Robins Kaplan partner and co-chair of our retail industry practice group, Anne Lockner, recently published an InsideCounsel article about the distinction between being aggressive and being strategic in litigation and negotiations.
As Anne writes, “Lawyers can win all the motions and trials we want, but if you could have resolved the matter three years earlier for a fraction of what it cost to go to trial, your client may not be impressed with your ‘win.’” When working for the Lloyd’s Claims Office 20 years ago, I watched this play out in real time. A law firm sent a 20 page letter describing their extraordinary efforts to recover 100 cents on the dollar in a subrogation action. A couple of weeks later, they submitted their final bill – in an amount $10,000 more than the total recovery. That story stuck with me, and I still tell it frequently.
Lawyers have an array of tools – ranging from a phone call to a jury trial – to address any given problem. While the simplest path may be to prepare for a jury trial immediately, best practice is to thoroughly evaluate the situation, discuss with the client what he or she wants to achieve, and then decide on a course of action on how to reach the goal.
While this is true for most areas of the law, it has particular application in insurance coverage disputes. Moreover, while cost is always a consideration for insurers, there are other unique and complex dynamics for these sophisticated clients. In most circumstances, insurers will value attorneys who can guide them to an efficient result that meets the client’s needs, rather than seeking vindication through expensive litigation or obtaining a “win” purely for the sake of winning.
The lawyer representing the insurance company in a coverage dispute is going to be adverse to his or her client’s customer, the insured. Insurers and insureds often enjoy long-term relationships that have no history of being adversarial. In the context of liability insurance coverage disputes, the insurer and insured often share the same interests, such as resolving litigation efficiently, minimizing damages awards, and discouraging further litigation. Without a well-founded strategy to address any disagreement, the lawyer could complicate efforts to attain the shared goals or could sour the relationship.
So, when selecting the appropriate tools to address a coverage dispute, it is essential for the lawyer to know what goal the client has in mind. It may be a situation where the issue is so important or there is so much money at stake that litigation is the only option. In many coverage disputes, however, litigation should be the backup plan, and the goal should be to reach an agreed resolution through negotiation. In any situation, understanding the client’s goals will allow the lawyer to design the appropriate path.
