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Looking forward: DTCI and the insurance industry

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dtci-huelatThe Defense Trial Counsel of Indiana is a strong and diverse organization. Our members are involved in all types of litigation, and we enjoy the respect of our adversaries and the courts. However, when I look to the future, I see storm clouds gathering on the horizon because one of the industries our defense counsel represents has chosen a course that will ultimately cause damage to itself in the future. The industry I am referring to is the insurance industry. Specifically, many insurance companies have gone to the exclusive use of in-house counsel except in cases involving a conflict. Other companies have asked their defense counsel to accept files on the basis of an agreed defense figure that is far removed from the actual time and effort required to properly defend the insured and our client.

While budgets and billing guidelines are important tools to keep in check defense costs, some companies employ these guidelines in such a way that few defense firms can properly defend the insured and still make a profit. The result of all these burdensome obligations is that many fine firms are turning away from insurance defense assignments. And while there are still competent firms willing to handle insurance defense cases, the number is dwindling. At the same time, the number of young trial-worthy defense lawyers waiting in the wings is much smaller than it was 20 years ago. The industry is facing the likelihood of a shortage of experienced defense lawyers in the not-too-distant future.

Examples of burdensome billing practices include:

1. When an attorney bills for discovery-related work, the insurance company reduces the attorney-fee rate to a paralegal rate. In short, there is a $50 per hour reduction.

2. Many companies refuse to pay the law firm for the time, effort and costs to issue a subpoena for the production of records and documents, despite the fact that the law firm must pay its staff to type and produce the subpoena and motion to produce. The law firm must also incur the cost of the stationery and postage – none of which is reimbursed.

3. Lawyers must examine and review all pleadings, discovery and court-generated orders, yet many companies will not reimburse the attorney for the time to review such matters. For those companies that do reimburse for this fee, often it is paid at a paralegal rate.

4. Lawyers are asked to travel great distances. However, many companies refuse to pay the lawyer for the time and expense involved or will only pay a portion, even though the lawyer would not be traveling and incurring expenses if it were not for the activity on behalf of the company.

5. Authorized research and other related matters are routinely reduced by auditors who have no clue of the lawyer’s effort in a given area. While the law firm can always appeal a reduction, the time it takes to appeal is generally high and extremely disruptive of the lawyer’s practice.

It is difficult to understand why so many companies have chosen a path that makes it virtually impossible for its defense counsel to thrive, since the average hourly rate for defense counsel in Indiana is only $135 an hour. This is much less than the hourly rate for other areas of practice in Indiana and is significantly less than the national average hourly rate. Moreover, many in the industry have acknowledged that attorney fee costs have remained rather consistent over the years when compared to the premium dollar, that is, 2.5 percent to 3.5 percent. (For every dollar spent, only 2.5 to 3.5 cents are used for attorney fees.)

Let me also add that many fine companies do not employ burdensome billing practices that are destructive to the long-term health of defense firms and the industry they serve. Nevertheless, as long as the rest do employ them, we will continue to see a fast retreat by defense firms from this area of practice.

It is time for the insurance industry to sit down with its defense counsel and address the reality of burdensome billing guidelines, as well as the exclusive use of in-house defense counsel. The failure to act now will cause significant harm to the industry in the future and to the insureds the industry must defend.•

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Jerry Huelat is a partner in the Michigan City firm of Huelat Mack & Keppien. He is the 2013 president of the Defense Trial Counsel of Indiana. The opinions expressed in this article are those of the author.

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  1. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

  2. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  3. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  4. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

  5. Diversity is important, but with some limitations. For instance, diversity of experience is a great thing that can be very helpful in certain jobs or roles. Diversity of skin color is never important, ever, under any circumstance. To think that skin color changes one single thing about a person is patently racist and offensive. Likewise, diversity of values is useless. Some values are better than others. In the case of a supreme court justice, I actually think diversity is unimportant. The justices are not to impose their own beliefs on rulings, but need to apply the law to the facts in an objective manner.

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