Category: General Counsel / In-House Counsel

Hurricane Matthew Bad Faith Survival Kit

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In the wake of Hurricane Matthew last week, another storm looms for insurers — the flood of hurricane and weather-related claims which will follow.  Here is a  quick bad faith survival kit which insurers can use to efficiently process claims and minimize the risk of complaints of poor claims handling or worse, claims-related bad faith.

1.  Sympathize

Claims staff should be trained and prepared to be met with anxious and often angry insureds.  It is a time of extreme high stress for policyholders, and a large early heap of TLC and empathy will start the claims adjuster/insured relationship off on the right foot.  As with any other endeavor in life, people form first impressions rather quickly, which oftentimes overshadow the duration of the relationship.  It is better to have the claims relationship colored with a positive first encounter than a negative one.

It can be as simple as a kind, sympathetic word, or some free or useful information on disaster relief or other basic necessities.

2. Get Boots On The Ground

Most major insurers have pre-planned claims teams to move in quickly to storm-afflicted areas, and there is good business purpose behind it.  Insurers want to be visible, and to be seen as helpful, in the wake of a crisis, and the more staff sent in to help, the more reachable the insurer is going to be, and the less waiting customers will have to do.  So too, it is important to have specialists in the claims process, such as appraisers, inspectors, water remediation vendors, and special investigators,  available in the afflicted areas  as well.

Insurers can be certain that as soon as the storm passes, the plaintiffs’ bar and public adjusters are going to be combing the same territory hunting for dissatisfied insureds.  Insurers will reduce such bad faith exposure and provide plaintiffs’ lawyers and public adjusters less happy hunting by promptly getting boots on the ground to begin the healing and helping and starting the claims process.

3.  “Be Quick, But Don’t Hurry”

This saying was originally made famous by legendary UCLA basketball coach John Wooden, but it is also excellent advice when it comes to hurricane and disaster relief claims processing.  There is no greater time in the life of a claim at which promptness will be more welcomed by policy holders –  their lives have been disrupted in major, and sometimes catastrophic ways, and helping to begin to return a sense of normalcy and reparation to their daily life is good customer service which tends to reduce later criticism of claims handling.

At the same time, claims staff should not be so quick that customers feel overlooked or short-timed, or that the claims work is poorly done.  It is important to be thorough so as not to miss or overlook payable aspects of weather-related claims.  Not only is this good customer service, but thorough claims attention will also cut down on policyholder complaints, breach of contract, and bad faith claims.

4.  Know The Coverages And Educate The Insured, Accurately

Many bad faith suits arising out of natural disaster claims  have in them an unfortunate and annoying commonality:  early promises allegedly made by claims representatives about coverage which later turn out to be over-generous or inaccurate.  Claims staff should already have been long since trained on the homeowners or other property/casualty  policy coverage sold by their companies, and how the gears and internal mechanisms of that policy operate to put claims dollars in the hands of insureds victimized by hurricanes and storms.

Claims representatives should always remind insureds that the written policy language controls when expressing their understanding of the applicable coverage, and offer to supply copies of declarations pages, or the policy terms and conditions themselves.  Claims personnel should never represent that a coverage element will be paid, or how much will be paid, if he or she is uncertain about the accuracy of that representation.  It is far better for a claims professional  to tell a customer that she is unsure about a coverage and will consult and get back to the insured than to bluff or guess at an answer, only later to be proved wrong.

As part of this element, it is also important to be frank and honest, tactfully, as to the particular limits of coverage, or if exclusions may potentially apply.  The early phases of the claims process in the wake of a hurricane are NOT the time to be making outright denials of  coverage, but neither is it a time not to be up front with customers about what limitations in the policy may apply.

As is so often the case, good business and courtesy go a long way  toward minimizing an insurer’s bad faith exposure arising out of the handling of hurricane and disaster – related claims.

Re-Pricing Subrogation Litigation For The Benefit of Clients

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The  beauty of alternative fee arrangements are that they are alternative — the flexibility they provide make them useful in a number of contexts, and  in a number of different sizes (from the single assignment to a large block of work).   That flexibility can be applied to subrogation matters insurers often assign to outside counsel.

