The Relationship Between Insurance Companies and Outside Counsel
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The document discusses changes in the relationship between insurance companies and law firms due to increased legal expenses and the complexity of claims. It highlights how insurance carriers are managing legal spending through data analysis, auditing services, and alternative fee arrangements. Specific practices include the use of legal fee audits and requirements for minimum professional liability insurance limits.
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The Relationship Between Insurance Companies and Outside Counsel
- 1. #ACIMalpractice ACI’s Advanced Forum on LPL/Legal Malpractice Larry Fine Global Head, Professional Liability Claims AIG Property Casualty Timothy J. Gephart VP of Claims Minnesota Lawyers Mutual John C. Minett SVP and Counsel – PL Claims Manager Endurance Services Ltd. November 19-20, 2014 Laura M. Simon Executive Vice President B&B Protector Plans, Inc. d/b/a Lawyer’s Protector Plan Moderator: Edward J. Zulkey General Counsel Emeritus and Senior Counsel Baker & McKenzie LLP Tweeting about this conference? The Relationship Between Insurance Companies and Outside Counsel
- 2. #ACIMalpractice Introduction and Overview: Reasons for Changes in the Relationship between Insurance Carriers and Law Firms
- 3. #ACIMalpractice •Insurance companies face pressure to better manage the legal expense associated with claims litigation •From 2008 to 2012 legal spending for the P/C insurance market remained flat at $21.3 billion while premiums shrank •Insurance carriers report that claims complexity and severity has increased •Law firm rates have increased 3-4%
- 4. #ACIMalpractice •Leading insurance carriers manage legal spending through detailed analysis of case and claim outcome data from modern claims and legal bill management systems •Multivariable statistical models •Use of Key Performance Indicators (KPIs) such as settlement rate, settlement cycle time, claim and case outcome metrics
- 5. #ACIMalpractice Specific Examples of Actions Changing Relationships with Law Firms
- 6. #ACIMalpractice •Legal fee bill audit services •Bottomline Technologies® •Website indicates a customer savings range of 8-15% •Over 11,000 law firms submit billings to Bottomline •Legal Cost Control, Inc. •Began offering bill audit services in the mid-1980s •According to LCC’s website, the company reviews over $60 million each month in legal and professional billing
- 7. #ACIMalpractice •Alternative fee arrangements •Requirement of minimum lawyers’ professional liability insurance limits (e.g. Berkeley Companies and Travelers are requiring minimum of $5 million limits of liability)