Moneyball and Litigation Management

Often, insurance carriers struggle with providing effective representation and service to their insureds while balancing the runaway costs of protracted litigation. At the 2024 CLM Annual Conference session, titled, “Moneyball for Insurance Companies: How to Improve Litigation Management,” speakers Jason Feld, Partner, Kahana Feld, LLP; Kate Dombrowski, vice president, claims general counsel, Selective Insurance Company of America; Robert Weingarten, vice president, Certus Claims Administration, LLC; and Daniel Jacobs, Assistant Vice President – Litigation, AM Trust North America, discussed the use of litigation metrics, performance indicators, carrier/counsel partnerships, and other litigation management tools to improve claims departments. 

Litigation Management Objectives

Cost and Budgeting

Dombrowski: “Surprising no one, all eyes are always on expense and cost on the carrier side. So, what we’re trying to always do is find the key players that we need to accomplish the results we’re looking for on our various lines of business in our different jurisdictions where we have cases, at the right price point. We’re always balancing the value-added services that our firms can offer us. We have all the same pressures in terms of staffing, in terms of expense management, in terms of technology that our outside firms have, and we recognize and understand that.”

...“[A]s soon as you know you’re likely to have a big change in your budget, I would not wait until you exhaust the budget you already have approved. We see that a lot, and that is generally viewed unfavorably, I would say. So, if you know you’re going to have to add to that budget, even if you have a lot of budget left, let your claims professional know, let your litigation manager know. ...[C]ommunication, setting expectations with everything—it lets us on the industry side get ahead of that messaging with all the additional parties that we have to inform about those kinds of things, so that’s very helpful.”

Data Recordkeeping

Jacobs: “We like firms to keep their own data. We look at average legal spend, we look at loss ratios, we look at cycle times…we have that data, but we also like firms to keep their own data, from not only AM Trust, but from other carriers they’re working [with], so we can look at it [and] we have something to judge a firm on…. Having spent the last five years on the insurance side, data is everything—and the more sources we can get [it] from, whether it’s any one of those indicators, the better…a firm that comes to us with no data is a red flag.”

Dombrowski: “The carrier side has to be aware of what it is we’re asking the defense partner to do. Our guidelines really strive to find a balance between getting our claims professionals the information they need when they need it, but also not demanding over-reporting. We actually discourage ad-hoc requests for reporting from our claims professionals to our defense lawyers for both our in-house operation and our outside counsel because it puts burdens on everyone.

“In the outside counsel space, of course, that increases billing, and if it’s not at a significant point in the case, if it’s just because that adjuster wants to move his or her diary, that’s not a useful way to incur additional legal spend and it puts pressure on our defense partners to report on something that potentially, they’ve already reported on. So, our guidelines request the initial reporting, and then we tie them to what we call significant events…so, meaningful depositions, party depositions...anything that materially changes the value of the case, we expect reporting on it. But one of the things that I’m constantly encouraging our defense counsel to do, both in-house and out of house, is make that reporting as concise as you can. You don’t have to regurgitate everything you wrote before. If what you want to report on can really be said in six sentences, send it in an email…. We count on our defense counsel to have a good bit of discretion about the kinds of thing we would want to see in writing versus over the phone." 

Cycle Time Expectations

Dombrowski: “It all depends on the jurisdiction, it depends on the pairing, the plaintiff’s attorney, and the defense attorney…there are certain firms that practice in Philadelphia County, for example, that will not settle until the 11^th hour, So, having our defense partners know that, who have relationships with people on the other side, it can give us that intel back to say, ‘Listen I’m doing everything I can do to create leverage to try to resolve this case; this is just the playbook for this firm. No matter what we do, they’re not going to settle until we’re on the steps of the courthouse.’ That’s valuable information, too, because then we can say, ‘Let’s put our resources into something else.’

“If we can narrow our panels so that our key player firms are getting a larger volume of work, that allows those firms to staff those files appropriately and have the flexibility to bring in resources. If we know we can try to get settlement, if we want to do a short notice mediation and we can get that on the books, you have someone you can send. If we’re constantly putting pressure on the defense attorneys to only have one partner working on this file, there’s a lot of competing interests there in terms of time and how you can get that case driving toward resolution. So, anything we can do on our side to help build and facilitate that efficient claims litigation, that all goes into the value proposition."

Weingarten: “We rely on our panel partners to have the expertise in their geographic and their line of business to tell us what they think about their opposing counsel. Getting to the point where you can hopefully accurately predict the loss of that particular case, the sooner the better. The carrier can obviously plan for it, counsel can plan for it, it just makes the whole process better and hopefully more predictable.”

Feld: “We’re judged by how quickly we can close these files, how quickly we can resolve them. It puts pressure on defense counsel too…to be proactive and try and get these things resolved faster. So, cycle time is how law firms are judged against other law firms…it is forefront in our mind to get the cycle time down as soon as possible.”

Maintaining Relationships

Dombrowski: “We count on our [outside counsel] for a lot of…experiential feedback they can give us. It’s not always, ‘Let me show you the numbers that came out on this case.’ A lot of times, it’s, ‘This person really came through for me….’ [A]nd it’s combined with the metrics. So, what we’ve found, sitting on the mountain of data that we have on the industry side, when we put it in buckets by trying to do apples to apples—relevant lines of business, relevant geography—what we’ve seen is we can compare staff counsel and our outside counsel firms, and we can compare our outside counsel firms to each other, and what we’ve found is there can be a very small range on indemnity results on cases, and a very large swing on the expense side, which I think is why the industry, 10 to 15 years ago, really went heavy into the expense management part of it. We still see it today.”

Using AI to Control Spending/Costs

Jacobs: “We’re a year into using Litify to capture every single litigated case in AmTrust and it’s a work-in-progress, but it’s a pretty useful tool so far. I think it’s going to get a lot better over time…. It certainly makes it a lot easier to figure out what’s going on. We can sort and track litigated cases by state, by firm, and everything is on dashboards…. I can just go on the computer and look at a given jurisdiction and figure out every single case that’s actively in litigation.”

Dombrowski: “We have expert bill review like many of the other carriers, we have dashboarding, we try to capture all of our metrics and put them into a digestible, actionable format. Data is only as useful as the way you can reasonably rely on it and make decisions based on it. At least up until this point, what my experience has been with these large data sets is—and this may improve over time—but the one place that I feel technology hasn’t been able to support us yet is the social inflation component that has been happening the last year to two years…. Those large data sets are based on historical data, which I think was very consistent, and then we had the pandemic, and now things seem to have just gone kind of haywire. That social inflation piece is just very hard to measure.

“There are AI tools out there that are up-and-coming and striving toward capturing that and giving that information, but this is where we really count on our defense firms to know the players in their space, the judges, the juries, things like, are there judge shortages? What are the incoming judges like? What’s their expertise level? ...We’ve got the historic stuff, but it’s hard to make decisions about values based on historic data when what used to be a $150,000 case is now potentially a $600,000 case in some jurisdictions. That gap, we need our defense counsel to fill for now.”