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DTCI: A refresher in insurance defense client and company reporting

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PinkieBusy lawyers practicing in insurance defense law sometimes forget the basic tenets of the practice. This article is a refresher course for the seasoned civil defense practitioner and a primer for those new to the practice.

Client and company reporting

Reporting to the client may sound elementary, but there are horror stories about the lack of reporting client companies receive from counsel. Poor communications and non-diligence account for almost a third of grievances filed for alleged misconduct. (See Indiana Supreme Court Disciplinary Commission, 2008-2009 Annual Report, available at http://www.in.gov/judiciary/discipline.) The duty to the client and insurance company representative of timely and accurate reporting cannot be overlooked.

Client reporting starts after receipt of the assignment and after the details of the initial engagement are agreed upon. An acknowledgment letter sent upon receipt of the new assignment is the client’s assurance that his counsel received the matter, performed a conflict check, and agreed to the representation. Telephoning the new client helps overcome any of the client’s hesitancy to call counsel because of unfamiliarity with the legal process.

The initial communication should be in plain English and inform the client that you are his lawyer and that this and all future communications are protected by privilege. The initial communication also confirms proper service of process, should that not be obvious from the documents already in possession.

An acknowledgment to the insurance company representative assures him the lawyer received the assignment, his insured is now represented by counsel, and the record is (or soon will be) protected. A phone call to the insurance company representative promotes open communications from the start and serves as an opportunity to thank the representative for the business.

Review your acknowledgment practices. Electronic discovery and litigation hold letters have imposed new obligations about which clients need to be informed early and often. Electronic discovery raises the bar on initial communications – specifically the duty to preserve any electronically stored information and to ask about the retention policies of the client. Failing to take these necessary steps early on may lead to professional liability issues for the lawyer and discovery sanctions from the court.

Lastly, check to identify any conflicts that may lead to a waiver or preclude representation. If representation is precluded, then a phone call to the client or insurance representative followed by a letter declining the assignment is appropriate. It should be made clear that no attorney-client relationship was formed.

Litigation guidelines

Outside counsel must meet company reporting requirements defined in an insurance company’s litigation guidelines. The complexity of these guidelines varies from one page to several pages including indexes, definitions, and appendices. Review these guidelines with the insurance company representative.

An initial evaluation report may follow the receipt and analysis of any pre-suit file materials that the insurance company representative has compiled. The report may include the following: communications with your client, confirmatory communications with the company representative, communications with opposing counsel, any fact witness interviews, a site visit to the loss scene, description of any documents informally produced by opposing counsel, and whatever else the company representative ought to know about. The initial case evaluation should also set out theories of liability, damages presented, applicable defenses known to date, applicable law to be applied, possible alternative dispute resolution, discovery undertaken or recommended, evaluation based on the facts and evidence to date, and recommendations for future handling. Litigation guidelines usually allow 60 to 90 days from the case assignment for counsel to provide a preliminary case evaluation.

Status reports should be sent to the client and company representative after any significant development, including the following: a material change in the facts; the discovery of a new witness; substantial developments in the damages presented, whether mitigated or aggravated; a new expert witness; discovery responses received or discovery directed at the client; deposition testimony; summaries of records and documents; dispositive motions; the status of settlement negotiations; and any change in the gestalt of the case. Several of the aforementioned developments are best communicated by telephone, followed by a letter memorializing them.

Clients and company representatives will frequently ask counsel for recommendations on the future handling of the case. Clear, concise, and supported recommendations should be contained in your report. Alternatives and options should also be provided, even when unsolicited. Remember, it is not your case, but your client’s!

Effective communications include disclosing any reservations or adverse consequences that may follow from a key strategic decision. It also strengthens the trust between the lawyer, client, and company representative. Only after informed communications should decisions affecting the case be made, and the decision is to be in the best interests of the client.

Insurance defense lawyers may have to complete documents called for in the litigation guidelines, such as litigation action plans, discovery plans, and proposed budgets. The attorney representing clients through an applicable policy of insurance that provides for the defense of the insured must become familiar with the litigation guidelines and billing protocols for that particular company. Any applicable reporting dates or required reports should be calendared after the acknowledgment and acceptance of the assignment.

The practice of law is a service-providing industry. Noncompliance with company guidelines does not bode well for the attorney’s reputation. In some circumstances it can be interpreted as an indication of the value the lawyer places on the business.

Insurance defense work remains competitive in the legal services market. If the practitioner cannot take the time to adhere to company litigation protocols, then the lawyer should be neither upset nor surprised when the company takes its work elsewhere. Losing a source of business is certainly not worth any perceived benefits of haphazard compliance with mandated litigation guidelines.