Traditionally, such assignments are handled on a simple contingency arrangement, or a flat fee basis.  Certain larger subrogation assignments can be assigned out by insurance company legal departments on an hourly basis as well.  Insurers are interested in other arrangements, however, which can increase their net recovery, which is a nice way of saying cut the costs of acquisition.  Outside subrogation lawyers are a large cost of acquisition.

Enter again the alternative fee option.  We recently quoted a monthly flat fee arrangement on a mid-size property subrogation claim.  There is an overall cap on the number of chargeable months (and therefore the maximum legal fee), and that cap number represents a sufficiently small percentage of the potential  subrogation recovery so as to be attractive to the insurer who was looking for a fee quote.

At first blush, the arrangement would seem to be less efficient than a contingency fee arrangement- it looks as if the outside law firm has an incentive to stretch out the duration of the subrogation case to maximize their fee.  But this suspicion ignores two patent realities: 1.) it is far better business to turn a subrogation case around in three months than three years, because it will lead to additional assignments; and 2.) insurance companies have so much subrogation work that they know the reasonable life span of any given subrogation matter, and therefore how their outside law firms compare to those norms.

Insurance company legal departments face cost pressures today like no other time.  Fee arrangements on subrogation cases which give insurers a means of increasing their net recovery, when compared to contingency, flat, and billable hour arrangements, will become increasingly attractive.  Lawyers and firms looking to keep the subrogation business they have, or to increase their market share, will have to offer something more than the traditional subrogation fee arrangements.

Coverage Practice Note: Enforcing The Employers’ Liability Exclusion in CGL Policies Against Claims of Temporary Employee Status – Part II

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In Part I of this post, we described the challenge created by enforcement of the Employers’ Liability Exclusion in a CGL policy against a claim that the injured employee making a claim against the insured was a “temporary worker,” and therefore exempt by definition from the exclusion.  In Part II, we examine a game plan for successful enforcement of the exclusion.

The Law

Control

While every jurisdiction has its nuances, there are some common elements to the applicable law of the temporary employee exception to the Employers’ Liability Exclusion.  The two most common areas of contention in the case law are the issues of control over the employees performance, and whether the putative temporary employee was “furnished” to the insured employer.

A majority of jurisdictions hold that unless a co-employer somehow is shown to have control over the decision to employ, or over  the parameters and/or the time, hours or compensation of  the putative temporary employee at the insured employer’s business, temporary employee status is not likely established.  See, e.g.,.  Empire Fire and Marine Ins. Co. v. Jones, 739 F. Supp. 2d 746 (M.D. PA. 2010); see also, Nautilus Ins. Co. v. Gardner, 2005 U.S. Dist. Lexis 4423 (E.D. Pa. 2005).

Was Employee Furnished?

By its express terms, the definition of temporary employee requires that the putative temporary employee be furnished in some way to the insured business owner:

“Temporary worker” means a person who [i]s furnished to you to substitute for a permanent “employee” on leave or to meet seasonal or short-term work load conditions.

 

Others seeking to avoid the Employers’ Liability Exclusion have argued that “furnished to” is a liberal and flexible concept, and can include  self-furnishing, or even a mere recommendation or endorsement by a co-employer to the insured business owner.   Both such arguments  have also been unsuccessful, however, in certain jurisdictions.  Empire Fire, supra;  Mendenhall, supra.

Let The Facts Fall Into Place

The facts more often than not will self-settle the case into the Employers’ Liability Exclusion — it is a broad one, and is designed to carve out a large space occupied by workers’ compensation insurance.  Moreover, the “temporary employee” definition is a narrow one, attempts to widen it notwithstanding.  Successful enforcement of this exclusion takes advantage of this exclusion/exception anatomy.

In the example from Part I of this post, there are no doubt facts which might be used to make an argument that the injured employee was in fact temporary, entitling the employer to defense and indemnity under the CGL policy.  The employee, the argument goes, was hired to replace another employee going on leave, and was “furnished” by way of the co-employers recommendation to the insured employer.

But the applicability of the Employers’ Liability exclusion lies in what admissions have been made, and what admissions can be obtained.   The insured employer’s examination under oath was free of any indication of even the suggestion of temporary employment.  The injured employee himself testified he did not believe the insured employer needed permission from a co employer to hire the employee, and admitted the co employer had no right of control over his decision to either accept the offer of employment, or the means by which he performed his work for the insured employer.

