To Settle or To Defend: - PowerPoint Presentation

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To Settle or To Defend:An Innovative perspective on Claim Resolution

Jack Blyskal Carl FessendenCSAC-EIA Porter ScottHeather Fregeau www.porterscott.comCSAC-EIA www.csac-eia.org Slide2

Have you ever seen this?A claim is in litigation, proceeding toward trialTrial is now about 30 days away

Defense costs are above $200,000The attorney calls you to say:Slide3

Have you ever seen this?I think we better try to settle this claim!

(Why wasn’t that considered $150,000 ago?!?)Slide4

Have you ever seen this?On a related note, The claim includes civil rights allegations, or some other count that triggers third-party attorney fees

Plaintiff attorney fees are 2-3 times your defense costs to dateAgain, why didn’t we try to settle this earlier, before the fees were so high?Slide5

Plaintiff Attorney Quote“Instead…the County engages in months of litigation and racks up legal fees. And then they settled. Who’s the Einstein that settled on that strategy?”

Michael Thomas, attorneySlide6

Costs of defenseLegal fees and expenses represented as a percentage of total paid on a claim is:

29% (for $100.6M)(from CSAC EIA closed claims, dates of loss 7/1/05 through 6/30/11. Plaintiff attorney fees are not captured in our data so not available. Where they apply they are usually more than the damages.)Slide7

Why are these costs so high?Why are they allowed to continue?

Rarely is an early assessment done on a case as to whether it should be settledRarely is an early demand elicited*Cases are frequently driven by fees rather than the merits of the case (both sides)Unrealistic demands* See next slideSlide8

Who’s on First?Should you make an offer?Should you wait for a demand?Does it make a difference?

Pros and ConsSlide9

Elements which indicate settlement Clear liability, orLow share of liability (settle out)

Policy limits case, orMinimal damagesPossibility of plaintiff attorney feesMinimal number of defendantsPoor defense witnessesHeavily emotional issues (damages, facts, etc.)Jurisdiction issuesSlide10

Elements which indicate defenseLow liability (Can’t settle out)Multiple defendants

Large damages (but not policy limits)Unreasonably large demandPlaintiff attorney “churning”Favorable jurisdictionsPolitical considerationsSlide11

Elements which indicate settlement Clear LiabilityNo defense to owing something

Might admit liability at trialOnly issue is damagesDiscovery should focus in this areaTry to negotiate directly, or set early mediationLow Share of Liability (Multiple Defendants)Try to settle out your share, let others go to trialSlide12

Elements which indicate settlement Policy Limits CaseFull coverage is exposed

Why incur expenses beyond limit?May be able to get an “early payment discount” for settling now, to reflect the time value of moneyWhy erode limits, if defense costs do so?Why spend time and energy?Slide13

Elements which indicate settlement Minimal DamagesExposure is low

Why spend far more than the case value on discovery?May be political or “message” reasons to do soMay need mediator to get the plaintiff to realistic numberSlide14

Elements which indicate settlement Plaintiff Attorney’s Fees OwingFrequently the plaintiff fees exceed the case value

Why allow the fees to grow?May need mediator to get the plaintiff attorney to realistic numberMay need to make statutory offer to make him realize ongoing fees will not be reimbursedSlide15

Elements which indicate settlement Poor defense WitnessesEven if the facts are on your side, if your witnesses don’t “sell” the story, you probably won’t win

Timing of settlement prior to witness depositions may improve the value you can reachLike with clear liability, you probably won’t win the caseSensitive documentsSettle before they are discoveredSlide16

Elements which indicate settlement Heavily Emotional IssuesCases involving sympathetic minors and/or catastrophic injuries impact juries, lead to awards

Recognize reality and try to settle case early and reasonablyLike with clear liability, you probably won’t win the caseIf you can’t settle, try to have case heard by judgeSlide17

Elements which indicate settlement Jurisdiction IssuesSome jurisdictions, especially with some defendants, are not likely to get defense verdicts

In many areas the police are viewed as the enemy, or corruptIn some jurisdictions if that city is the defendant, jurors tend to rule for the plaintiffKnowing the plaintiff attorney skills, local vs. outsiderThe ethnicity of the claimant and defendant may have an impact with some jury pools, both pro and conSlide18

