Where Have All of the Insurance Lawyers Gone?

It has always been difficult to tabulate how many lawyers are on insurance company payrolls. That is, until recently.  An article published in Law360 entitled, “The 100 Law Firms With the Most Insurance Partners,” gives rare insight into just how much of the legal market is aligned with insurance company interests.

The Largest Insurance Company Law Firm in the World

What Lies Behind this Guarded Gold Door? The Largest Insurance Company Law Firm in the World.

In total, the article counted 2,850 law firm partners practicing full time insurance law. Almost 90 percent of the total insurance lawyers referenced in the article represent insurance carrier interests.  Moreover, many of corporate America’s biggest and best known law firms top the list for providing insurance company advice: Rose Fulbright, with over 3,800 lawyers, is credited with 142 insurance law partners, DLA Piper, with over 4,200 lawyers is credited with having 120 insurance law partners, and Hogan Lovells, with over 2300 lawyers, is credited with having 92 insurance law partners.

One of the reasons that insurance companies dominate the legal market is that insurance carriers are not shy about using lawyers to pressure their insureds and minimize claims expenses.  Insurers have an arsenal of top quality lawyers on retainer to support and litigate claim denials.

Another reason that insurance companies dominate the high-end legal market is hidden from this survey.  Insurance companies also hire and pay for corporate defense counsel to defend corporate policyholders with respect to, among other things, securities, class actions, and employment litigation matters. The quid pro quo for being listed on an insurance company approved defense panel counsel list is that law firms accepting insurance company defense money must agree to limit their advocacy against the insurance companies that feed them.  Although the level of “permissible” advocacy may vary from carrier to carrier, the rule is the same for all, namely, don’t do anything that we, the insurance carrier, don’t want you to do.  The financial incentives of being approved as panel counsel for an insurance carrier are significant, and few if any firms would risk loosing such a valuable relationship by siding with a policyholder on a claim.

There is little doubt that this panel counsel relationship controls how law firms deal with claims against the insurers to which they are beholden.   AIG’s appropriately named “AlphaFirm” panel counsel list, AlphaFirmList=All, includes many of the most respected law firms in the country, and panel counsel lists for other insurers are similarly well represented.  Although a law firm is perhaps not technically conflicted out of representing policyholders based solely on its status as panel counsel, it goes without saying that approved panel counsel firms should not represent policyholders with claims against those insurers who pay their bills.

In the end, insurance company ties with law firms can be difficult to unravel.  The easiest way to ferret out whether a law firm can represent a corporation on an insurance claim is to ask one simple question: Can you file a bad faith claim against all of the insurance carriers involved in this claim?  If there is a pause in the response, or if there is an explanation as to why the given claim is not a bad faith claim, or if the answer is no, the law firm competing for the policyholder’s coverage work has a problem, and is likely not the best firm to handle the matter.

Where have all of the insurance lawyers gone? Let the buyer of legal services beware.  They are out there representing insurance companies.  There are very few high quality national-scope law firms left that exclusively represent policyholders, and even fewer that  successfully compete and win against these large law firms on a routine basis.

Miller Friel, PLLC is a specialized insurance coverage law firm whose sole purpose is to help corporate clients maximize their insurance coverage.  Our Focus of exclusively representing policyholders, combined with our extensive Experience in the area of insurance law, leads to greater efficiency, lower costs and better Results.  Further discussion and analysis of insurance coverage issues impacting policyholders can be found in our Miller Friel Insurance Coverage Blog and our 7 Tips for Maximizing Coverage series.  For additional information about this post, please email or call Mark Miller (MillerM@MillerFriel.com, 202-760-3161).

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