Category Archives: Litigation Management

Nothing Has Changed in Litigation Management: Why Your Current Strategy May be Extinct

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Is your claims litigation management strategy stuck in the Jurassic era? If you’re still relying on the same old methods of stringent guidelines and micromanaging counsel hours, I hate to break it to you, but you’re piloting a prehistoric beast in a world of modern marvels.

Let’s face it, folks. The approach to claims litigation management hasn’t seen a major evolution since billing systems were implemented over 25 years ago. For decades, we’ve been clinging to the same two strategies:

  1. Implement ironclad litigation guidelines
  2. Scrutinize every billable hour like it’s the Da Vinci Code

Sound familiar? I thought so. But here’s the kicker – these antiquated techniques aren’t delivering the stellar results you’re after. It’s time to shake things up and re-examine your approach.

3 Reasons Your Old-School Approach is Failing

  1. It’s All Stick, No Carrot – Stringent guidelines and hour-by-hour oversight create an adversarial relationship with your counsel. Instead of fostering collaboration, you’re breeding resentment. And let me tell you, a resentful attorney is rarely a cost-effective one.
  2. You’re Focusing on the Wrong Metrics – Obsessing over billable hours is like trying to lose weight by weighing yourself every hour. It’s the outcome that matters, not the minute-by-minute process. Your fixation on hours billed is blinding you to the bigger picture of case outcomes and total cost.
  3. It Stifles Innovation – When attorneys are more concerned about adhering to rigid guidelines than finding creative solutions, you’re shooting yourself in the foot. The best legal strategies often come from thinking outside the box, not coloring inside the lines.

The New Era of Litigation Management

So, what’s a forward-thinking claims leader to do? It’s time to evolve, my friends. Here are three strategies to catapult your litigation management into the 21st century:

  1. Embrace Outcome-Based Billing – Instead of nitpicking hours, focus on results. Implement a billing structure that rewards efficiency and favorable outcomes. When your interests align with your counsel’s, magical things happen.
  2. Leverage Predictive Analytics – Use the wealth of data at your fingertips to predict case outcomes, optimal settlement points, and litigation costs. Let technology be your crystal ball, guiding your strategy from day one.
  3. Foster True Partnerships – Treat your panel counsel as strategic partners, not adversaries. Regular strategy sessions, open communication, and mutual goal-setting can transform your relationship and your results.

Time for an Extinction Event

It’s time to face facts: your old litigation management strategy is a dinosaur, and the meteor is coming. You can either evolve or go extinct. The choice is yours.

Remember, in the world of claims, it’s not the strongest that survive, nor the most intelligent, but the ones most responsive to change. So, are you ready to leave the Jurassic era behind?

What’s holding you back from evolving your litigation management strategy? Or if you’ve made the leap, what results have you seen? Share your thoughts in the comments below – let’s start a revolution!

Getting Creative And Reducing Claim Costs Without Sacrificing Quality – Part II

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Building blocks on which to create a new foundation to improve processes

Last month, I discussed the building blocks needed to reduce claim and litigation costs, while still maintaining a strong focus on quality. Those building blocks included:

  • collecting current data about your claims and litigation
  • evaluating the claim and litigation work itself
  • settling on a carrier claim and litigation handling philosophy

These building blocks create a foundation on which to build new processes and procedures that will reduce your claim and litigation costs, and maybe even decrease you volume as well. I refer this building process as looking at What I Have, What I Want, and What I See.

What I Have – All This Data

The data you collected regarding the current state of your claims and litigation is an excellent starting point. Examine your data and identify the areas that you wish to improve.

For a couple of reasons, while the amount of your legal spend may a visible target for improvement, don’t spend too much time on rate-issues first.  This is because the impact of improved processes and procedures will likely decrease total spend naturally, without having to address rate issues. Focus instead on issues like overall litigated volume (the number of pending litigated claims), cycle time (the average amount of time litigated claims take to close from inception), severity (of your pending litigated claims), and other factors. Developing processes and procedures that improve these other factors is a good starting point.

What I Want – Creating The Benchmark

Look again at your non-dollar data. Think about what you believe those numbers should reflect. For instance, if the average time it takes a litigated claim to go from inception to closure is two years (730 days), you know that, on average, you will be paying panel counsel for two years to bring that matter to a close. Based on your knowledge and you your industry contacts, determine whether this number appears high. Do this for other non-dollar metrics that you have measured.

