How To Resolve Claims While Saving Millions Of Dollars
The alternative to costly, protracted litigation is simple - aggressive, early investigation of a claims in conjunction with the use of pre-litigation mediation.
The specific early resolution program that has been implemented by various companies has been uniquely tailored to each company's needs. Each such program was designed to address the types of claims that the companies anticipated would be diverted. While every program differs to some degree, all have certain essential elements as a common core. These elements are:
◊ Scheduling an early meeting with claimant and claimant's counsel to identify factual basis for the claim(s) and to inspect the product, scene, and/or any other evidence that is at the heart of the matter;
◊ Securing an extension of time within which to respond to the complaint (if one has been filed/served);
◊ Securing an agreement to abate all discovery pending efforts to achieve an amicable resolution;
◊ Securing an agreement to informally exchange all necessary, relevant information and documentation that is discoverable and that would permit both sides to reasonably evaluate the liability and damages issues;
◊ Conducting informal interviews with all potential eyewitness, neighbors, employers, co-employees, or anyone with information as to the liability and damages aspects of the claim;
◊ Scheduling a non-binding mediation to take place within a 60-day time frame with a mediator who is known to be effective in resolving disputes;
◊ Realistic, preliminary evaluation of exposure, both in terms of liability and potential damages;
◊ Taking the sworn statement of the claimant (or the person most knowledgeable with regards to the matter) prior to the mediation. This statement is typically taken the afternoon prior to the mediation for the sake of efficiency but it can be scheduled/taken at any time prior thereto.;
◊ Adjustments to exposure evaluation based on the information provided during the sworn statement; and
◊ Participation in the mediation.
To minimize legal fees and costs, the initial meeting with the claimant and claimant's counsel is conducted by an in-house representative. When necessary, the company representative is assisted by other in-house personnel, i.e. as in the case of a product inspection which would be attended/conducted by an in-house engineer.
All other steps are undertaken with the participation of select outside legal counsel who acts as settlement counsel.
Some companies have attempted to emulate the program with a twist, using in-house counsel or their litigation counsel instead of retaining separate settlement counsel. The percentage of claims resolved by these companies is drastically less when compared to companies that have chosen to stay within the parameters of the program and retain settlement counsel. That is because in order for the process to have the best chance of success in resolving claims early, counsel must be committed to:
◊ Resolving claims within as short a time frame as possible; and
◊ Obtaining the information needed to evaluate a claim through informal exchanges with opposing counsel; and
◊ Adapting to the nuances of the expedited process.
In-house legal counsel typically do not have the experience of advocating in the mediation context and are often times unable to view claims objectively. Litigation counsel may well excel in the litigation arena but as will be discussed below, there are dynamics in play that may prevent them from being the best choice for early claims resolution.
That is why in order to maximize the likelihood of resolving claims within the process, separate settlement counsel is necessary.
Selecting settlement counsel involves retaining someone who is experienced in the dynamics of mediation and negotiation. Successful advocacy in the mediation context requires legal counsel to be firm and aggressive in advancing the company's position, but compassionate and sensitive with regard to the aggrieved party sitting across the table. The typical pit bull mentality that is common in litigators simply does not advance a company's ability to resolve claims amicably as over aggressiveness and insensitivity only guarantees a failed mediation.
In short, someone whose practice includes a significant emphasis in advocating during mediations necessarily brings an increased level of experience, vision and demeanor that cannot be matched by someone whose expertise lies exclusively or primarily in litigation.
Counsel also has to place the company's interests ahead of his or her own secondary interests, i.e. billable hours. The goal is to resolve as many claims as possible without resorting to full blown litigation. Thus, counsel must share in the company's desire to settle claims as soon as possible. As discussed on the previous page, this is a very difficult role for litigation counsel to embrace.
Strict adherence to the process has resulted in demonstrable success for companies. As will be shown in the next section, the process has yielded a settlement rate that exceeds 95% in thousands of claims, a reduction in litigation related expenditures by over 75%, and client savings in excess calculated in the millions of dollars.