If the factual situation looks  by overview like something which should be covered by workers’ compensation insurance,  there is a fair chance that the Employers’ Liability Exclusion of the CGL applies to relieve the CGL insurer of the duties of defense or indemnity of the insured employer.

For more information on successful enforcement of CGL and other policy terms provisions, and exclusions at reasonable, stable monthly subscription fees,  reach  me at chaddick@dmclaw.com or 717-731-4800.

Coverage Practice Note: Enforcing The Employers’ Liability Exclusion in CGL Policies Against Claims of Temporary Employee Status – Part I

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Part I – The Problem

The scenario is not at all uncommon:  a worker  suffers injury at a worksite, and through  the vagaries and  vicissitudes of life, and  for manifold reasons, the business owner has a CGL policy but no applicable workmen’s compensation coverage.  The injured employee was fairly new, and has now filed suit against his (assumed) employer and another company also on the worksite.

This seems straightforward enough:  The applicable CGL policy contains a well-worn, well-known Employers’ Liability Exclusion which disclaims the duty to defend or indemnify the insured business owner for any claims arising out of injuries to employees.  It commonly reads:

EXCLUSIONS

            This insurance does not apply to:

…

d.         Employer’s Liability

                        “Bodily injury” sustained by:

1)        Any “employee” (other than a “residence employee”) as a result of his or her employment by the insured;

            …

 This exclusion applies whether the insured may be held liable as an employer or in any other capacity and to any obligation to share damages with or repay someone else who must pay damages because of the injury.

The difficulty lies, sometimes, in the Definition of who is an “employee,” some of which commonly reads as follows:

DEFINITIONS

…

“Employee” includes a “leased worker”. “Employee” does not include a “temporary worker”.

 …

“Temporary worker” means a person who [i]s furnished to you to substitute for a permanent “employee” on leave or to meet seasonal or short-term work load conditions.

Rarely do the interests of injured employees and employers looking for protection converge.  But in seeking to avoid the Employers’ Liability Exclusion,  such rare common ground appears.  An injured employee wants a fund against which recovery can be made for his or her injuries.  An employer, who for one reason or another finds himself without workmens’ compensation coverage, needs protection from liability for the loss.  The CGL carrier is a convenient solution for everybody — except, of course, for  the CGL insurer, who has neither priced, nor underwritten, nor issued workmens’ compensation coverage for the insured business owner.

Square Peg, Round Hole, No Matter

Thusly, the elegant dance begins.  In examinations under oath, the insured business owner refers to the injured worker as an “employee,” and spoke of “hiring” him or her.  No mention is made of the employee being furnished by a co-employer, nor is  there any mention of the fact that the injured employee was actually brought on temporarily, or to substitute for another employer who was going on medical leave.

Several months later, however, the injured employee files suit for his injuries , and the insured business owner has received a reservation or rights letter f rom the CGL insurer, agreeing to provide a defense but reserving all rights to disclaim coverage  under the Employers’ Liability exclusion.  The landscape has changed — and the Employers’ Liability Exclusion now poses a grave problem for both the injured employee and the insured business owner.  The definition of “temporary worker” definition to the rescue…

The business owner, now represented,  now paints a murkier picture at his deposition in the coverage action compared to his recorded statement.  The injured employee did come on,  the business owner now testifies, several months before someone in the same position was to go off on medical leave.  The business owner got both  permission and a recommendation  to hire the worker from another contractor for whom the injured employee continued to do work while working for the insured business owner.

For his part, the injured employee testified in much the same manner, although he admits that neither employer controlled his hours or performance at the other employer.  He also testifies he didn’t believe the insured business owner needed permission from the injured worker’s co-employer to hire him, even though the co-employer recommended the injured worker highly.

All eyes now  turn to the CGL insurer, and the insured business owner’s counsel tenders and re-tenders the  defense and indemnity of the insured business to the CGL insurer .  What is the CGL insurer to do?

We will answer that question in Part II of this post.

 

 

 

 

Dollarize The Benefit Of Alternative Fee Arrangements For Clients

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In house legal departments are all under the imperative to spend legal expense dollars more efficiently.  At the same time, they may also be wary of trying new fee arrangements with outside firms, unsure of whether or not they will “win” the gamble.  It does not, however, have to be a gamble at all.