Look at each area you wish to improve and consider a practical benchmark and goal you would like to achieve. My advice is to not set arbitrary goals, as they bear no particular relation to what you will be able to achieve, and thus set your organization up for disappointment or worse. Instead, work with stakeholders in the process and think about how your metrics work together to form a complete picture.

Set incremental measurement points. Hypothetically, you may be starting with a two year cycle time and wish to set a benchmark objective of reducing that by six months, followed by a long-term goal of reducing it to one year. Again, always make sure that your objectives align with the other information you are obtaining. Do your objectives make sense in light of the jurisdiction, the severity of the portfolio, the type of case, and the claims handling philosophy of your organization?

You may have a very diverse book of cases and wish to develop benchmarks and goals first by line of business, or by stakeholder. In fact, when you start objectively considering all of the factors involved, you may end up with benchmarks and goals that look something like this:

  • Overall Litigated Claim Pend Time – Current Average: 730 days
  • Motor Vehicle Accident (simple): 550 days (benchmark); 365 days  (goal)
  • Product Liability 700 days (benchmark); 650 days (goal)
  • XYZ Claim Professional 680 days (benchmark) ; 600 days (goal)

These numbers are purely arbitrary for the sake of example, but they are illustrative of processes you may wish to consider when examining your current situation and deciding how you’d like them to look in the future.

What I See – You Have To Look At What Is There

A continual focus on quality is critical. Higher-quality claim and litigated file management results not only in lower indemnity payments, but in decreased costs as well. As someone who has managed thousands of files with bad faith allegations, there is nothing more expensive than trying to successfully litigate a poor quality claim file.

One of the core building blocks of the process are evaluations – evaluations of all professionals involved in your litigation life-cycle, from claims professionals to attorneys. In looking at those evaluations (whether through internal or external audit), identify those practices that need to stop and those that are more likely to extend the cycle-time of your cases.

A simple example — in reviewing a number of litigated claims last year, I noticed a consistent pattern of defense counsel granting numerous extensions to opposing counsel to respond to written discovery. These numerous extensions were causing files to last for months with no activity (other than counsel billing for those activities associated with granting the extension). During my review, I made note of such patterns and then developed ways of addressing them through new procedures and processes. In addition, I also considered what I discovered in these evaluations and my solutions for addressing these issues in my benchmarking and goal-setting.

In the next and final part of this series, I will explore the nuts and bolts of the procedures, processes and guidelines that can be used when moving forward with a revamp of your litigation management system.

Time to Get Creative – Reducing Claim Costs without Sacrificing Quality (or your sanity)

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Bright ideas will help reduce legal costs while still getting great service

Even as the country continues its difficult economic recovery, Moody’s recently concluded that P&C personal lines insurers remain financially sound. While such a report is good news, Moody’s also noted that challenges such as rising claim severity trends and significant property catastrophe risk remain. All this leads to an increased pressure to reduce costs and close claims.

The reality that claim and litigation departments are cost centers as opposed to income generators increases these pressures. Claim and litigation departments are also asked to do more with less resources and are under increasing pressure to close claims and litigated files faster than ever, while still maintaining claim handling and litigation management best practices. With all these challenges, how do claims professionals succeed? They get creative.

What You Know and More Importantly, What You Don’t Know

Before you can make changes and employ new processes, you have to know what you know and what you don’t know.  Obtain as much information as you can regarding the following:

  • Number of current litigated and non-litigated claims, broken down by type and severity
  • Average length of pending litigated and non-litigated claims
  • Average cost per closed litigated and non-litigated claim file
  • Average number of days necessary to close litigated and non-litigated claims
  • Average amount paid (indemnity) per closed litigated and non-litigated claim

These are just the basics.  If you have more information available, get it.If you don’t have this information, you have gained some valuable knowledge as well, namely, that you will need to develop or implement ways of tracking such information as part of your plan.

Who Is Doing the Work?

Next, you have to evaluate the strengths and weaknesses of your claim handlers, claim managers, outside counsel, and any other vendors you employ to handle claims and litigation.  If you haven’t formally evaluated these folks in a while, now would be a good time to do so.