Ethical obligations and tripartite relationship

The tripartite relationship is the cornerstone of insurance defense law practice. It is created by the insurance contract and the hiring of defense counsel by the insurer to defend the insured under the policy. The lawyer’s familiarity with ethical obligations to the client and the client’s insurance company, which may not coincide, can go a long way in safeguarding the insurance defense practitioner from running afoul of ethical obligations.

Several Indiana Rules of Professional Conduct pertain to the tripartite relationship and lead to ethical considerations. (See Indiana Professional Conduct Rules 1.1, 1.2, 1.3, 1.4, 1.6, 1.7, and 1.8. See also Cincinnati Ins. Co. v. Wills, 717 N.E.2d 151 (Ind. 1999).)

The most often cited rule leading to potential problems in the tripartite relationship is Indiana Rule of Professional Conduct 1.8(f)(2):

(f) A lawyer shall not accept compensation for representing a client from one other than the client unless:

(2) there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship; …

Indiana Rule of Professional Conduct 5.4(c) also provides:

A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering such legal services.

In some circumstances, it is possible that the insurance company’s litigation strategy may be interfering with defense counsel’s judgment or defense counsel’s attorney-client relationship, thus impeding the lawyer’s ability to do his job. The keen practitioner recognizes this threat and should obviate it through the use of efficient communication with the client and company. In the event efficient communication fails to eliminate the conflict, the lawyer may be placed in the uncomfortable position of being unable to follow his own judgment.

The lawyer’s ultimate duty is to the client, the insured of the company, and not to the insurer. (See Indiana State Bar Ass’n Legal Ethics Comm., Op. 3 (1998). See also Indiana State Bar Ass’n Legal Ethics Comm., Op. 4 (1998) addressing the issue: May an Indiana attorney submit statements for insurance defense services to the insurance company’s outside audit company, which statements contain confidential or privileged information?).

Communicating with counsel, courts, and colleagues

Lawyers are communicators. When not communicating with clients and company representatives in pursuit of the cause, lawyers communicate with their learned adversaries, judges and court personnel, and, of course, colleagues. As members of this noble profession, lawyers are held to higher standards than are other members of the community.

Rule 22 of the Indiana Rules for Admission to the Bar and the Discipline of Attorneys is the oath of attorneys. The Indiana Rules of Professional Conduct contain a preamble titled, “A Lawyer’s Responsibilities,” at paragraphs 1-13. This is the code by which lawyers are to live and practice. (In addition, for lawyers practicing in Marion County, see Appendix A and B of Marion Circuit and Superior Court Civil Rules pertaining to the Commitment to Respect and Civility.)

Lawyers must continue to treat each other with the dignity and respect that the profession demands and human beings deserve. Certainly, heated disagreements with our adversary will take place – both in and out of the courtroom. But when the fireworks cease, it is good to remember that the lawyers may find themselves on the other side of the “v.” next time. Agreeing to disagree is healthy, but do not lose sight of the need to promote and practice civility in the practice of law.

Providing good service and managing expectations

A lawyer can wear many hats in the course of one client representation: advisor, advocate, and counselor. It is, among many other things, the lawyer’s ability to wear these hats and to promptly recognize and switch roles according to the task at hand that sets lawyers apart from other professions.

A lawsuit can be devastating for the client even if sufficient insurance coverage exists. Most clients have never been in a contested lawsuit and are unaware of how the legal process works. They are unaware of the time, effort, and resources that go into taking the case to trial by jury. The time demands associated with preparing for a civil jury trial will undoubtedly affect the client’s life. The lawsuit will likely take away time from the client’s family. It may consume time from the client’s job. It may lead to cancellation or adjustment in planned vacations. The addition of the unwelcomed and unanticipated stress can place a strain on the client’s already hectic life. Lawyers need to tell their clients all of this and explain to them in advance the rigors of civil litigation.

Timely, informative oral and written communications speak volumes about the level of service the lawyer provides to clients. Being open and honest with the client as to what the legal process entails, and the corresponding expectations placed on the client, will go a long way toward building an attorney-client relationship based on trust.

In some cases, the insurance company representative may have a misconceived expectation of the desired end result. The company representative may fail to appreciate detrimental evidence the case presents that makes it difficult, or even impossible, to achieve the hoped-for outcome. Communicating this information to the client and company representative – sometimes repeatedly – during the course of the representation should help to modify the company’s expectation. A lawyer well versed in the facts of a particular case should be able to evaluate the potential risk the case presents, including an evaluation of the exposure facing the insurer. For obvious reasons, this is very important information the company representative wants to know.

