A Survival Guide For Outside Counsel

By Steven N. Joseph

Michael Young, a partner at the law firm Hepler Broom in St. Louis, recently posed a question on LinkedIn:

“For all insurance adjusters, supervisors and in-house counsel out there, what are the things that drive you crazy about outside counsel? Things that we don’t do that we should or things that we do that we shouldn’t?”

Excellent question. And I can spend many pages writing about what outside counsel does wrong or how they continually succeed in driving me crazy.

But I won’t. First, I have to say that outside counsel has a difficult job. They may work for a number of insurance and non-insurance related companies and each company may have its own billing and reporting guidelines.

Even worse, in dealing with one insurance company, you could be dealing with fifty different adjusters, and each adjuster has their own peculiar preference. One adjuster likes short reports. The other likes long reports. One adjuster wants to talk on the phone a lot. The other communicates solely by email. Face it. You just can’t win.

But you can. And it is very simple. The first question you need to get the answer to is “How can I make the claims adjuster’s or in-house counsel’s life a little bit easier with respect to the case I am handling?” If you cannot answer that question, the first thing you need to do is get the answer.

Think about it. Just by asking the question, you are creating a relationship. The person on the other end will want that relationship because it creates trust which helps your business and bottom line. The relationship is not with the file, but the person on the other end of the phone, and with the client. The client has been sued. I have a dispute with an insured that I want to figure out how we can resolve. So, you have troubled people and you will be the person to show them the way out of their troubles.

We want our hands held sometimes. Ok, most of the time. And I want to be able to do this too. I am on the insurer side, and because of the volume of the business, I have seen this claim before and I can walk the insured through the process. I always like to say “I have read the book and I know the ending.” I say that to the person who has not read the book. I like to hear this from defense counsel as well.

And they do. However, if you talk the talk, you have to walk the walk. Outside counsel wants to be put on my Company’s panel counsel list and they tout their experience in handling the kind of claims I see.  They have read the book.

And then, they get on the panel counsel list, and they offer to come into the office to give a seminar on handling the type of claims we see. The offer is accepted. We like the CE credits and it may be helpful for the claims staff. They have read the book, and they will come in and read the book to us.

But, just imagine the disappointment the claims adjuster will feel that after hearing about how outside counsel has read the book, how outside counsel even came in to read the book to them, the outside counsel gets assigned the very claim that the book is based on, and they do not know the book. In fact, outside counsel tells the claim adjuster “Thank you for sending me this very interesting new book!”

The claims adjuster gets further evidence when the adjuster is provided with the semi-annual litigation report. It is a form, and many attorneys fill it out like they are filling out a form at the doctor’s office. The report summarizes the lawsuit that, hopefully, the claims adjuster summarized on his or her own for their own understanding, and the rest of the report just goes on to say that things are premature and there are no answers. This kind of report adds no value.

Does that report make the claim adjuster’s life easier with respect to that particular claim. The answer is “no”. We are unable to figure out what reserve to place on the file. We are unable to determine how we want to resolve the claim. We are stuck. If outside counsel wants to make the claims adjuster happy, make sure that the claims adjuster is not stuck.

The claims adjuster does not expect outside counsel to have all the answers. However, qualified answers are fine enough. Based upon my meeting with the client, my review of the documents I have, my experience with similar cases, this is how I see this case playing out. That is all we need, and the claims adjuster and the outside counsel can then further their relationship by discussing what direction would be best for the case.

I like to tell outside counsel to follow one rule. “If the report does not help you make you a better lawyer is representing your client, and your handling of the case, it will not help me.”

In other words, write the report for yourself first.

Another tip that will always have outside counsel succeed in their relationship with the claims adjuster or in-house counsel is to always evaluate the case with the four pillars of any case. These four pillars, which I will explain, come from my experience as a trial lawyer and my trial working on some big claims doing mock trials. Trials and mock trials.

A trial has the opening statement and the closing argument. The opening statement has the jury hearing what you believe what the evidence will show. I like to think of this as the promises we can keep. I am not the finder of fact. The folks on the jury are. “If I keep my promises, you should find for my client, but if I don’t, I want you to find for the other side. Where will you get a fairer deal than that?”

