Pelland, Dave, Risk Management
Runaway defense costs and surprisingly large settlements are more often signs of ineffective litigation management than unfavorable laws or jurisdictions, according to Mick McGavin, manager of safety planning and claims for Johnson Controls, Inc., in Milwaukee. To gain better control of his company's workers' compensation lawsuits, Mr. McGavin has developed a total quality management approach to litigation -- a process that generates positive results consistently by eliminating variability.
"The quality of your defense counsel and your preparation play a big role in determining the ultimate cost of litigation," Mr. McGavin says. "You have to decide how you want the cases to be handled, reduce your desired procedures into a single policy and make sure that those guidelines are followed in every case."
Mr. McGavin implemented the multistep process to controlling litigation after an examination of his company's workers' compensation results.
"Our large cases represented a majority of our total cost, even though they were a small percentage of the number of cases," he says. "Because most of those were litigated claims, we realized that controlling the quality of our litigation process would reduce our overall cost."
To improve its litigation program, Mr. McGavin says Johnson Controls retained a legal firm to help the company identify best practices such as proper planning and budgeting, and to work with local counsel to make sure the desired procedures were followed.
As a result, Johnson Controls implemented a multistep litigation management process that requires its local attorneys to prepare a preliminary analysis of each case. The process also includes progress measurements and checklists to monitor the various steps that must be completed while a case is pending.
The preliminary assessment begins with a detailed look at the issues being disputed in the underlying claim and predictions of the most likely and worst-case outcomes. Attorneys also prepare budgets for defending lawsuits. In addition, Mr. McGavin says, he asks for an estimated timetable, which aligns everyone's expectations and preserves a sense of urgency.
"Estimating the likely outcome and the worst case helps us identify the risks we face by pushing a case forward, which puts the case into better perspective," Mr. McGavin says.
At this stage, the company also asks its attorneys to identify the likely employment outcome. Whether the employee intends to return to work or is likely to be fired will influence the ultimate disposition and cost of the case. …