Good insurance sales are often a direct result of good claims service. Insureds likely will not renew their policies if they have a bad experience during the claims process.
When a claim is in litigation, defense counsel often becomes the face of the company handling the claim. They will have more regular, face-to-face interaction with the insured; a luxury that claims professionals do not always have.
Since the insured will often get a good or bad feeling about the claims process based on how they are treated as they go through litigation, defense counsel has a duty to represent the insured zealously and with loyalty. That duty is an ethical one for lawyers, but it also coincides with the carrier’s desire to provide excellent service to its customer, the insured.
With that in mind, what does defense counsel need to consider in order to be an effective representative of the company?
Counsel’s Duty of Loyalty. Counsel has an ethical duty of loyalty to the insured. The insured should be made aware of this from the outset. Regardless of whether a policy has a consent-to-settle provision or other provisions that give the insured input into the litigation process, the insured should have no doubt that counsel is their lawyer and not the carrier’s lawyer. However, the carrier’s role should also be explained, including decisions regarding settlement, reporting, and payment of legal bills. Insureds need to know that the attorney-client relationship exists between them as the insured and counsel hired by the company.
Return Calls and E-mails Promptly. This basic tenet is from day one of Business Marketing 101, yet some lawyers still struggle with it. Make sure your counsel knows that this is a priority. Not only for messages from you but also for messages from the insured. If the insured is not kept in the loop, not only does this reflect poorly on counsel, it also makes the insured uneasy about the insurance coverage they purchased. You should never get a call from an insured asking why his lawyer has not been in touch. On the other hand, frequent early communication from counsel to the insured provides the assurance that the claim and litigation are under control. There is also an emotional or intangible business cost involved for the insured. Knowing the case is being handled effectively can help alleviate any distractions and let the insured function normally on a day-to-day basis.
Keep the Insured Informed of Negotiations. Regardless of whether the policy requires the insured’s consent regarding negotiations, it is good practice to give them input into any settlement negotiations. The most frequent question from a client who is not accustomed to litigation is, “How much are they asking for?” The unacquainted insured needs an explanation of the negotiation process, the effect of discovery, trial dates, mediations, and other anticipated developments regarding potential resolution. After that, they should always be informed of any offers and demands. Even if it isn’t their money at stake, it is their reputation and they deserve to know the status. This job most easily falls on defense counsel since they have the most frequent contact with the insured.
Do Some Hand-Holding. Whether it is an individual or business insured, there is often little familiarity with the litigation process. The large corporate insured (often with a high deductible or SIR) is, of course, one exception to this. However, individual insureds have jobs and families to focus on, and small-business insureds have daily operations and the bottom line demanding their attentions. Litigation can be very intimidating for those who don’t deal with it on a daily basis. Defense counsel and claims professionals deal with the ups and downs of litigation all of the time. Make sure your counsel takes the time to educate the insured and provides a simple road map of what to expect. Predictability is the antidote for anxiety.
Perform Adequate Postmortem Analysis. Once the litigation is resolved, either by judgment or by settlement, the insured will likely still have some questions. Advise counsel to make himself available to the insured for an analysis of the case. Too often the temptation for both counsel and the insured is to be rid of the case as soon as possible. It’s surprising how often an insured will bring up concerns after litigation that he never voiced early on. This usually doesn’t happen in a brief phone call letting them know the case is resolved. Although it takes time, the opportunity to rehash the case often provides a greater level of comfort to the insured going forward, gives them a better feeling about the claims process, and increases the chances of a repeat customer at renewal time.
Jim Pattillo is a partner with Norman Wood Kendrick & Turner, an Alabama-based law firm. He has been a CLM Member since 2010 and can be reached at jpattillo@nwkt.com, www.nwkt.com.