Good outside law firms should be feeding back data to their clients on how alternative fee arrangement’s are working.  Where positive, this feedback will only encourage the client to put the arrangement into wider usage.  Where negative, it should be the basis of renegotiation for the benefit of the client, to arrive at an arrangement which does what the outside law firm promised to do:  reduce legal expense.

Here is an excerpt from a recent feedback report sent to a client on how a monthly flat fee subscription arrangement was working out for them.  It is a report in-house departments would all like to see, and should be demanding from their outside lawyers:

Dear _______ and ________, 

I thought you might like an update on how you were doing by using the monthly flat fee subscription arrangement  we piloted on some new assignments you have made.  I hope you will be pleased with the results: 

Case           Hourly                Flat                     Savings

A                 $4,621.00          $3,900.00         $821.00

B                  $5,587.00         $2,925.00          $2,662.00

C                  $2,554.00         $2,985.00         -$431.00

D                  $3,926.50         $2,925.00           $371.50

 

TOTAL       $16,058.50        $12,635.000       $3,423.50

SAVINGS         21.32%

What jumps out at me  is not so much the savings — although that is a good thing — but the leverage the arrangement could provide when scaled up.  In other words, the wider you put the fee arrangement into usage, the more money you are likely to save in legal expense, which is one of the key imperatives of claims and legal departments in this day and age.  Hypothetically, if this arrangement were applied to $200,000.00 in legal expense under the traditional hourly arrangement, you would cut this expense to $160,000.00, a savings of $40,000.00.

We wanted to make sure you knew that we were not merely making promises on the fee arrangements upon which we could not deliver.  It appears the arrangement is saving your department money, which is what any good outside law firm should be trying to do for you in this highly competitive environment.

We hope you are pleased, and we are happy to put the arrangement to wider use whenever you believe it is wise to do so.

 Thanks, as always, for your business. 

CJ

Share the news, good or bad, with in-house legal departments to help them to the job they have been charged to do:  handle the company’s legal matter faster, better, and more efficiently.  It can only help.

Why You Should File (And Win) Summary Judgment In (Almost) Every Bad Faith Case, Part I

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Excepting death and taxes, there are no sure things.  But there are plenty of near – sure things and fat pitches in life, and summary judgment motions by insurers in bad faith cases is one of those things.    Insurers should be filing and winning more of them.  In this post, we undertake a brief review of why more summary judgment motions should be filed by insurers in bad faith cases.  In the next post, we will look at how such motions can be best positioned to win.

But first, why should more summary judgments be sought in bad faith cases?

The Burden of Proof Is Exactingly High, Favoring The Insurer

In most if not all states, bad faith must be proved by a hybrid burden of proof which lies somewhere above preponderance of the evidence, and below beyond a reasonable doubt.  This burden of proof applies as much to the summary judgment stage as it does to the trial of a bad faith case, and it can be used offensively to argue that no genuine issue of material fact can be established.

In my experience, the burden of proof should be stressed more by insurers at the summary judgment stage than it is.  It is a great reminder to the judge to properly orient his frame of reference when reviewing the motion.

Genuine, Bona Fide Bad Faith Is Rare

Don’t believe what the Plaintiff’s bar says.  Claims adjusters and claims departments simply do not benefit from intentionally and unfairly  handling claims, and the list of why they do not benefit is a long one.  Most people want to do a good job and do it fairly.  Even the ones that don’t  seek to avoid unwarranted attention, and don’t want to get fired.  Nobody in a claims department wants their name associated with a bad faith suit, to be drug into interviews and depositions, or to be responsible for legal expense and risk.

I have written on this subject before, but in nearly 30 years of practice I can count the number of instances of claims handling with malice aforethought on a single hand — half of a single hand, actually.  It just does not happen.

Do mistakes happen in claims handling?  Of Course.  Negligence?  Occasionally.  But bad faith law allows safe harbor for both, and neither statutory nor common law bad faith claims are designed to punish an insurer for either mistakes or negligence.

