Why Insureds May Win COVID-19 Claims Coverage Cases.

Media reports are that many businesses and non-profits are looking to their insurers for “business interruption” and other coverages due to the COVID-19 pandemic. At first blush, it would appear that these claims for coverage face an uphill battle based upon what might be termed clear policy language (specially manuscripted policies notwithstanding).

But it would be premature for the insurance industry to declare victory on the coverage issues. For if history is any guide, policyholders may win most of the coverage cases.

Mr prediction is based on the insurance industry’s experience in litigating various policy issues for environmental claims coverage 30 years ago. As a former Director of Environmental Claim for two insurers during the environmental claims coverage wars, I witnessed first hand how clear and otherwise unambiguous policy language did not save the insurance industry by and large from having to provide coverage for environmental claims and their massive clean-up costs.

Some will say that the skill of many of the insureds’ coverage attorneys was a big factor in the policyholder victories. And many were very skillful. But the biggest factor in my judgment in determining the final outcome in the environmental coverage wars was a very obvious willingness of so many courts to bend over backwards (and then some) to buy into often unique and novel arguments in order to find coverage.

I strongly suspect that the chief reason state courts in particular found coverage in so many cases was to give a needed lifeline to state governments. This lifeline was needed because states were on the hook for the massive costs of environmental claims cleanup costs as insolvent or nearly insolvent businesses were unable to pay without insurance coverage.  

Of course, what happened in the environmental claims coverage wars may not repeat itself in the COVID-19 coverage wars. But there is one thing for certain. Just like in the environmental claims coverage wars, insurers and their policyholders are going to be involved for years to come in multiple battles fought in state and federal courts throughout the U.S.

After having experienced the environmental claims coverage wars firsthand and seeing what worked and didn’t work so good, I think I am in a good position to give an important piece of advice to both insurers and policyholders.  And that piece of advice is to spend some extra money to hire competent coverage counsel.

For insurers, this is not business as usual. It is not the time to assign the first COVID-19 coverage cases to local panel counsel – especially those who mainly handle defense and only occasionally handle coverage claims.

For insureds, I offer similar advice.  This is not the time to turn over your COVID-19 coverage case to the same attorneys who handles your H.R., tax, or general business matters.  While these attorneys may be very competent and get good results for you in their own areas of expertise, insurance coverage is a very specialized discipline. It is not for some attorney who only does this part-time.

Engaging competent coverage counsel to handle complicated insurance coverage matters usually means engaging a good regional or even national law firm that specializes in insurance coverage. If you are an insured, look for a regional or national firm with attorneys who specialize in “insurance recovery.”

Now if you have read my past blog posts, you will know that I have repeatedly cautioned against hiring a BIG law firm if a smaller law firm is available that can handle the case. Well, this is the exception to that advice.  If there was ever a time for insurers and insureds to go BIG, now is the time. For only large regional or national law firms will have attorneys who not only have the capabilities needed, but also have the firm resources that will be needed to handle coverage cases that may take years to litigate.

One final piece of advice and this applies just to insurers.  Since even smaller insurers may face multiple coverage suits in different jurisdictions, a “coordinating counsel” should be appointed. Larger insurers routinely do this in product cases where similar suits arise throughout the U.S. But all insurers – including smaller insurers – should appoint a coordinating counsel to oversee all the COVID-19 coverage litigation. And while it may seem counterintuitive to believe, I can tell you without reservation that having a competent coordinating counsel assisting local counsel should actually save on litigation costs. But even more importantly, it will help ensure that consistent positions are being taken.

Unfortunately, not all policyholders or insurers read this blog. Thus it is very likely that many coverage cases will be litigated by counsel on both sides who are not skilled coverage attorneys. So the wild card in this mix will be the courts. To bail out policyholders (as well as local and state governments) who face grave economic peril, will judges again bend over backwards to find coverage in COVID-19 coverage cases just as they did in the environmental claims coverage wars?

Stay tuned.

It’s Deja Vu All Over Again As COVID-19 Presents Law Firms With Same Financial Issues Faced During The Great Recession

With almost daily report of law firm layoffs and/or reductions in compensation, it looks like the COVIS-19 pandemic is going to have the same effect on the financial health of the legal industry as did the Great Recession in 2007-2009.  And if what happened in the Great Recession is any indicator, law firm clients will need to scrutinize more closely their legal bills.

