In today’s video, Miller Friel Managing Partner Brian Friel continues his series The Ten Biggest Mistakes Made By Corporate Insurance Policyholders with his eighth entry, which address using the wrong lawyers. Although corporations recognize that insurance law experts are warranted for any significant claim, the process of getting there is not always straightforward. Not so long ago, the concept of “one stop shopping” for lawyers was quite the thing. A corporation with an unsettling piece of litigation might first look to litigators defending the claim to give an opinion on whether or not the claim is covered by insurance. General litigators or even corporate attorneys are often brought in to give a cursory opinion on coverage. The ease and simplicity of this approach is easy to understand. Companies often want to use the same law firm to both defend the underling case and to prosecute its insurance claim. However, insurance recovery law is too complex and too important to have non-expert lawyers leading a claim.
We talked before about the inherent complexity of insurance recovery law in past posts. See How To Choose An Insurance Recovery Law Firm. Insurance law is a specialized practice area. It involves not only complex insurance policy language, but also rapidly evolving case law that can vary significantly from jurisdiction to jurisdiction. Insurance companies do not retain general litigators to evaluate claims for them, and neither should corporations. In fact, insurance companies are known for hiring some of the most sophisticated law firms in the country, including law firms having hundreds of insurance law specialists on call to represent their interests when it comes to claims. See Where Have All of the Insurance Lawyers Gone?
Watch the video to learn more.
For a transcript of the video please see below.
Another common mistake made by corporate policyholders is relying too heavily on their outside general litigators who are handling the underlying defense matter to assist on the insurance claim. We understand why this happens. Everybody likes the idea of one-stop shopping. You go to a large firm. You’ve been sued in a intellectual property case or practical liability case, some complex commercial transaction, and you have some great general commercial litigators or a great IP litigator or patent litigator or copyright litigator. Maybe that person or maybe a person down the hall from them at their firm also has some background in doing an insurance claim maybe a couple years ago or five years ago and has some general idea of how insurance policies are structured and a general idea of how the claims process works.
There is going to be a natural pull for a company to want to keep that all within one shop, and that’s very natural. We understand that. The problem is insurance law is a very specialized area of law. You’re talking about not just an insurance contract, it’s a specialized insurance contract that could be hundreds of pages long with detailed provisions, definition sections, insurance grants, exclusions, endorsements, different policy provisions for different states, depending on where corporate facilities are located. You have 50 state laws that control for insurance law, plus the federal courts in those 50 states that sometimes come up with their own laws and interpretations of insurance policies, and all of those laws are evolving over time and the insurance products are evolving over time.
Insurance policies today, whether they’re general liability, directors and officers, fidelity, employment, they’re different than they were three years ago, much different than they were ten years ago, and almost incomparable to what they were twenty years ago. You need someone who understands this specialized contract and the specialized law that goes along with it. Companies also have to realize that when you have a claim, particularly a significant claim with real dollars at stake, and you get a coverage letter from an insurance company, whether it’s directly from the company or from its own outside counsel, be rest assured the insurance company who has retained their own outside counsel to assess your claim, evaluate your claim, probably either issue a denial or strongly worded reservation of rights, but not making any payments and raising all sorts of reasons why they think they may deny the claim, be rest assured, the insurance companies are not using general practitioners or general litigators to evaluate your policy and your claim.
For that reason alone, you shouldn’t be using general practitioners or general litigators to evaluate your policies or your claims.