Introduction:
We talked about the myths in a recent podcast, the things people are saying about P&C litigation:
-P&C claims litigation takes place in the courtroom
-Claims litigation is just attorneys
-Nuclear verdicts are the cause of P&C's problems
-P&C insurers are one idea away from fixing claims litigation
-Legal invoice review is litigation management
And in the last podcast I talked about why the plaintiffs' attorneys are winning P&C litigation. I encourage you to listen to that podcast first and then come back to this one.
The P&C insurance market recently started to evaluate opportunities to improve P&C claims litigation. For decades insurers relied on their attorneys – insurance defense attorneys – to manage this challenge. About a decade ago insurers began relying on third party bill review companies, too. These companies that cut insurance defense lawyers’ bills.
The P&C industry has shifted its focus to profitability, and now see all the money is going to lawyers.
Those of us in P&C claims litigation – claims leaders, adjusters, and attorneys - we’ve known about this problem for a while.
Those of us in P&C claims litigation know that the myths that everyone's talking about are not the causes of the problem.
Those of us in P&C claims litigation know the truth is that the plaintiffs' attorneys have all the power, and insurance defense attorneys don’t.
As I mentioned in my last podcast, the scales of justice are tipped over into someone’s email inbox in a subfolder somewhere. The plaintiffs’ attorneys did a lot of things right in the past ten years. What about the insurance defense attorneys?
Truth #1: People:
I talked about how the plaintiffs’ attorneys have heavily recruited talented teams, many of which have come from insurance and insurance defense. Why? Plaintiffs’ law firms pay better and provide a clearer career path. Plaintiffs’ law firms objectively measure outcomes based on action, not activity.
Adding to that, the career path in insurance defense is complicated. First, your #1 metric is hours billed. Hot take: that hasn’t been that great for anyone. Additionally, the path for development within an insurance defense firm leads to potential conflict. The originating attorney - meaning an attorney that owns the client relationship - is the one who makes the most money. When the originating attorney leverages another attorney to serve that client, eventually that attorney must consider whether he or she can bring that business elsewhere to capture the most value. This is a complex career path.
Additionally, I talked about how the plaintiffs’ attorneys work together. The plaintiffs’ bar collaborates: wikis, listservs, and shared data, to name a few. They collaborate because they’re aligned in their goals.
By contrast, the defense bar competes with itself. Sure, the defense bar has trade organizations, but without an aligned goal, these organizations tend to amplify the complexities.
To put it bluntly, many have said we have an insurance defense attorney shortage, and most predict an upcoming litigaiton adjuster shortage.
Truth #2: Process:
The plaintiffs’ bar leverages attorneys for what they're best at – legal work. Plaintiffs’ attorneys show up for legal proceedings, conduct settlement negotiations and mediations, and support the staff that supports them.
Plaintiffs’ attorneys don't talk a lot about 'process' because the results tell the story. They hire professionals to support their processes and stay out of their way.
In insurance defense, the process is mostly writing long memos and emails. One would think that the process is the case milestones like Case Evaluation, Discovery, and Mediation, but the process is what people are actually doing not why they’re doing it. What people are actually doing is writing emails and documents. Of course, managing attorneys have a similar process to a plaintiffs’ attorney, but they are a fraction of the attorneys in P&C litigaiton.
The process doesn’t have a clear way to measure the quality of the destination, so insurance defense attorneys face a lot of conflict. A defense verdict may lead to a congratulatory email, but bill adjustment disputes or a diary status requests lead to one hundred emails. And internally, insurance defense attorneys are forced to measure quality of the process by the way they are rewarded: hours billed.
Truth #3: Technology:
We can cut to the chase here:
-Defense attorneys are also not incentivized to use technology without a corresponding fix to the hourly billing model.
-Claims litigation professionals and defense attorneys have PTSD from the last generation of technology. Their only experience was legal bill review.
So P&C claims litigation sticks to one technology: Microsoft Office. Adjusters and attorneys spend their time in emails and Word documents, occasionally manually syncing them with their respective systems.
Conclusion:
So why are the defense attorneys not winning? People, process, technology.
While P&C adjusters and attorneys were ‘managing litigation’ and practicing ‘insurance defense’, the plaintiffs’ attorneys simplified the people, process and technology.
The scales of justice are tipping over, and with AI and litigaiton financing it will be tough to stop.
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I invite you to join us and our clients in our mission to level the playing field. We'll start by telling the truth, and we'll continue by sharing the playbook ahead.
If you found this valuable, please like and share it wherever you saw it, join the conversation on LinkedIn. We will be making some important announcements over the next few weeks, so be sure to subscribe to my newsletter/podcast/blog at wesleytodd.substack.com.
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