Desk Clearing: Efficiently Using Outside Counsel to Evaluate, Negotiate, and Close Claims

efficiency

Decades of the billable hour have left insurance company and other commercial legal departments gun-shy about using outside counsel as a resource. Outside counsel is often thought of as far too expensive and inflexible.  But that is changing, and offices of general counsel should be aware of the change to position their departments to take advantage of it.

The “small” matter, or the matter not in litigation but percolating,  are two of the largest drains of psychic energy for the in-house legal department.  Nevertheless, legal departments are loathe to refer such matters out, fearing the cost of doing so cannot possibly be justified.  This is no longer true — there is a way.

Outside counsel should have a pricing structure in place to allow, even  encourage, the referral of the small and the percolating matter, either one at a time or in block assignments.  Flat rate pricing, block pricing, and other cost-favorable arrangements are now available, permitting  legal departments to send pesky matters out for quick evaluation, and where appropriate, negotiation and conclusion.

Closed matters.  That is the goal of every law department of every insurer and corporation.  But all too often in the past,  sending a small or percolating matter out to counsel was the farthest thing from leading to a closed matter, in the minds of general counsel.  It was the opposite of getting a matter closed — it was instead seen as  the  opening a matter, and the start of having to pay for the privilege of keeping it open.

Outside law firms for too long have been seen as matter  “gators” — elongators and prolongators;  instead, they should be seen as truncators and terminators.  Legal departments should have the ability to take a look at the stacks of small unresolved matters on their desks, and be incentivized to send the stacks to outside counsel with instructions to dispose of them quickly, efficiently, and inexpensively.   And outside counsel should know how to do that.

If you do not have an outside firm who can perform that service for your legal department, it is not because there are no outside firms who can do it.  It is only because you haven’t yet located the right outside firm.  Hire fewer elongators, and more terminators.

 

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Author: CJ Haddick

C.J. Haddick is a Director with the law firm of Dickie, McCamey, & Chilcote, PC, based in Pittsburgh, Pa. He has advised and represented insurers in insurance coverage and bad faith litigation for more than a quarter of a century, and written and spoken throughout the United States on insurance coverage and bad faith prevention and litigation. He is Managing Director of the firm's Harrisburg, Pa. office. Reach him at chaddick@dmclaw.com or 717-731-4800.

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