Andrea M. Alonso and Kevin G. Faley
*Originally published in Claims
November 1999

There was a time in the insurance industry when claims professionals were directed to send summonses and complaints to outside counsel because of long-standing relationships with those firms. The relationship may have been based on political ties at times forgotten or unknown to the professional. The relationship may have also been based on the quality or strength of the law firm. Outside counsel worked on the file from answer to trial or settlement. Little more was expected than a bill at the end of the case, which was paid in due course and unquestioned. Reporting requirements, outside counsel guidelines, task billing and bill reviews all were unheard of, or at least very rarely used.

This scenario has drastically changed. Nowadays, strict reporting requirements, pre-litigation budgets and concise guidelines are to be followed by outside counsel if the law firm expects to receive work from any insurance company. Whether competition among outside counsel or general cost efficiency is responsible for this change in litigation management is not relevant. What is clear is that claims professionals do, and should, demand more from outside counsel. Here are some very basic services which must be provided by outside counsel to the assigning claims professional on any property and casualty litigated claims.

Assignment of a claim

Gone are the days when receipt of a summons and complaint went unacknowledged by the law firm until and answer was served. Immediate contact (within 24 hours) must be made by counsel with the insurance company and the insured. Some companies require an immediate fax acknowledgment. Others will accept a letter or phone call from the managing partner of the firm. Whatever the form, the claims professional deserves to know if the law firm has received the summons and complaint or whether it has been lost in the mail.

An initial in-person or telephone conference with the insured and claims professional to discuss the claim must be scheduled within 30 days of receipt of the summons and complaint. This can be held at the insured’s office or, in the case of premises or construction cases, could coincide with an on-site visit, depending on the severity of the claim.

Simultaneously, the insured and his attorney must secure and label all relevant records and documents and identify potential witnesses. If additional work must be done in terms of locating witnesses and documentation, an investigator must be contacted and assigned to the file after consultation between the claims professional and the attorney. Many a case rises or falls on the prompt initial investigation work done at the commencement of the suit.

Lastly, in the assignment phase the attorney must provide an initial case assessment and monetary evaluation to the claims professional based on the information in the file, however limited that information might be. Incomplete records or discovery is no excuse for failure to provide a money value to the case. The value can be changed by the attorney, based on subsequently discovered material or testimony. The claims professional must have a basis to set reserves, and it is the attorney’s duty to provide information to set that number.

Reporting and consultation

Depending on the size of the claim, generally the claims professional should insist only one partner and one associate be assigned to handle the case. Multiple attorneys are usually unnecessary on the typical property/casualty file. In the same vein, the file should not be bounced from attorney to attorney so that the quarterly bill received by the company looks like the law firm’s letterhead.

Crucial to the reporting process is that all phone calls must be returned immediately, and absolutely no later than 24 hours.

The claims professional must be involved in all major decisions including selection of experts, inspections, settlement conferences, settlement negotiations and offers. The claims professional should have the option of personally attending all phases of the litigation. No greater than 90 days should elapse without an update from outside counsel regarding the status of the case.


Depositions or examinations before trial are the most critical pre-trial discovery device. The claims professional has the right to attend all depositions and should be notified in a timely fashion of all dates by defense counsel. Post-deposition, a full report on each witnesses’ testimony and its ultimate effect on liability must be forthcoming from defense counsel within one week of the deposition.

Motions for discovery or summary judgment are usually time-consuming and expensive portions of any lawsuit. Defense counsel must obtain prior approval of the assigned claims professional after extensive discussion as to the chance of prevailing on such a motion. Legal research, the “black hole” of billing, should be discussed and limited in an effort to avoid duplicative work or excessive billable time.

Good claims handling requires case assessment throughout discovery. Early settlement or resolution by arbitration or mediation should be considered during the discovery phase. If a case cries out for settlement, litigation should not be prolonged. A good defense counsel will alert the claims professional to explore early on in the discovery phase settlement options that can cost-effectively dispose of the claim.

If the value of the case changes drastically during the discovery phase, then the attorney must immediately notify the claims professional in writing that the case is worth either more or less than previously evaluated, and state the reasons why. Nothing is more annoying to the claims professional than to have the value change suddenly and without reason, especially the eve of trial.

On trial

Every claims professional is entitled to an extensive trial report at least 60 days before trial. This report must include an opinion as to:

  • Verdict value.
  • Settlement value.
  • Chance of success at trial.
  • Actual dates of trial.

The claims professional has the right to be given prior notice of trial dates so that he or she may make plans to attend the trial. At the actual time of trial, multiple daily calls from the attorney must be demanded. Counsel should exchange home phone numbers and any other 24-hour call numbers, so that access is never an issue. Trials have peaks and valleys that provide auspicious times for offers and settlement. Without clear and constant communication at trial, propitious settlement cannot be achieved.

In the event of an unfavorable verdict, an analysis of the testimony, and any issues ripe for appeal, should be received by the claims professional immediately. Most states have a 20-to 30-day time limit for filing appellate documents. The claims professional must be in an informed position to recommend going forth with any appellate process or, on the other hand, to pay any judgment.

A note on billing: Every claims professional deserves a well itemized bill served at least on a quarterly basis. That bill should be well documented and include the attorney’s name and exact time, along with a narrative summary of the work performed. A claims professional has the right to question any bill and demand an explanation for any questionable or excessive charges.

The world of insurance defense attorneys has become increasingly competitive. Only those firms that provide top service to the claims professional will remain on the even shrinking outside counsel list. The claims professionals are just that – professionals who have dedicated much time and education to their careers. They should be treated with dignity and respect by outside counsel and have all inquiries and communications responded to promptly and completely. In sum, claims professionals have rights during the litigation which must be adhered to by outside counsel.

Every claims professional should have the right to

  • A prompt acknowledgement of his or her assignment.
  • An initial claims conference and case assessment indicating reserves.
  • An immediate return of phone calls or written requests.
  • Advance notice to attend all depositions and conferences.
  • Prior approval of all motions to the court and legal research.
  • Advance notice of trial dates and full pre-trial report.
  • A full post-trial report.

Anything less should be unacceptable to the claims professional and the insurance company he or she represents.

Andrea M. Alonso & Kevin G. Faley are partners in the New York City based law firm of Morris Duffy Alonso & Faley, specializing in premises, automobile and construction liability and professional malpractice.