So, the promises are the first pillar. If we can make lots of promises that are helpful to the case, it has a lower value. If the other side has lots of promises, it may have a higher value.

The next pillar comes from the closing argument piece. “This is my favorite case to try. My favorite case! It is not because of sexy issues or fancy experts.  It is because this is the case I can rely on the common sense of the jury. Whenever I can rely on the common sense of the jury, juries always do the right thing.”

So, does our story have the better common sense appeal. That is the second pillar.

The third and fourth pillars come from the two questions they ask mock juries. The first one is “do you have a strong desire to compensate this particular plaintiff?” Studies show that if the plaintiff is a widow or orphan, juries tend not to care so much about the facts. They just want to give away the money. The third pillar is the sympathy question.

The second question is “do you have a strong desire to see this particular defendant lose?” Not only do we have to think about the sleazy low life that the defendant may be, but also the defenses raised. A particular defense may get you points on the law school exam, but you can turn off a jury by raising them.

You think about those four pillars. Evaluate based on those four pillars. Negotiate based on those four pillars. Try your case on those four pillars. You will have a happy client regardless of the result.

The last thing to be concerned about is surprise. Guess what? Claim adjusters, in-house counsel, and your parents all do not like surprises. So, picture this scenario. You have been writing to everyone how the case is defensible, and you get to the courthouse steps. All of a sudden, everything falls apart. Bad judge. Bad jury instructions. Bad jurors. Bad witnesses.

And bad news. We now have to come up with lots of money to settle the case.

So, I tell my Batman and Robin story. The Adam West and Burt Ward one. Batman and Robin find the bad guys in the warehouse by the river. They beat up the bad guys. But, at the end of the episode, the net falls down on them, and next thing you know, they are tied up and about to be tossed in a vat of boiling oil.

Batman has a utility belt. Robin does not. Go online and check out the pictures and you will see that I am right. How can you have a teenager go out as a crime fighter and not give him a utility belt. (Batgirl had one!)

So, Robin freaks out. “Holy deathtrap, Batman!!” Batman then proceeds to go into his utility belt, take some tool or transistor thingy out, and saves them from a certain death.

The interesting thing is that it happened with every villain. The Joker. Catwoman. King Tut. The Riddler. You think that at some point, Batman and Robin would know about the net. Look up and see if there is a net!

So, the claims adjuster and in-house counsel do not want to be Batman to your Robin. We do not want to go into our utility belt and take out lots of money to save outside counsel from a certain death. The problem with that is that after we save outside counsel from certain death, there could be adverse health consequences for the claims adjuster or in-house counsel as well.

See!! It is easy. And you know what? Not only will following the instructions above ensure that you will have a very happy client. Happiness is contagious. You will find happiness as well!

Getting the Insured’s Consent Without the Hammer

This is the first post at PLUS Blog by Steven N. Joseph. Steven is an accomplished Senior Steven JosephExecutive and Consultant with more than 30 years of success spanning insurance and related verticals (professional liability, financial services, professional services, legal malpractice, accounting malpractice). His broad areas of expertise include litigation, mediation, negotiation, business evaluation, professional liability, insurance law, product liability, legal liability, reinsurance, claims management, D&O insurance, underwriting, legal malpractice, and property & casualty.

He is a recognized industry speaker, has written and presented on the topics of Managing Professional Liability Actions and Negotiation Techniques for the Professional Liability Underwriting Society, Practicing Law Institute, Corporate Counsel of America, and the American Bar Association.


One of the common features of an errors and omissions or directors and officers policy is that, for an insurer to be able to first resolve a claim, they must first obtain the written consent to settle from the insured.

While for some insureds this provision may go unnoticed, for others it is of great importance. They may have an interest in protecting a reputation. They may have a valid concern that a settlement of one claim may spur on and encourage future claims.

Insurers, in exchange for giving the insured the right to consent to any settlement, are given the right to reduce the available limits, typically to the amount that the insurer would have been able to settle the claim for had the insurer been able to obtain the insured’s consent when the demand to settle was made, or a reasonable date certain after that to allow the insured to accept the demand.

