Insurance Defense Law Firms

Insurance Defense Law Firms

Insurance defense law firms are paper (and paperwork) intensive, and this is how they document and justify their existence. Generating paperwork is how they survive. They DO NOT want to settle cases, at least not right away (not without 3 – 5 years of hourly billing first). Unlike plaintiff attorneys, who receive a percentage of what they settle for, and thus have a direct interest in trying to resolve the matter as rapidly as they can, for the highest sum that they can. Defense attorneys only get paid from their $90 – $150 per hour billable hour fee. They are, therefore, in absolutely NO RUSH, EVER to resolve things at any early stage. In fact, all that an insurance defense law firm gets for resolving a lawsuit early is losing years worth of ‘billable hours’ and thousands $ in fees.

This is essentially what cases mean to insurance defense firms; that they are big, cash cows. In fact, quite unlike the plaintiff or even the defendant or his insurance company paying the legal bills; insurance defense law firms have NO direct tie to, or monetary interest in, the case or its outcome, other than hourly billable fees. Cases mean nothing to them; simply “billing exercises” and a way to pay their bills for the next several years. This is largely why there is animosity between insurance companies and their legal counsel. This is also why many insurance companies have moved to bring their legal counsel “in-house,” working full time for them exclusively.

So, be aware that once a matter is transferred from the insurance company claims department, to their outside litigation team/insurance defense attorneys, things change dramatically. Things shift from, “How can this matter be resolved?” to “How can we drag this matter on as long as possible?” Defense attorneys instantly shift the focus away from settlement, to delay and deny for as long as possible, regardless of the impact to any of the respective parties. This is important for you to know and understand, that if an insurance defense law firm becomes involved or you are forced to file suit, generally at that point things are going to take significantly to resolve.

Defense attorneys will not admit this, but in private joke about this delay and deny policy they use to obstruct things for their own purposes. Of course, this delay policy is couched in different terms such as, “We need ‘additional information’ to evaluate the claim” or they “Need additional reports, facts, or medical information, etc., to properly assess the value.” There is always a “need” and rationale for their ongoing delays and incessant requests for “information” to “round out and complete their files,” even if these requests have virtually nothing to do with the case itself. In essence, defense attorneys use/abuse the legal discovery process to attempt to obtain their dual goals of extended billing and attempting to dig up a little dirt on the plaintiff, so that they may justify this process and attempt to create a defense where many times none exists.

A major tool used by insurance defense counsel is the discovery process. Discovery is the formal process during litigation by which the parties learn of each others’ cases (including strengths and weaknesses). Some of the methods used to obtain information are interrogatories, statements under oath, depositions, and formal exchanges of documents, including photographs, reports, law enforcement reports, investigations, personnel files & data, HPPA protected documents (medical, dental, and psychiatric reports), polygraph examinations, etc. To insurance defense law firms, these processes are merely a means to compel and collect seemingly relevant (but often inane), information that has little to no bearing on the case, and probably never will.

Nevertheless, the compilation of this data enables them to bill a rather tidy sum in “defense” of a claim, and the insurance company not only goes along with all of this but funds it and directs it. This might not seem to make sense at first, but the insurance companies have a motivation, too. All the while this charade goes on – for years, the insurance company is holding (what is in effect) your money. They are earning a pretty strong rate of return [estimated 20% 30% investment returns, worldwide], so they find that the interest on a good sized settlement amount, more than pays for their “defense attorneys” to play their delay/deny game and their “search for the truth” in their litigation (interrogatories, depositions, etc,) requests.

Generally, after years of asking these questions, as trial looms ever nearer, at some point the insurance company will force their legal defense people to finally get around to asking pertinent questions like, “How much money it will take to settle this claim and make it go away?!” Since the insurance company is the entity ultimately footing the hourly legal bills, as well as the final settlement or verdict; at some point they demand an ACCURATE assessment of the true claim value as well as the likelihood of prevailing at trial. Finally, as the matter gets perilously close to trial, often only weeks or sometimes even days away, the truth comes out and settlement offers start becoming higher and more realistic.

Unfortunately, by this point the injured party has invested years in this process. As the trial gets closer, the plaintiff has invested significant amounts of time, effort and energy into preparing for the upcoming trial. The plaintiff becomes increasingly more serious about trial and has (in some sense) less incentive to settle. He has already endured great financial hardship, pain, suffering, and possibly undergone surgery. He has invested a significant amount of money [via his attorney, which he must reimburse] into the preparation of this matter for trial, including retaining expensive expert witnesses, and these costs must be deducted from the settlement. Many times the plaintiff, by now, is angry and bitter, and this case becomes more than “just about money.” Sometimes, the hardships go beyond even this and have caused marriages to crumble and bankruptcies to occur, as well as the loss of one’s job and even one’s house.

Some have suffered complete devastation of their credit rating; they have lost their cars, homes, etc. Thus, by pushing the envelope this long, defense counsel and insurance companies often make matters much more difficult to settle and more serious for all involved. Things become much costlier all the way around, and settlement sometimes becomes all but impossible to achieve, as the stakes have gone up dramatically, and the amount required to settle increases demonstrably. All the while the defense attorneys and the insurance company are unconcerned about what they are doing or making the case increasingly impossible to settle. Therefore, be advised, that when an insurance company ceases to handle claims directly and turns the matter over to their defense counsel, matters grind to an immediate halt for the next 1 – 4 years; or until the trial date looms very near.


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