Be a defense lawyer: help your clients minimize losses.

• Position: Part 3 - Manual for lawyers representing insured defendants

Help Your Clients Minimize Losses

In keeping with the limits on a carrier's contractual authority to hire an agent for a policyholder, a defense lawyer's job is to defend a policyholder against the claims asserted in a complaint. This is the only job a defense lawyer has-indeed, the only job a defense lawyer can have for a policyholder--and a defense lawyer performs it competently and successfully by recommending strategies that are expected and intended to efficiently minimize the loss to the claimant.

Loss-minimization is a goal usually shared by an insurer and insured. In the vast majority of defensive representations, an action that reduces the amount paid to the claimant will help at least one of the two clients without making either worse off. Often, such an action will help both clients by reducing both the carrier's expected pay out and the insured's exposure above the policy limits.

Loss-minimization also is the goal embodied in standard contracts of insurance. These contracts transfer the liability exposure from the policyholder to the carrier and equip the carrier to manage the risk. The carrier's tools include the right to investigate the claim, control of defense, discretion to settle, and the right to the policyholder's cooperation and assistance.

To help carriers minimize losses efficiently, defense lawyers must be sensitive to defense costs as well as to the impact defensive maneuvers are likely to have on the outcome of litigation at trial. Most lawsuits settle. From a client's perspective, it is a waste of money to prepare extensively for a trial that will not occur. Consequently, the best reason to spend money preparing a lawsuit for trial is that these preparations make settlements cheaper. Before advising an insurer to spend additional dollars defending a claim, a defense lawyer should always consider whether, with reasonable probability, the outlay will help the carrier close the file more quickly or inexpensively.

Dealing with an Insured's Affirmative Claims

To defend a policyholder, a defense lawyer need not raise or develop a policyholder's affirmative claims, whether these run against the claimant or somebody else. Moreover, the defense clause neither obligates a carrier to pay for the prosecution of affirmative claims nor authorizes a carrier to compromise an insured's affirmative claims by settling them. Unless both clients agree otherwise, an appointed defense lawyer can have no responsibility to assert or...