The insurance defense lawyer plays a vital role in civil defense litigation. The lawyer owes ethical obligations to his client and duties to report to the insurance company representative. Keeping your client and the insurance company representative well informed throughout the life of the lawsuit is important. It not only fulfills the lawyer’s duties and obligations under the tripartite arrangement inherent in an insurance defense practice, but practicing effective communications will enhance the lawyer’s reputation in the legal community.•

Elliott Pinkie is a partner with Hoover Hull LLP, in Indianapolis, and he is a member of the DTCI Trial Tactics Section. His practice focuses on civil litigation for the defense, including professional liability, premises liability, unique auto liability, retail liability, and long-term care liability. The opinions expressed in this column are those of the author.

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  1. A high ranking Indiana supreme Court operative caught red handed leading a group using the uber offensive N word! She must denounce or be denounced! (Or not since she is an insider ... rules do not apply to them). Evidence here: http://m.indianacompanies.us/friends-educational-fund-for-negroes.364110.company.v2#top_info

  2. A high ranking bureaucrat with Ind sup court is heading up an organization celebrating the formal N word!!! She must resign and denounce! http://m.indianacompanies.us/friends-educational-fund-for-negroes.364110.company.v2#top_info

  3. ND2019, don't try to confuse the Left with facts. Their ideologies trump facts, trump due process, trump court rules, even trump federal statutes. I hold the proof if interested. Facts matter only to those who are not on an agenda-first mission.

  4. OK so I'll make this as short as I can. I got a call that my daughter was smoking in the bathroom only her and one other girl was questioned mind you four others left before them anyways they proceeded to interrogate my daughter about smoking and all this time I nor my parents got a phone call,they proceeded to go through her belongings and also pretty much striped searched my daughter including from what my mother said they looked at her Brest without my consent. I am furious also a couple months ago my son hurt his foot and I was never called and it got worse during the day but the way some of the teachers have been treating my kids they are not comfortable going to them because they feel like they are mean or don't care. This is unacceptable in my mind i should be able to send my kids to school without worry but now I worry how the adults there are treating them. I have a lot more but I wanted to know do I have any attempt at a lawsuit because like I said there is more that's just some of what my kids are going through. Please respond. Sincerely concerned single parent

