Litigation & Insurance Tips

Posted on October 15, 2020

Originally published in October 2020

This article has not been updated for current law since the date of its posting on the website. This article is not intended to provide any legal advice. Please seek advice of your professional council.

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Litigation can be a daunting process, and when insurance is involved, can feel complicated. The following tips can help:

Have the insurance "bat phone" at the ready
Identify your litigation team and their responsibilities
Consider the outsiders
DATA: litigation's four-letter word
Reservation of Rights Letters - not as nice as dinner reservations
Prepare for the unknown and consider the alternatives

Have the Insurance “Bat Phone” At the Ready

Depending on the type of insurance you have, giving prompt notice can go from being a good idea, to being absolutely essentials.
For a “claims made” policy, it is essential that notice of a claim be given promptly, and prior to a new policy year beginning.
Even for an "occurrence" policy, providing prompt notice will, at times, provide for a reduced deductible, open up resources available through the carrier, and allow for an early evaluation of the claim.

Identify Your Litigation Team and Their Responsibilities

From either a defense or a plaintiff perspective, early work in litigation almost always results in a better and more cost effective ending.
In order to properly evaluate and manage the claim, there needs to be at least one (and usually more than one) person responsible for internal management of the claim.
Even with qualified outside litigation counsel, having a good internal team, and a clear line of communication will keep legal fees down and allow everyone to hit necessary deadlines.
The team should include people with sufficient decision-making authority, as well as individuals knowledge able about the relevant facts and evidence.

Consider the Outsiders

If your claim or defense is dependent on information held by someone that you do not control, you need to identify and address that issue early.
If there are documents held at vendors, experts, or former associates, those need to be gathered and preserved.
If there are third party witnesses whose testimony will be important, decisions need to be made regarding how to properly approach them to obtain their testimony.

DATA: Litigation's Four-Letter Word

Almost every piece of litigation now involves some level of electronic data as evidence – gathering it for preservation is essential.
Emails and documents stored on company owned servers are generally accessible and relatively easy to preserve.
The Team needs to consider whether there are text messages or other messaging data that is relevant and, if so, how to preserve it.
We have all been thrust into a world where the line between work and home has been blurred. This means that the line between work and personal data may also be blurry. Evaluating that issue early could avoid significant litigation and non-litigation related consequences.
Honestly evaluate your internal IT abilities to manage litigation data issues.

Reservation of Rights - Not As Nice as a Dinner Reservation

If insurance issues a reservation of rights letter, that needs to be addressed early and considered throughout the process.
You need to consider whether separate counsel is needed to address coverage issues.
Is there a real risk of insurance coverage ending mid-litigation? If so, how that would be handled should be discussed with defense counsel and the carrier.
A proper evaluation of the coverage issues can aid not only in defense issues, but also in being prepared for how a case may be resolved.

Preparing for the Unknown and Considering the Alternatives

Depending on the Court in which you find yourself, litigation can involve significant unknowns with regard to risk and timing.
Ensure early dialogue about timing and how the Court handles scheduling.
Ensure early dialogue about risks and costs to avoid surprises, to the extent possible.
Picking an alternative arena for the litigation may be in everyone’s best interest. Post-litigation decisions to invoke arbitration are becoming more common and may provide the ability to get an issue resolved at a lower cost and on a quicker schedule.

Author: Neal R. Devlin