Find out what they do, how they do it, and ask them for feedback regarding how they think that they can do their jobs better.  One of the biggest problems I’ve seen are companies that get in the way of their employees being successful often through employing processes and procedures that look good on paper, but don’t make sense in practice.  The only way to know if this is occurring in your organization is to spend some quality time with the people who are doing the work.

And don’t leave out the lawyers!  Although some may believe that panel counsel are only interested in billing you as much as they can, the good ones are also in an excellent position to know if your litigation procedures are costing the carrier money.  They can also provide procedural and process changes that may result in moving litigation to conclusion more quickly.

Know Thy Carrier

While all carriers want to decrease costs, decrease claims, and decrease litigation,  there are different philosophies as to how to accomplish these goals.  Some carriers may want to avoid litigation at all costs because they don’t want to pay legal fees and thus, they may be willing to pay more on questionable claims in order to avoid litigation.  Some carriers may want to take a hard-line approach with all claims and litigation (i.e. if they can’t prove it, we’re not paying it).  Some carriers take a more practical, business approach and want to do a cost-benefit analysis regarding the payment of claims and litigation.

You must know your carrier’s philosophy before you can make changes that count.  Moreover, the philosophy you choose is the one that is going to be the face of your claim and litigation department for the world to see, so make sure it’s the face you want to display consistently.  Companies that do not have, or do not know, what their claim and litigation philosophy is will not be successful at consistently reducing costs and closing claims and litigation.

In order to develop your philosophy, you will need to work with the balance of senior management and other relevant stakeholders to discuss the options and arrive at a conclusion that everyone is comfortable with promoting throughout the organization. Depending upon the size of your carrier, the number of people involved, and the difficulty you have obtaining information, going through steps one through three may take approximately two to six months.  However, once you complete these steps, you will be armed with everything you need to sit down and draft your new claim and litigation management plan.

Check back in December for part two of my blog that will discuss initial steps in your new claim and litigation management plan and provide an example of a plan that was successful for me.

3 Ways To Help Defense Counsel Help You Make Claims Management More Efficient

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You can’t always get what you want but you can get what you need – If you ask for it!

Thank you Rolling Stones for reminding me what sometimes needs to be done to help get the job done better. As claims professionals we are always being stretched to do more with less, and sometimes can never get what we need from our partners in the industry; our hired defense counsel.  Getting to the basics of claims management to evaluate losses, setting reserves and moving a case to resolution requires a good partnership with counsel. Given the current economic environment it has never made getting what you need from defense counsel so important.

So if you can’t always get what you want, less files and more staff to help, how do you get what you need to help?

Here is a novel response: Ask for it!

Defense counsel correctly spends much of their time focused on defending their clients. Unfortunately, and all to often, many counsel reports are designed to justify some activity in the invoice rather than providing useful information. Does reporting about sending medical authorization out really provide any valuable analysis to help the claims professional make a reserve or resolution decision?

Getting what you need

So how does one focus counsel to help provide better information for claims?  Try these three suggestions to help them help you get better results:

  1. Educate counsel on the world of claims – Attorneys are great at defending their clients, but many no very little about what goes into a claims professional’s day.  When speaking to attorney friends I am often amazed how little they truly know about the day-to-day business of claims.  Spend a few minutes telling your counsel about your claim file responsibilities such as reserving, regulatory requirements, documentation and how many files you have, will help the understand your needs better.  Even a basic discussion of file counts will enlighten counsel to what it means to have to go through hundreds of correspondence a week while still having to make appropriate decisions.
  2. Give counsel a clear understanding on what you need to make decisions – If you want counsel to provide damage assessments early in the case, even with limited information, then tell them exactly what you expect and hold them to it. If you don’t want them to put a number on a file until discovery is complete then be clear about that too (although I would not recommend waiting till the end – and we can save that for another blog article). Today’s attorneys are being asked to complete different reports and forms and follow different reporting guidelines for a variety of clients.  If you don’t tell them specifically what you need to help you get your job done then you will never get what you need. It may take a little extra time when the case is assigned, however, it will pay dividends down the road with information that will help you make claim decisions better.
  3. Be persistent – The squeaky wheel always does get the grease. Attorneys I speak to want the interaction with their clients. If counsel doesn’t provide you what you need then call them up and remind them again. Getting what you need requires a little effort and there may be a break in period where they learn exactly what works and what doesn’t. Accepting what has always been is no way to ever get what you really need. So speak up, don’t be shy, and don’t accept what hasn’t worked in the past.