The insurer’s interest may be different than the insured’s. They are looking at the cost of defense and the uncertainty of litigation. Their experience may tell them that a settlement would be more cost effective than rolling the dice at trial. A settlement ultimately may be more beneficial to the insurer’s bottom line.

When the insured refuse to settle, too often, almost instinctively, the insurer’s claims professional will issue a letter with reference to the “reduction of limits” clause, and it is typically referred to as a “hammer” letter.

While a “hammer letter” may be necessary in certain circumstances, the issuance of one comes at a certain cost because it pits the insurer against the insured, and creates an adverse relationship. The best way to resolve a claim at the lowest cost is when both the insured and the insurer is working towards the same objective.

As with most negotiations, the most effective way to get movement is to listen and show your understanding of your opposing side’s position. I like to tell insureds that, years ago, I got a call from an insured attorney who was sued for legal malpractice.

The insured told me that he got a call from the plaintiff. I said “The plaintiff? What did the plaintiff have to say?”

The insured then replied, “Well, he told me that I should not take the lawsuit personally. He only wants the insurance money.”

So, of course, I asked the insured how he reacted to this.

The insured then responded; “I first thought of the $100,000 deductible. So, it is cost me money to defend this claim, but this guy does not want me to take this personally.

Then, I thought of the time I have to spend meeting with attorneys, looking at documents, testifying in a deposition, but this guy does not want me to take this personally.

Then, I thought of my reputation. I had to report this to the bar, and my partners are upset with me.

So, it is costing me my  money, my time, and my reputation, but this guy does not want me to take this lawsuit personally.”

The point of this story is that the claims professional needs to show we understand, and we get it. It is very personal, and as much as we talk about emotional claimants who cry how they were injured, there can be very emotional defendants on the other side as well.

While I want to show them that I fully understand their position, I want to make sure that I can give them an understanding of the process. First, I never expect to make any deal, including obtaining consent, because I am making arguments why it is my best deal. I have to explain why it is their best deal as well.

A line I always like to use is “I read the book, and I know the ending.” This line is used to do a bit of hand holding of the insured. Then, I tell them that I have had many insureds who have told me “I have been practicing for 40 years and have never been sued. I want my day in court.”

The response, I explain is that I would love to tell them that their day in court is next Tuesday, about 2 PM, and it should last an hour, maybe an hour and a half. However, too often, it is the month of July and you are not getting your billing hours in, you are not seeing clients, you are not looking at your kids during dinner, and you are not taking that vacation to Disneyland. That same insured then says “Why did I buy insurance. Let’s settle the case.”

The problem with that kind of plan is that by the time you get to the courthouse steps years later, it becomes more difficult to settle the case. Both sides have made huge investments in their positions. Feelings harden. The number you can now settle the case is many times what you may have been able to settle the case years earlier.

I have never had an insured not understand this approach. However, while some insureds will understand, and give the consent to settle, other insureds may push back with a justified fear that once they give their consent, I will give away the candy store.

Another mistake that a claims professional may make is simply seek blanket consent to settle. However, a limited consent to settle may be all that the insurer needs to resolve the case.

Another story I frequently tell insureds in this situation is about a settlement conference in Hartford I attended many years ago before a Federal Court Judge. The opposing sides and their counsel had great animosity for each other and you could feel it in the courtroom.

The Judge opened the conference by saying to everyone, “Principles are a very nice thing to have until it gets in the way of reason.”

I liked that line very much. We settled the case and both sides were equally unhappy with the result. Because I liked that line, I had to tell it to my wife, given the fact that she happens to be a person of great principle.

After I told her the line, she looked at me puzzlingly, as if I came from another planet. She then remarked, “Without principles, there is no reason.”

I use this story to explain to insureds that there may be a number that makes sense to put aside some principle for the sake of reason, or just getting on with life. Then, at some point, the number becomes too high, and there is the line in the sand, and it becomes about principle. I assure them that I do not want them to abdicate that principle that can be seen in the line in the sand.

This approach does not only obtain consent from the insured, but a willing partner appreciative of an insurer who is only looking out for the insured’s, not insurer’s, best interest even when the insured may not necessarily understand what their best interest may be.