I once worked with a regional claims manager who invariably reacted to a claims file that had blown up by issuing new procedures to the claims staff. The new procedures supposedly were tailored to ensure that what happened with that one file would not happen again.
Of course, when another claim file invariably blew up, he again issued new procedures that sometimes were directly contrary to the old procedures. And, of course, he repeated the process when another claim file blew up. One of his subordinate managers described his boss’ litigation management style as being like someone who drives down the road going from ditch to ditch.
Fortunately, as a claims litigation manager I learned a different style of management. I learned that in managing a large volume of litigation, you do not manage to or set your operating procedures on what happens from time to time in isolated claims files. Rather, what you need to manage to are “trends.”
In managing to trends in claims litigation today, claims managers have a large array of data points available to take into consideration. Sometimes the problem is too much data to consider rather than too little and the problem becomes which data is the more important to consider (more on that is a future post). Nevertheless, some of the most valuable litigation management data available to claims managers today is available via data taken from legal bill reviews.
Very large insurers have a distinct advantage over their much smaller competitors in that they can afford to have managers whose sole job it is to analyze and drill down into all the litigation management data (including legal bill review data) to identify “trends” that need to be managed in order to improve the company’s litigation management program and not only drive down legal costs, but improve indemnity results as well.
Unfortunately, many smaller insurers believe they cannot cost justify the expense and time needed to properly analyze the litigation management data available to them. This is not only is a false economy, but it also may mean that they are following the “ditch to ditch” approach to litigation management.
In a future post, I will discuss what legal bill review data is most key to analyzing for trends that can help outside lower defense costs and improve indemnity results. And I will also discuss how legal bill review data can be used to cut back on the size of staff needed to handle litigated files.