Bad Faith Rulings Are Inherently Ideal  For Judges To Make

Nearly ten times out of ten, the proper adjudication of a bad faith case can be made following discovery, when a judge can look at the facts of the specific claims handling, and apply the particular bad faith law of the jurisdiction to serve a gate keeping function.  If  a judge finds a reasonable basis for handling the claim at issue, the inquiry is over.  And only in the rarest of cases will a judge genuinely believe that an insurance bad faith case can go to trial.

Summary judgments for insurers in bad faith litigation are fat pitches in which the odds favor the insurer.  In the next post, we will examine how to maximize that advantage, and win more summary judgment motions.

For more information on how to file and win more summary judgments in coverage and bad faith cases, and to reduce your legal expense while doing it,  reach  me at chaddick@dmclaw.com or 717-731-4800.

Alternative Fees Case Study: Flat Monthly Subscription Fee Arrangement’s First Birthday Party

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Innovation is worrisome to outside law firms.  In most cases, at best it is given passing lip service as part of the DNA of any law firm attempting to keep pace with the changing market of working for in house legal departments.  At worst, innovation is the object of secret fear and loathing.  The billable hour is comfortable, predictable, measureable.  The problem is,  your clients don’t care about that.  You are in business for them, not the other way around.

But to all of those in secret fear of innovation and giving alternative fee arrangements a try, take heart, and be not afraid, for I bring good news.  In actual, real-life practice, the flat monthly subscription alternative fee arrangement works, and is popular with in house legal departments looking for greater cost control over outside legal fees.

In the past year a large, multi-state errors and omissions insurer was looking to its outside counsel to offer alternative fee options.  I matched them up with the monthly flat fee subscription arrangement with limits on the duration of the subscription for the matters they assigned us.  At the time we were doing work for this legal department in only one state – Pennsylvania.

The mechanics are straight forward – I conduct a brief review of every new assignment to get a sense for the size and probable case duration, and then provide the in house legal department with a quote for handling the case, expressed in a set payment per month with a maximum duration of months.  Each side can request to renegotiate the case duration if there are major changes in case complexion during the life of the case.  Trial prep, trial, and appeal are separately negotiated if necessary on either an hourly fee or flat fee per day basis with parameters on the number of agreed upon days, at the option of the client .

We are now a year into the program, and  we are now working for this insurer in five states, not one.  They have fed back to us the following about the program:

  • the primary benefit to this insurer’s claims operation is the injection of some cost – certainly into an inherently cost-uncertain endeavor — litigation;
  • cost-efficiency of the subscription arrangement grows with the number of assignments made on that basis;
  • they like the billable hour comparison data we provide so they can compare the relative cost, and benefits received, by the monthly subscription arrangement;
  • they enjoy the ability to adjust the subscription duration should new developments in the case, changes in parties, etc., take place during the life of the case; and
  • they appreciate the fact that we often “no charge” them for any months in which no substantial work takes place due to factors beyond our control, and they are willing to extend the subscription duration for a corresponding length in exchange.

Innovation in outside law firms can be taken beyond merely lip service.  It can be put into practice when it comes to alternative fees, and it can be successful for both the lawyer and the client.

For more information on how to deliver efficient, and cost-effective service to  your in house legal department through the use of flat monthly subscription and other alternative fee arrangements, reach  me at chaddick@dmclaw.com or 717-731-4800.

Subscription Flat – Fee Efficiency Comes to Insurance Litigation and Non-Litigation Matters

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“Adapt or die….”

Billy Beane, Moneyball

As insurance company legal departments continue to feel organizational pressure to improve efficiencies in the  engagement of outside law firms, many outside firms lag behind in adapting products and services to meet this need.  Those firms who have, however, risen to meet the demands of the market continue to innovate.  Subscription fee arrangements are one such innovation.  Under these arrangements, in which clients pay outside firms an monthly flat fee  subscription  for legal services, provide much – wanted control over expense, and help insurers’ legal departments convert variable costs into fixed ones.

We have discussed a broad range of alternative fee innovations in these pages many times in the past.  Subscription fee arrangements represent a narrow but powerful segment of this range.

