Setting the Strategy Stage

As an attorney with more than 20 years of litigation experience, several themes have recurred over that time. And while we are bound to see these themes again in the future, we can take steps to control them.

One of these litigation themes revolves, in general, around the initial claims investigation strategy. The Chinese military general and strategist Sun Tzu is reported to have said, “Tactics without strategy is the noise before defeat.” That statement reveals a fundamental truth: In victory, sound strategy comes first, driving all actions thereafter.

In that light, a sound initial claims investigative strategy, typically handled by claims professionals with civil litigation, is crucial for moving claims quickly and successfully.

Establishing Strategy Early On

The key to resolving claims—and forestalling litigation costs—often flows from a thorough initial claims investigation and early issue spotting. Initial claims handling is critical to posture claims for settlement or, alternatively, to manage expectations and delineate which claims need defending and will incur higher costs. Initial claims strategic efforts are like “the big rocks” discussed by Stephen Covey in “First Things First.” Essentially, the big rocks (the initial claims investigation plan) must go into the claims jar first, before the rest of the claims handling work (the proverbial little rocks, the sand, and the water) will fit into the jar and provide value. Therefore, putting the big claims rocks in first is the fundamental core strategy.

UCLA’s legendary college basketball coach John Wooden won 10 NCAA men’s national championships, at one point winning an incredible 88 consecutive games. Wooden was well aware of the strategy behind putting first things first. He said, “If you don’t have time to do it right, when will you have time to do it over?”

The same holds true with claims processing: Early identification of key legal issues sets the overall claims strategy upfront. Everything afterwards flows from that strategy and will help manage time (move claims faster) and set cost expectations. Securing your strategy early on is key. Knowing in advance that settlement will be unlikely or that there is a tricky legal issue, an unreasonable claimant or claimant’s attorney, or a dangerous venue will help weed out claims requiring a vigorous defense from resolvable claims.

The following practical strategies fit within this fundamental initial claims-handling framework, working well for most claims and generally crystalizing issues and key decision points.

Getting the Facts Straight

The first strategy is to nail down the case facts as soon as possible. Knowing the facts sets the playing field. Facts will, no doubt, be argued over during litigation, but securing witness statements or key factual information from the outset makes it harder for witnesses to change their stories or for factual information to change. Facts also do not tend to age well with litigated claims. Eyewitnesses leave jobs or move, people forget what they saw or heard, and some people may become convinced of certain facts that actually never happened (given the passage of enough time).

Accordingly, a good initial claims investigation will confirm the key facts: the who, what, when, where, and why. Witness statements, as more fully discussed below, should be nailed down in writing and signed by witnesses, with good contact information for each witness (cellphone numbers and email addresses that do not change if the witnesses move or change jobs/locations). Typed statements are better than handwritten statements, especially when some witnesses have illegible handwriting, and witnesses should print their names under their signatures.

Procuring Statements

Written statements are helpful to refresh witnesses’ memories after the several years that can go by before difficult claims end up at trial. These statements should address contextual information about claims. For example, do not just ask a witness what he saw. Ask him if he has background information related to a particular claimant or another witness, such as whether the witness is a friend or relative of the claimant, whether he believes the claimant, or if he has anything else he wants to say. Witnesses are naturally circumspect with claims or legal investigations and may not offer up information unless asked. Likewise, asking a witness if he believes a claimant (or another witness) or has anything else to add may lead to key factual information revealing credibility flaws, motives, or biases that could have been missed.

Like written statements, a claimant’s recorded statement also can be crucial to moving a case quickly. Any recorded statement should document the complete description of the incident/injury, include questions to the claimant about prior insurance or injury claims, and nail down each and every body part injured or damage claimed. An in-depth description of the incident is critical, as the claimant’s version of the incident may shift over time (when compared to medical records or at a later deposition). Such shifts in how a claimant describes an incident may cause opposing counsel to question her client’s credibility for trial, thereby pressuring the claimant for a quick and reasonable resolution.

If the claimant’s version of events is inconsistent, that may be a red flag as to credibility. Follow-up questions should also cover whether the claimant had any pre-existing conditions to each body part claimed and, if so, the name of each prior medical-care provider. The names of any witnesses should also be obtained, as well as any documents completed after the incident, the cause of the incident, and any third parties involved.

Acquiring Surveillance and Gauging Witness Credibility

Another key to setting up claims for faster processing and positive outcomes is to secure video surveillance or security camera video footage immediately. Security camera footage of a claimed event may exist, but if no steps are taken to obtain the digital, recorded copy, the computerized security camera files may self-delete after a set number of days. If a picture is worth a thousand words, then a video is worth even more. A video provides context and helps nail down details that may become distorted over time, as witnesses tend to focus on some details and not others. Obviously, if a claimant or a witness states something that is directly contradicted by a video, the credibility of that claimant or witness becomes questionable.

Similarly, if a claimant has significant credibility issues, then assigning surveillance early on (before a claimant retains counsel) may catch the claimant doing something inconsistent with his claim. This, by itself, may be grounds to shut down settlement talks and dig-in for defending the claim. Alternatively, presenting a claimant (or opposing counsel) with video evidence may create a decision point for the claimant, crystalizing the picture and forcing him to decide how much he wants to risk and how reasonable he is with settlement negotiations. No doubt, if a video supports a claimant’s allegation, this may be a good indicator that the claim should be steered towards a rapid settlement (as opposed to a fruitless and expensive fight).

Physical Evidence and Subrogation

Like video evidence, securing any relevant physical evidence of the claimed incident (or determining if a site inspection is necessary) is important, as it can confirm or deny key details. Initial efforts should be made to keep any potential evidence safe and available for possible litigation. If evidence is not secured, it can lead to costly litigation and discovery motions. In addition, securing physical evidence may also assist with subrogation-recovery efforts.

Additionally, subrogation potential should be identified early, along with relevant statute-of-limitations deadlines. If a claim looks like it should be accepted but has a potential subrogation recovery, the focus of the claim can shift to pushing for settlement (versus defending) and looking toward a third-party recovery.

Obtaining an Early Legal Opinion

A final strategy to move a claim to a decision point is to consider obtaining an early legal opinion before litigation. The case strategy has often already been set by the time a claimant decides to obtain counsel and file suit. An early legal opinion can identify unexpected legal issues, help identify the real problem(s), possibly preclude a claimant from seeking counsel, and may steer the case to a quick resolution without litigation.

Key to the helpfulness of a legal opinion (pre-suit) is making sure that all relevant claims or other file materials are forwarded to counsel promptly. A legal opinion involves front-end costs, but it will help identify legal issues early, evaluate venue, assess the overall likelihood of a defense on the issues, and help weigh the cost-benefit analysis of the claim should it go into protracted litigation. Doing all of this on the front end can also help set the case strategy on a path toward a quick resolution. Should the case go to litigation, an early legal opinion will help manage expectations while defending the claim.

Efficiency is a function of doing things right the first time. Claims handling is no different. Practical steps made on the front end of claims processing will pay dividends later on. These steps are axiomatic, and are often critical pieces for moving claims rapidly and successfully. If a claim can be settled, it should be, and quickly. If a case involves difficult legal issues, that should be recognized early so the claim can be postured for a trial strategy. Ultimately, nailing down the key legal issues early will help with positive outcomes and move claims faster, while also keeping expectations, cost projections, anticipated timelines, and foreseeable costs realistic.