Andrea M. Alonso and Kevin G. Faley
*Originally published in the
For The Defense
August 2000

The entire world is undergoing dramatic climatological changes. Record heat waves, droughts, flooding – all allegedly attributable to “El Nino” or “La Nina” – are affecting the way we live. The winds of change are also tearing through the insurance defense industry. Only the law firms that bend in the wind will survive the storm.

Across the country, reputable defense firms with long histories of representing insurance companies and self-insured clients are losing business. Insurance companies are moving their claims to other law firms or ceasing to send new files to those firms. The reason is simple. The firms are not listening to the insurance companies when they tell the lawyers what they expect. The insurers have told the lawyers to:

  • Communicate more effectively with us and follow our guidelines;
  • Allow your bills to be reviewed and devise alternative billing schedules;
  • Utilize alternative methods to dispose of cases.

The failure to heed these basic requests will result in a firm being removed from the company’s ever changing outside counsel list.


We live in an age where people walk around airports apparently talking to themselves. They are, in fact, in constant communication with their clients, their offices, or in some other way furthering their business. The insurance defense industry is reflective of this atmosphere. Gone are the days when it was acceptable to allow days to pass before a phone call or letter was responded to by an attorney. Most companies demand a return call BY THE END OF THE SAME BUSNIESS DAY at the latest. Excuses such as “I was on trial,” “I was out of town on business,” or “I was on vacation” are no longer accepted by insurance companies.

You are expected to be able to be reached by your client – at any time. Domestic cell phones are de rigueur. If you travel abroad, rent a cell phone before leaving the United States or at the foreign airport. The days of escaping from the pressures of your practice are gone. Either you get back to you client immediately and attend to his or her needs, or he will find another law firm who will get back to him more quickly.

This sense of urgency must be conveyed to young associates at the insurance defense firm. Excuses for failing to return phone calls such as “I was in an all-day deposition” are not acceptable. They must be told to return phone calls after hours or before the start of the next business day. Going on vacation and leaving no number where they can be reached or giving an alternative attorney’s number is equally unacceptable. Insurance professionals are under tremendous pressure to get answers immediately. They cannot wait for a young associate to return from his or her honeymoon before they properly place reserves on a file.

Law firm partners especially must provide home and vacation phone numbers to all their clients. Claims managers and supervisors must have instant access to partners and managing attorneys throughout the litigation process. This is necessary in the event that a junior attorney is not handling a file in accordance with the company’s directions; the partner must be ready to order appropriate change in this behavior. Or, an associate may not be responding to the company’s requests. The insurer may become so infuriated with the law firm that files are taken away from the law firm before an attempt to remedy the situation is made. Direct communication between the senior partners in the firm and the insurance company may be necessary to prevent this deterioration in communication.

Contact between partners and insurer is most crucial during a trial. Many times a witness’ testimony goes past five o’clock and testimony will resume promptly at 9:00 a.m. the next day. Conversation in the evening with the trial attorney and/or senior partners may help to determine an appropriate time to settle the case; or, it could lead to a shift in the trial plan.

The improvement in communication demanded by the insurance industry especially applies to following company guidelines. Long gone are the days where a law firm accepted a case, tried it to conclusion, and submitted a final bill. In the past, communication with the company regarding the status of the litigation was left to the handling attorney’s discretion. Nowadays, time limits for sharing information must be specifically adhered to by outside counsel. If the claims manager demands an immediate acknowledgement of receipt, by fax or phone call, of a new claim file, the law firm must set up a system to do so. If a 45-day conference or preliminary report is required, it must be submitted within 45 days. If 90-day status reports are required, they must be timely supplied.

Insurance defense attorneys have been heard to complain that time limits differ from insurance company to insurance company. They complain that it is difficult to set up their diary systems because of the variety of demands. Clearly, this is no fault of any insurance company. The lawyer simply must be flexible if he or she wants to handle the business of more than one carrier. A failure to create – and follow – a diary system to meet the demands of different insurers will result in the loss of the business of those insurers. The adoption of standard reporting guidelines – such as those recently promulgated by the Defense Research Institute (see the April 200 issue of For The Defense) – by the insurance industry would simplify the administrative work of insurance defense firms. Until they do so, firms must comply with the various reporting requirements set up by companies.

Attorneys will argue that insurance company guidelines interfere with their practice of law and amounts to the companies’ running their law firms. To some degree they are correct. Essentially, however, any lawyer who does not take into account his or her client’s desires in running the firm may well have no law firm to run.

The authors recently were with the head of a corporation who received a call on her cell phone from her attorney. She spontaneously told us, “I love my attorney.” A shocking remark to hear in this day and age. When we asked why, she answered, “He is so attentive to our corporation’s needs.” This is the attitude and performance that all insurance companies and self insureds are demanding from their outside counsel – immediate attention to their needs.

Insurance companies do not want to see the settlement value of cases change drastically at the time of trial. The way to ensure that this does not happen is through consistent and fluent communication between the handling attorney and the company. Unexpected changes in evaluation can cause reserves to be raised. The company may then scrutinize its reserves, and require authority to settle from the home office or corporate headquarters. No insurance professional wants this kind of negative attention drawn to his files.

At a meeting for defense counsel for a major Midwestern insurance company, the claims specialist put it very succinctly in describing causes for the deterioration of the relationship. He stated that very few firms commit legal errors or achieve bad results at trial. Rather, it was their failure to communicate effectively with the company that led to the breakdown of the relationship.