Magazine article Risk Management

Litigation Cost Control Seen as Dominant Issue

Magazine article Risk Management

Litigation Cost Control Seen as Dominant Issue

Article excerpt

Litigation Cost Control Seen as Dominant Issue

Throwing caution and perhaps physical safety to the wind, seven attorneys, six risk managers and one hybrid (an attorney from RIMS) braved a cold Chicago day to stage a forum. The meeting, held in mid-February, proved to be not only civil but informative.

The attorneys, Chicago members of the American Bar Association Tort and Insurance Practice Section's Self Insurers and Risk Managers Committee, and the risk managers, members of local RIMS chapters, established litigation cost control as the dominant issue of concern. A suggestion was made that risk managers control litigation through a hands-on approach, in conjunction with corporate counsel. One participant noted that risk managers often use the same attorneys for all disputes, even though they may not be the most qualified for handling certain cases. Some of the risk managers, on the other hand, complained that attorneys want litigation to drag on, greatly increasing defense counsel costs.

The discussion then turned to alternative dispute resolution mechanisms. Although one attorney cautioned that arbitrators do not always understand complicated legal issues, another attorney said risk managers do not fully explore ADR options. He noted that the U.S. Supreme Court has made a policy of enforcing arbitration contracts and suggested that arbitration between sophisticated parties be nonbinding for non-tort actions. In conclusion, participants discussed how ADR forces parties to think about their cases earlier. Nonbinding mini-trials, in particular, are good indicators of a case's strength, and at a minimum, ADR may settle some discovery issues.

When insurers and insureds are codefendants, risk managers were advised to discuss the handling of the case with their insurer and their insurer's attorneys because the parties' objectives may be different. An attorney suggested that insureds in such situations look for a conflict of interest so the court or the insurance carrier will allow the insured to hire its own attorney at the insurer's expense. One risk manager said he tries to get a conflict-of-interest clause in his insurance contracts.

The discussion turned to sharing agreements. An attorney suggested that, at a very early stage, all potential defendants meet to create a game plan. Any differences can be arbitrated at a later date. The attorney noted that self-insurers are often open to such an arrangement, but insurers usually are not. However, one risk manager had a bad sharing agreement experience because the codefendants did not act in his company's best interests. …

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