Thoughts on the Rising Costs of Litigation, From a Defense Perspective

As I was reading through the November 22, 2010 edition of Missouri Lawyer's Weekly, I came across a Commentary piece regarding the rising costs of litigation. It comes from the perspective of a plaintiff's attorney. I, as someone whose practice has primarily focused on representing insurance companies, have a different take on the issues raised in the commentary. I wanted to use this forum as an opportunity to provide my thoughts on some of the issues raised in the Commentary, hoping to generate a discussion amongst readers on both sides of the aisle.

One of the examples given of the system working in strange ways is a case where mediation had been offered prior to the suit being filed, but then after suit was filed that offer was withdrawn until certain discovery was completed. This may seem strange to a lay person, but in my experience working with insurance companies it is not strange at all. Oftentimes, before a suit is filed the matter is handled by one adjuster, and then once suit is filed, the claim is transferred to a litigation adjuster. Also, the company itself likely has guidelines to follow once suit is filed, which may include the completion of certain discovery and investigation prior to agreeing to mediation. Also, carriers often consider settling cases that have questionable merit prior to suit being filed because they can be closed quickly and cheaply. Once a “questionable” case gets past that point, the more prudent approach is frequently to defend the case vigorously, since that often does cost the carrier less than settling. We can debate for hours on end whether the guidelines themselves create waste in the system, but the fact is the insurance companies have put them in place to protect themselves in resolving claims that have made it all the way to litigation.

To suggest that defense firms “churn” files just to generate fees ignores the reality of the defense assignment generally. Our firm, for example, must defend cases assigned to us pursuant to relatively stringent defense counsel “guidelines” from most of the carriers for whom we work. Although those guidelines differ from carrier to carrier, in general they require us to communicate regularly with the insurance company regarding our strategies, plans and the rationale for any work we expect to do. We submit frequent reports to our clients, alerting them to witnesses whom we might wish to depose and explaining why, and outlining the work we expect to do before we do it. If the carrier thinks we are doing more than is necessary, they are not shy about refusing to authorize the work, because the cost of that work does increase their expense.

I agree with the Commentary’s assessment of trying to resolve claims prior to suit being filed. In the plaintiffs’ cases that I have handled in my career, that is exactly what I try to do. For many of the reasons mentioned in the Commentary and above, it is advantageous to all parties to do so. It keeps costs down, it results in a quicker resolution for your client. That being said, if there is not clear liability, or the damages do not warrant resolution, or there is a coverage dispute, the insurance carrier should not be blamed for having those matters litigated to the full extent. Requiring a Plaintiff to prove their entitlement to an award is central to our system of civil justice. We don’t require them to prove it "beyond a reasonable doubt" like we do for criminal liability, we require them to prove it "by a preponderance of the evidence" or simply that it is "more likely than not" that the Defendant is liable. It is my job as a Defense attorney, on behalf of my clients, to make sure the Plaintiffs meet their burden before being compensated. If that is viewed as “running up the bill” by the Plaintiff's bar, then so be it. I can tell you that it has not been my practice to waste my or anyone's time, whether it be the Plaintiff, my client, or the Court, by filing frivolous motions or propounding unnecessary discovery. That type of behavior can be detrimental not only to the case at hand, but it can also lead you to quickly lose credibility with the Judges and your fellow members of the Bar, which will adversely impact cases you handle in the future.

Finally, I want to point out an area in which I may be in agreement with the Commentary. I would be in favor of a state system of expert disclosure similar to that required by Federal Rule of Civil Procedure 26. I am in favor of expert reports being prepared and disclosed to the opposing party early on in the proceeding. I am in favor of those reports following a certain format, and that certain information be required in that report. I am also in favor of experts being required to disclose their rates for services and prior testimony when providing their reports. It is my opinion that these disclosures allow the parties to make intelligent decisions as to whether to depose the particular expert witness. As the system in Missouri stands now, the only way for an opposing party to learn the opinions of an expert is to take a deposition. The types of disclosures required by Federal Rule 26 do not do away with the ability to take a deposition, but make the decision as to whether a particular deposition is necessary a more intelligent one.    

Laying the blame for the spiraling costs of litigation at the feet of one party (Plaintiffs or Defendants) is not appropriate, as the truth always lies somewhere in the middle. So long as the issues are discussed with civility, which I think was done in the Commentary, and I hope I have done here, we will hopefully all end up with a system that continues to improve and serve the interests of justice.