auto accident claims with a static damage estimate to encourage those with similarly situated cases to settle rather than litigate. Additionally, State Farm announced that it will offer discounts to policyholders if they allow cameras into their cars to evaluate driver safety. Meanwhile, the volatility in the stock markets has insurers hedging investment risks and evaluating the benefits of utilizing float as a means for other investments. The regulatory environment is also ever-changing, from tepid responses to natural disasters to new regulations requiring more robust cyber-expertise within insurance companies. Heightened enforcement and other shifts in the regulatory environment can make what was previously considered best-practice seem inadequate or create a niche area of law where none previously existed.