Rather than pay outside firms by the hour, a referred matter, litigated or not, is quoted by the outside firm at a flat monthly price.  Assignments with a shorter life span of 60 days are simply quoted on a flat rate fee basis.  Most litigated matters are quoted with a cap on the number of months the subscription fee is to be paid.  Both the lawyer and client agree, however, to be open to reasonable adjustments  of the length of subscription, especially in cases of unforeseen circumstances, delays, as well as events which may shorten the life of the assignment.  Trial preparation and trial are billed separately, either on an hourly basis, or an after-negotiated flat rate per day quote.

For comparison purposes, our firm provides clients with a statement of what a subscription fee matter would have cost if it were billed hourly.  This data is used not only to demonstrate extra value provided to the client, but to make adjustments in the monthly subscription fee, if necessary, in similar future assignments to make sure the client is satisfied with the arrangement.

The subscription fee arrangement is also scalable.   Assignments can be negotiated in blocks for a single subscription fee, for example, and volume subscription discounts can also be offered and agreed upon.

Subscription flat fee arrangements are win-win for both legal department and outside law firms.  Firms are encouraged to handle matters quickly and efficiently, and insurance company legal departments can migrate a large portion of outside legal expense to a fixed cost as opposed to a highly variable one.

Reach  me at chaddick@dmclaw.com or 717-731-4800 for more information on how the use of flat fee subscription agreements in insurance litigation and non litigation matters can create efficiencies for your legal department.

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

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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.

 

Outside Counsel Re-Packaged and Re-Focused: Four Pillars

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If your outside counsel has not worked on re-purposing how their services  are delivered to suit your needs, you are entitled to ask why, and to ask them to get to work on doing so.  In-house legal departments in the current market are entitled to value in at least four key areas:

1.  Monthly Access to Counsel at No Cost For Questions on Miscellaneous or on-Assigned Matters – My clients each have several hours per month of free phone consultation time, analysis, or research on any subjects of their choosing.   A good client who invests their money in you to represent them in paid matters is entitled to be able to pick up the phone or send an email with a random or miscellaneous question without worrying about the meter running.  It is a way to provide value to good clients, and a way to encourage them to reach out and stay in touch to take advantage of the benefit.

2.   No-Cost Quarterly  At-Client “Office Hours” – This is an extension of the no-cost consultation service.  My clients each get eight hours per quarter of my spending time in their offices, where I can assist and consult on matters of importance, provide updates or continuing education on topics of interest, or to listen and learn about the legal department’s or company’s goals and objectives, and to discuss how we might assist the client in achieving those goals.  It is a great way to learn more about a client’s DNA and institutional culture, so that legal services can be aligned with those things.

3.   Alternative Fee Options, And The Willingness To Negotiate Any Fee, Any Time – I have posted about the complex subject of alternative legal fees many times, and have a page dedicated to describing many popular alternative fee options.  Clients like the ability as they assign matters to outside counsel to toggle back and forth between traditional hourly rate arrangements and alternative fee proposals based on the nature of the matter assigned.  The only real rule here is absolute flexibility.  The client should be given the option of deciding which fee approach they feel is best for them at the outset of assigning a matter.

Outside counsel  should be open always to adjustments in the fees as a case or matter proceeds.  Circumstances change, cases can take unexpected twists and turns, and an in – house legal department should never, never feel locked into an unfavorable fee agreement after circumstances material change.  Setting legal fees is NOT an adversarial process between outside counsel and general counsel;  rather, it is a collaborative one.

4.   Re-Thinking Hourly Fee Engagements To Provide More Value – Some clients still prefer engaging outside counsel by way of a traditional hourly fee deal.  At the same time, however, in addition to the extras discussed above, they are also looking for value from outside counsel even under these engagements.  We have re-packaged our hourly fee engagements with legal departments, and re-thought how they should operate.

Our clients have begun to regularly see “No Charge” line items in their invoices.  Under our re-vamped hourly rate system, clients are not charged for routine letters and phone calls, and  charged only for substantive work which moves a matter forward.  In that way, a client feels like it is paying only for value received, not merely a ticking clock.

All of these pillars serve the same goals:  First, these features encourage clients to reach out to outside counsel on non-assigned matters, and feel like they are partnering together to serve the common goal – the client’s interests, without necessarily worrying about cost.  Second, these features provide value to clients on the matters which are formally assigned to outside counsel.

To put these advantages to work for your in-house legal department or office of general counsel, reach me at chaddick@dmclaw.com or 717-731-4800.