When Settlement is IndicatedPrioritize discovery and place on a timelineKeep discovery deadline in mind

Get an extension for discoveryMitigating factors?Selecting a mediatorSlide19

Elements which indicate defense Low LiabilityIf a plaintiff will not accept his/her level of contribution to an accident, there may be no choice

Multiple DefendantsIt may be nearly impossible to reach an accord to allocate liability among the partiesConsider defendants-only mediationSlide20

Elements which indicate defense Large DamagesDamages, especially if there are pre-existing conditions, or questions as to causation, may impede the ability to settle a case

Ongoing damages may dictate to a plaintiff that they want to wait as long as possible to try and get the maximum consideration of what will be involvedSometimes too soon may be “too costly”Medicare considerationsSlide21

Elements which indicate defense Unreasonably Large DemandA demand does not necessarily resemble real value. But if the plaintiff won’t “come to earth”, settlement will not be possible

Don’t quit just because the initial demand is high, but be aware of the problems this creates, including plaintiff expectationsSlide22

Elements which indicate defense Plaintiff Attorney “Churning”Some attorneys see cases which award fees as opportunities to go as long as possible to maximize their fees

May need to consider statutory offers to bring these cases in line. If the attorney knows his fees are at risk, he is less likely to put in the extra workSlide23

Elements which indicate defense Political ConsiderationsSome public entities decide they want to send a message, make a practice not to settle, may have an issue with the specific plaintiff or attorney, etc.

Try to explain the realities of the case, and the cost to themInvolve excess carriers and/or pools early in the processSlide24

Tools to ConsiderStatutory Offers CCP 998 – State jurisdictionRule 68 – Federal jurisdiction

ENEMediation/ADRConsider Hi/Lo when far apartMay require additional discovery to prepareSlide25

Questions or CommentsSlide26

Carl FessendenPorter Scott

350 University Ave, Suite 200Sacramento, CA 95825(916) 929-1481www.porterscott.comMr. Fessenden graduated with majors in Political Science and Communications from the University of California, San Diego, in 1988. He graduated from University of the Pacific, McGeorge School of Law in 1992. Mr. Fessenden joined Porter Scott in 1994 and has been a shareholder since 2000.

Carl represents clients throughout the State of California in a variety of forums, including the Superior Court, the Court of Appeals, the U.S. District Court for the Northern and Eastern Districts, and the Ninth Circuit Court of Appeals. He represents public entity clients in cases involving harassment, discrimination, and retaliation claims; civil rights; labor issues; whistle blower claims; contract actions; and dangerous condition of public property.  Slide27

Jack Blyskal

CSAC Excess Insurance Authority75 Iron Point Circle, Suite 200Folsom, CA 95630(916) 850-7300www.csac-eia.orgJack Blyskal has over 40 years multi-line experience in the insurance field, with most of that time in Claims or Claims-related positions. In addition to both handling and managing most areas of Claims, he has served as a Claims Training Manager, Recovery Manager and Claims Audit Manager. He is currently the Chief Claims Officer for the CSAC-Excess Insurance Authority, the largest Property/Casualty JPA in the United States. In this role he oversees the Claims Functions for the Members’ JPA in Workers’ Compensation, Liability, Property and Medical Malpractice.

Jack received a Bachelor of Arts Degree in English from Bucknell University, and a Master of Arts in Organizational Management from the University of Phoenix. He also has the insurance designations: CPCU, Associate in Risk Management, Associate in Claims, Associate in Insurance Services, and Senior Claims Law Associate. Slide28

Heather Fregeau

CSAC Excess Insurance Authority75 Iron Point Circle, Suite 200Folsom, CA 95630(916) 850-7300www.csac-eia.orgHeather Fregeau has worked for CSAC EIA for over 10 years in the Liability Claims Department. Prior to working at CSAC EIA, Heather worked in Human Resources and management positions. Heather has attended several mediations and successfully resolved claims with a mind towards fiscal responsibility, political concern, and what is right for the exposure. Heather holds her AIC and is a graduate with honors of University of Phoenix. She resides in Rocklin with her husband and two children ages 9 and 7.