Magazine article Risk Management

A Case Study of Litigation Management by Extranet

Magazine article Risk Management

A Case Study of Litigation Management by Extranet

Article excerpt

IT WAS ONCE the bane of attorneys everywhere: the dreaded exit. Now, those same attorneys cannot live without it. Claims adjusters and in-house attorneys swear by it because it has dramatically changed their practices--for the better.

An extranet is a restricted-access, Web-based network that crosses organizational lines. It is bigger than an intranet and smaller than the Internet. Over the past few years, larger self-insured companies have begun using extranets to manage litigation. They serve as a quick, efficient means of communication between attorney and client, and can be structured so that the client chooses which attorney is able to see what information. Some data--such as basic information about the client, its policies and procedures--may be accessible to all of the client's attorneys, while some information placed on the extranet--such as the contents of a specific case file--is accessible only to the attorney assigned to a particular legal matter.

Resistance to Change

When outside counsel were first notified by their clients that they would need to begin communicating, submitting bills and--generally--handling litigation files through a personal computer hooked up to the clients' private litigation management Web site, many balked, but the objections were weak: "It will just increase our costs and we'll have to raise our rates," "It will constitute a waiver of the attorney-client privilege," or, "We don't have the technology to do it."

Actually, law firm costs decreased as a result of savings in stationery, envelopes, postage, clerical time and dramatic increases in productivity. Initial concerns about waiving the attorney-client privilege proved to be groundless since the extranet is merely a different form of confidential communication between the client and its legal representatives. There is no disclosure of the information to a third party. In fact, confidentiality is actually better protected because online communication is more secure and private than low-tech communication via letter, fax or phone. And the technology requirements are simple: a personal computer with a Web browser and an Internet connection.

Any number of attorneys for a particular client can access the client's extranet site (using a confidential password) and view and download nonprivileged information (company information, witness information, information commonly requested in discovery) that may be helpful in the representation of the client. Only the attorney assigned to a lawsuit, however, can access the information on that particular lawsuit. Thus, confidentiality is maintained.

An Extranet Management Success Story

One of the real success stories of litigation management in the past few years has been the ability of both insurance companies and self-insured businesses to reduce costs in the face of more lawsuits and more costly verdicts. Alternative attorney fee arrangements, dedicated claims adjusting units, use of in-house attorneys and greater use of technology have all played a role in increasing productivity and reducing overall cost. But the advent of the extranet has proven to be the biggest reason for success for many companies.

At any given time, Kmart Corporation, in Troy, Michigan, has thousands of open personal injury and other tort cases pending in fifty states, Puerto Rico, the U.S. Virgin Islands and Guam. These cases are handled by outside counsel, who report to TPA adjusters, who report to in-house attorneys, who report to the company's risk manager.

The cases used to be handled the old fashioned way: a new lawsuit would be received by the registered agent, reviewed and then forwarded to the defendant's headquarters, reviewed by in-house counsel, forwarded to the adjusting company, reviewed by a supervisor, reviewed by the adjuster and then forwarded to outside counsel. Along the way, the pleadings were photocopied three times, mailed or overnighted three times, three paper files were opened and then put in a file drawer, and three transmittal letters were dictated, typed and mailed. …

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