  5. California Sex Offender Management Board (CASOMB) End of Year Report 2014. (page 13) Under the current system many local registering agencies are challenged just keeping up with registration paperwork. It takes an hour or more to process each registrant, the majority of whom are low risk offenders. As a result law enforcement cannot monitor higher risk offenders more intensively in the community due to the sheer numbers on the registry. Some of the consequences of lengthy and unnecessary registration requirements actually destabilize the life’s of registrants and those -such as families- whose lives are often substantially impacted. Such consequences are thought to raise levels of known risk factors while providing no discernible benefit in terms of community safety. The full report is available online at. http://www.casomb.org/index.cfm?pid=231 National Institute of Justice (NIJ) US Department of Justice Office of Justice Programs United States of America. The overall conclusion is that Megan’s law has had no demonstrated effect on sexual offenses in New Jersey, calling into question the justification for start-up and operational costs. Megan’s Law has had no effect on time to first rearrest for known sex offenders and has not reduced sexual reoffending. Neither has it had an impact on the type of sexual reoffense or first-time sexual offense. The study also found that the law had not reduced the number of victims of sexual offenses. The full report is available online at. https://www.ncjrs.gov/app/publications/abstract.aspx? ID=247350 The University of Chicago Press for The Booth School of Business of the University of Chicago and The University of Chicago Law School Article DOI: 10.1086/658483 Conclusion. The data in these three data sets do not strongly support the effectiveness of sex offender registries. The national panel data do not show a significant decrease in the rate of rape or the arrest rate for sexual abuse after implementation of a registry via the Internet. The BJS data that tracked individual sex offenders after their release in 1994 did not show that registration had a significantly negative effect on recidivism. And the D.C. crime data do not show that knowing the location of sex offenders by census block can help protect the locations of sexual abuse. This pattern of noneffectiveness across the data sets does not support the conclusion that sex offender registries are successful in meeting their objectives of increasing public safety and lowering recidivism rates. The full report is available online at. http://www.jstor.org/stable/full/10.1086/658483 These are not isolated conclusions but are the same outcomes in the majority of conclusions and reports on this subject from multiple government agencies and throughout the academic community. People, including the media and other organizations should not rely on and reiterate the statements and opinions of the legislators or other people as to the need for these laws because of the high recidivism rates and the high risk offenders pose to the public which simply is not true and is pure hyperbole and fiction. They should rely on facts and data collected and submitted in reports from the leading authorities and credible experts in the fields such as the following. California Sex Offender Management Board (CASOMB) Sex offender recidivism rate for a new sex offense is 0.8% (page 30) The full report is available online at http://www.cdcr.ca.gov/Adult_Research_Branch/Research_Documents/2014_Outcome_Evaluation_Report_7-6-2015.pdf California Sex Offender Management Board (CASOMB) (page 38) Sex offender recidivism rate for a new sex offense is 1.8% The full report is available online at. http://www.google.com/url?sa= t&source=web&cd=1&ved= 0CCEQFjAA&url=http%3A%2F% 2Fwww.cdcr.ca.gov%2FAdult_ Research_Branch%2FResearch_ documents%2FOutcome_ evaluation_Report_2013.pdf&ei= C9dSVePNF8HfoATX-IBo&usg=AFQjCNE9I6ueHz-o2mZUnuxLPTyiRdjDsQ Bureau of Justice Statistics 5 PERCENT OF SEX OFFENDERS REARRESTED FOR ANOTHER SEX CRIME WITHIN 3 YEARS OF PRISON RELEASE WASHINGTON, D.C. Within 3 years following their 1994 state prison release, 5.3 percent of sex offenders (men who had committed rape or sexual assault) were rearrested for another sex crime, the Justice Department’s Bureau of Justice Statistics (BJS) announced today. The full report is available online at. http://www.bjs.gov/content/pub/press/rsorp94pr.cfm Document title; A Model of Static and Dynamic Sex Offender Risk Assessment Author: Robert J. McGrath, Michael P. Lasher, Georgia F. Cumming Document No.: 236217 Date Received: October 2011 Award Number: 2008-DD-BX-0013 Findings: Study of 759 adult male offenders under community supervision Re-arrest rate: 4.6% after 3-year follow-up The sexual re-offense rates for the 746 released in 2005 are much lower than what many in the public have been led to expect or believe. These low re-offense rates appear to contradict a conventional wisdom that sex offenders have very high sexual re-offense rates. The full report is available online at. https://www.ncjrs.gov/pdffiles1/nij/grants/236217.pdf Document Title: SEX OFFENDER SENTENCING IN WASHINGTON STATE: RECIDIVISM RATES BY: Washington State Institute For Public Policy. A study of 4,091 sex offenders either released from prison or community supervision form 1994 to 1998 and examined for 5 years Findings: Sex Crime Recidivism Rate: 2.7% Link to Report: http://www.oncefallen.com/files/Washington_SO_Recid_2005.pdf Document Title: Indiana’s Recidivism Rates Decline for Third Consecutive Year BY: Indiana Department of Correction 2009. The recidivism rate for sex offenders returning on a new sex offense was 1.05%, one of the lowest in the nation. In a time when sex offenders continue to face additional post-release requirements that often result in their return to prison for violating technical rules such as registration and residency restrictions, the instances of sex offenders returning to prison due to the commitment of a new sex crime is extremely low. Findings: sex offenders returning on a new sex offense was 1.05% Link to Report: http://www.in.gov/idoc/files/RecidivismRelease.pdf Once again, These are not isolated conclusions but are the same outcomes in the majority of reports on this subject from multiple government agencies and throughout the academic community. No one can doubt that child sexual abuse is traumatic and devastating. The question is not whether the state has an interest in preventing such harm, but whether current laws are effective in doing so. Megan’s law is a failure and is destroying families and their children’s lives and is costing tax payers millions upon millions of dollars. The following is just one example of the estimated cost just to implement SORNA which many states refused to do. From Justice Policy Institute. Estimated cost to implement SORNA Here are some of the estimates made in 2009 expressed in 2014 current dollars: California, $66M; Florida, $34M; Illinois, $24M; New York, $35M; Pennsylvania, $22M; Texas, $44M. In 2014 dollars, Virginia’s estimate for implementation was $14M, and the annual operating cost after that would be $10M. For the US, the total is $547M. That’s over half a billion dollars – every year – for something that doesn’t work. http://www.justicepolicy.org/images/upload/08-08_FAC_SORNACosts_JJ.pdf. Attempting to use under-reporting to justify the existence of the registry is another myth, or a lie. This is another form of misinformation perpetrated by those who either have a fiduciary interest in continuing the unconstitutional treatment of a disfavored group or are seeking to justify their need for punishment for people who have already paid for their crime by loss of their freedom through incarceration and are now attempting to reenter society as honest citizens. When this information is placed into the public’s attention by naive media then you have to wonder if the media also falls into one of these two groups that are not truly interested in reporting the truth. Both of these groups of people that have that type of mentality can be classified as vigilantes, bullies, or sociopaths, and are responsible for the destruction of our constitutional values and the erosion of personal freedoms in this country. I think the media or other organizations need to do a in depth investigation into the false assumptions and false data that has been used to further these laws and to research all the collateral damages being caused by these laws and the unconstitutional injustices that are occurring across the country. They should include these injustices in their report so the public can be better informed on what is truly happening in this country on this subject. Thank you for your time.

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