A client's view of law firm change: opportunities for improvement.

• Author: Hogan, R. Todd

AN INSURED looks to the insurer to satisfy two promises--to pay what is owed and to provide a defense. The operation of a successful law firm helps the insurer project to the insured that the promises will be fulfilled. Conversely, law firm disruptions reflect poorly on the insurance company's ability to provide the quality defense needed. Because trial attorneys have wonderful adaptive skills, change should be their ally. They can skillfully change their course to take advantage of the resources and opportunities available. In the new economy in the United States, their talents as trial attorneys have the potential to put them several steps ahead of most businesses.

The insurance industry needs a strong defense bar. The knowledge and information defense counsel provide enables claims handlers to satisfy claimants and settle cases fairly. Because 95 of 100 cases settle before trial, timely information is more prized than extraordinary trial skills. Trial skills may assist the industry in paying what is owed, helping to control unreasonable demands, and permitting truth and justice to prevail. But timely information allows the claims handler to get the job done.

WHEN BREAK-UPS OCCUR

A change or disruption in a law firm affects the flow of that timely information and costs clients money. As a purchaser of "knowledge services" from attorneys, the insurance industry needs to protect against that disruption of information. It protects itself internally with policies and procedures and externally by observing law firms for evidence of poor management, which leads to disruptions.

Each company, each major client, has a philosophy for dealing with discontinuity of information caused by a law firm break-up., If an attorney handling a file decides to leave, the insurance company can either stay with the firm, follow the attorney or give the file to another law firm.

Following the attorney runs counter to the recent policy of paring down the number of panel counsel. So a company has reasons to stay with the present firm and not to expand the panel as each group of lawyers leaves. To allow files to follow departing lawyers is not only disloyal to the firm, but it also encourages instability within these business partners and tends to undermine the discipline in the claims organization.

If staying with the firm can be characterized as the preferred rule, there are still reasons to depart from that rule. A suit may be close to trial, or the insured client have have developed an important working relationship with the trial lawyer, or the firm no longer wishes to do this type of work. Because of the complexities each of these situations brings, the litigation manager appreciates early notice of disruption.

Where a firm break-up is amicable, the attorneys should let the insurer know as soon as possible, to discuss opportunities for peaceful, non-disruptive placement of files, and the continuation of the relationship with the client-insured. If the break-up is not amicable, and guards stand at the doors to protect files and equipment, the insurer still needs to know what is happening. To whom should the claims handlers turn for information and reports? Will mail be misdirected, delayed or lost?

IADC member R. Todd Hogan, C.P.C.U., is Director of Legal Services at CCC Information Services Inc., Chicago, which provides services to the insurance industry and its vendors. A graduate of the University of Notre Dame and the University of Arkansas Law School, he has practiced law in Illinois for 11 years, prior to spending the last nine years managing the Claims Legal Services Division at CNA Insurance Cos.

The earlier that information is given to the insurer, the more in control the firm appears. Confidence develops in the continued vitality of the firm, and that over the long run, the insurer is doing business with a capable business partner.

As with any other communication, accuracy gives the firm tremendous credibility with the insurer. It doesn't need to know all the dirt, doesn't care about the recriminations, and certainly doesn't want to score the fistfights in the hall. That will come out later anyway. The insurer wants to understand the plan...