No attorney is going to say that they don’t want to make a claims professional’s job easier, so help them to help you. Start by telling them what you do, ask for what you want, and then make sure they do it.

You may not get what you want all the time, but you will get what you need.

How do you help counsel help you?

Thinking Outside The Box: Litigation management program initiatives can substantially lower costs

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There is money to be saved by managing the litigation puzzle

Managing litigation is an easy way to save extra expense costs on claims files. A strong litigation management program designed to help foster improved communication, and streamline defense of insureds, benefits all parties involved. As I wrote about the cost savings benefits of out-of-the-box claims handling, using new and forward thinking strategies for litigation management is an excellent way to save money as well. This is even more important in complex litigation found in the areas of product liability, class actions and D&O claims where defense budgets can often trump the loss side of the claim.

A different perspective on how you can manage the larger litigation process

I was recently reading about cost reduction in the Sophisticated Litigation Support blog by Kevin Brooks, Managing Partner of Teris, a litigation support company. These types of companies provide eDiscovery and document management services that can significantly reduce expenses in litigation. Managing eDiscovery and other large document productions is a critical step to control defense budgets.

In his article, Is your outside counsel costing you time, money and case results?, Kevin explains why this vendor–provided service can be particularly beneficial:

You may believe that litigation support management is better left to your outside counsel. And in some situations, this may be true. However, in many cases your law firm could be costing you time and money, as well as affecting case outcome. Law firms are experts in the law, but very few have the resources and data expertise to manage your litigation life cycle properly.

If you take a more active approach by utilizing different types of vendors that compliment each other, you can considerably reduce spending while also having confidence that your operation is both efficient and effective. You as a claims person can proactively manage those services by leveraging specialized vendors instead, at a much lower net expense.

Kevin’s article continues with a list of ten important reasons for why your organization should hire a Litigation Support vendor directly. Four of the ten stand out as significant cost reduction opportunities:

Cost and Expense Forecast – Consult directly with data experts to more accurately identify costs for each project and keep expenses down. Vendors can also help cut future costs by proactively consulting on your data.

Budget Management – Identify points of savings by being able to initiate volume discounts. The service provider can extend volume discounts as they build long-term relationships directly with corporations. You can also avoid the markup from some law firms which could increase your costs for services from 25 percent to as much as 100 percent.

Streamlined Litigation Management – Reduce the number of vendors your corporation works with. This is especially relevant if your company works with several outside counsels and all have their own separate lit support vendors.

Resources – Access the most cutting-edge technology for handling data. Small and medium-sized law firms may not have an in-house IT department to manage large numbers of electronic documents.

I have been involved in a number of litigation projects that would have significantly benefited from support services provided by companies such as Teris, Xerox Litigation Support , Trial Solutions and others (as a side note, I have not worked with any of these vendors and cannot specifically endorse their services here). Litigation costs can get out of hand on large cases in a hurry so paying close attention to them is essential. The largest part of those costs can often be the handling and management of documents and eDiscovery, and not all attorney’s have the skill and technical capabilities to handle the types of services supported by these vendors.

In addition to those mentioned above and in Kevin’s article, there are many different kinds of vendors available to help lawyers streamline the litigation process. These include medical records retrieval companies, litigation graphics and video reenactments to name a few. Claims managers can and should suggest using additional resources to assist law firms which will also help lower litigation costs.

Evaluating your total litigation management process to streamline the procedures, understand the costs in advance, and ensure resources are effectively allocated, will allow for proper expense reserves to be set, and in the end reduce the amount of money spent.

A note on expense reserves

Expense reserves are often the forgotten stepchild of the reserve process. Many time claims handlers will adjust the expense reserve in the beginning of the claim and then increase it over time as expense bills come in. Good claim handlers will establish litigation budgets and evaluate expense reserves in a similar manner as a loss reserves. Regardless, ensuring expense reserves are accurate will help you manage costs across the board and enable you to truly understand the true expense exposure to your organization.