Training the Staff to Do Legal Bill Reviews – Part II

This is another in a series of posts I started on January 23, 2011, on the three options that an insurer has when it comes to eliminating the leakage in outside legal expenses.  To recap, those three options are:  establish a dedicated legal bill review unit, train (and monitor) all litigated file handlers on how to properly review legal bills, or outsource the review of legal bills.

In my post on February 6, I discussed the first option, establishing a dedicated legal bill review unit.  The take-away on this option is that it is really the better option provided that an insurer has a large enough legal bill volume to justify a staff of at least 3 FTEs.  My post on March 15 was the first of a two-part post on the second option: training (and monitoring) all litigated file handlers on how to properly review legal bills.

If you read my March 15 post, you might have come away with the impression that you definitely would be swimming upstream with little chance of success if you chose the option of training your entire litigated file handling staff to properly review legal bills.  But I ended my post on a hopeful note that there was an exception to the general rule that it is a waste of time and money to train (and monitor) the entire staff on how to properly review legal bills. Continue reading

Why Aren’t Insurance Attorney Rates Higher?

An attorney friend of mine in the San Francisco area lamented about the low rates insurers pay to attorneys.  He asked if I didn’t think that $250 an hour was a reasonable rate for insurers to pay defense counsel?  Well, since that this is the rate I charge in my ethics and professional responsibility law practice, I had to agree that $250 is a reasonable rate.

However, $250 an hour is not a standard rate that can be applied throughout the entire legal profession.  (See my earlier posts on $1,000 an hour lawyers.)  I can easily point to the fact that my rate is lower than other attorneys in my area charge for similar legal services.  Even in tony San Francisco, $250 an hour for “standard” insurance defense cases would not be considered the going rate for insurance defense lawyers.

I will step out on a limb here and say that insurers would not object at all to paying all insurance defense attorneys $250 an hour – if that were the going rate for insurance defense attorneys.  Why this is not the going rate for insurance defense lawyers is not the fault of the insurance companies.  It is the fault of the insurance defense attorneys who invariably undercut each other on fee rates just to get the business.  As a claims manager, I saw many good defense attorneys inch their way up in fee rates only to be undercut by other firms who wanted the business and could do just as good work.

You can’t blame the insurance companies for this situation. Continue reading