One reason for closer scrutiny is because of what happened in the Great Recession with regards to staffing cuts. In the Great Recession, the support staff rather than attorneys bore the brunt of law firm cutbacks. This was because law firms were reluctant to let go of the attorney talent they worked so hard to attract and invested so much to develop. So the only other place to turn for savings in a labor intensive business is to support staff.

As I have blogged about before, cutting back support staff and increasing the ratio of attorneys to support staff will save law firms money. But, it also almost invariably means increased costs for law firm clients. Continue reading

How To Discuss Fee Bill Issues With Your Lawyer – Part IV: The Nuclear Option

[This is the fourth and final post in a series of posts on how to discuss and resolve fee bill disputes with your lawyer. If you have not done so already, it is a good idea to read the first three posts in this series.]

Invariably, whenever I write a post about a lawyer getting disciplined for an ethics violation involving fee billing, I will get emails. Mostly from individuals with comments or questions about lawyer discipline. And so it was that after my post about an lawyer who got a six month suspension for overbilling, I received emails from individuals with questions on the disciplinary process for lawyers.

Some of the most frequent questions I am asked are how to go about filing a complaint (and if a lawyer is needed to file the complaint), will the disciplinary agency get my money back or get my lawyer to answer my questions (or do whatever it is they want the lawyer to do), and can my lawyer retaliate against me (or file a suit against me for slander) if my complaint is dismissed? So with this the fourth and final post in this series, I would like to answer these questions and share the basics of filing a disciplinary complaint against a lawyer. Continue reading

How To Discuss Fee Bill Issues With Your Lawyer – Part III

[This is the third post in a series on how to discuss fee bill disputes with your lawyer. If you have not done so already, it is a good idea to read the first two posts in this series as they detail steps that should be taken before getting to the point where the additional steps outlined in the post should be considered.]

In my last post in this series, I ended with the assumption that communications with your lawyer and/or the firm’s managing partner or other partners in the firm failed to resolve the billing issues.  In this post I will discuss what additional steps may be taken to resolve the billing issues once direct communication has not worked or has broken down. Continue reading

Overbilling Lawyer Gets Support From Her Overbilled Clients

Making the rounds of legal publications last month was a story about an attorney in MA who was suspended for 6 months for overbilling her clients by 450 hours. According to the facts set out in IN RE: DOREEN ZANKOWSKI , the attorney claimed to have worked an incredible 3,893 hours in one year. This included 3,173 billable and 720 non-billable hours.

And according the Opinion, in addition to inflating her own hours, the time billed to clients by associates who worked under her was also inflated. However, there was no word in the Opinion as to what was done with the associates who were aware that their time was being inflated.

In reading the unusually long 42 page Opinion, something strange caught my eye. Continue reading

Googling To Find Out If Your Attorney Uses Form Documents

In a prior blog post entitled “The ‘Does Anyone Have A Form That I Could Use’ Practice Section,” I poked gentle fun at a state bar practice section I belong to because most of the posts on the section listserve were from attorneys asking other attorneys if anyone had a particular form document that the inquiring attorney could use. Due to the volume of such requests, I had found it both amusing as well as telling that an awful lot of what attorneys do in most any practice area has to do with using forms.

And it seems that you no longer have to ask a fellow attorney for a form. You can just Google the name of a Motion or other type of legal document and you often will find a form. I have done this countless number times when reviewing legal bills from attorneys throughout the U.S.

Recently I had occasion to look up a Notice of Motion and Motion to Compel Testimony and Production of Documents in California. I suspected that the document the attorney billed 2 hours to prepare was a form document. So I Googled it, and sure enough I was taken to a form document. This form document not only had the basic form Notice and Motion, but it also had the argument for the attorney to use in support of the Motion including the supporting case authority. Comparing the attorney’s Motion with the form Motion, I could see that 90% of what was in the attorney’s Motion was in the form Motion. And the 10% the attorney had added did not take 2 hours. Continue reading