During the “hard” insurance market of the last three years, many companies have chosen to increase their deductible or Self-Insured Retention (“SIR”) in an effort to reduce premium costs. While increasing the SIR increases your company’s risk exposure, it also provides valuable opportunities to exercise more control over managing those risks. One way to increase your control over managing litigation is to request an endorsement on your policy that allows your company (instead of the insurer) to choose defense counsel.
A typical Comprehensive General Liability (“CGL”) policy provides that the insurer has the right to select the lawyer or law firm that will defend the case if your company is sued. If your CGL policy has an SIR of $20,000 per occurrence or less, your insurer will probably be reluctant to agree to a choice-of-counsel endorsement. On the other hand, such endorsements are not at all unusual in policies where the per occurrence SIR is $100,000 or more, and they are included in almost all policies where the SIR exceeds $500,000.
When a claim or lawsuit is tendered to your insurer to defend, the insurer has one primary goal: to dispose of the case for as small a settlement and/or defense cost as possible. Insurance defense counsel typically retained by insurance companies are very effective in handling routine matters such as slip-and-fall or automobile accident cases. They are skilled in meeting the insurer’s goal of disposing of the case for as little as possible and doing as little as possible to accomplish that goal.
However, when a case or series of cases involves serious allegations that threaten your company’s reputation, you need to be able to retain counsel who is familiar with your business and has specialized expertise in the necessary area of law. Examples of such cases include allegations of race, age or sex discrimination; directors’ or officers’ liability relating to financial transactions; sexual harassment; or product liability matters.
Being able to retain counsel of your choice is even more critical when your company is facing multiple cases in multiple jurisdictions. In such circumstances, the defense of all cases needs to be coordinated and handled with consistency, and with an eye toward the overall strategy of obtaining the best outcome for the company over the long term. This is difficult, if not impossible, to accomplish when utilizing a number of different counsel in different states (possibly assigned by different insurers). If your company has an existing relationship with a particular law firm, that law firm should understand your business goals and be better equipped to act in your company’s best interest than insurer-assigned counsel with whom you have no history or established relationship.
Serial products liability cases particularly benefit from a consistent and well-coordinated defense. You may think that your company’s products do not lend themselves to such a scenario, but seemingly harmless products can result in significant liability exposure. For example, one of our firm’s clients, a manufacturer of ventilation products, enjoyed decades without any products liability claims. Suddenly, an unforeseen problem with a new product resulted in a CPSC investigation, and over twenty wrongful death, personal injury, breach of warranty and class action lawsuits were subsequently filed throughout the United States and Canada over the following three years. A team of Warner Norcross lawyers defended all of those cases with a consistent strategy that brought very favorable results.
Most insurance brokers are very familiar with choice-of-counsel provisions and recognize the benefits that they provide to insureds. Talk to your insurance broker now about obtaining a choice-of-counsel endorsement. When the need arises for competent counsel that you know and trust, you won’t want your company’s hands to be tied by its insurance policy.
Welcome Thomas J. Manganello
Warner Norcross & Judd is pleased to welcome Thomas J. Manganello to our Metro Detroit office. Tom practices in the areas of commercial litigation, product/premises liability, construction and automotive negligence. Tom has an impressive win rate in all product liability, premises liability and automobile negligence trial law proceedings as lead counsel representing major automotive clients in cases nationwide. He has achieved favorable verdict outcomes or advantageous settlement agreements in a large volume of construction/indemnity cases for GM, with particular expertise in plan construction cases. Tom handles warranty, general commercial, truth-in-lending and consumer litigation for automotive industry clients, with an active participation role in coordinated efforts to change laws regarding binding arbitration on employee purchase plans/discounts. He has established the first-ever comprehensive risk management program for all GM facilities across the correct management Midwest. Tom brings a special expertise to our firm and we are pleased to have him on board. You may reach Tom directly at 248.784.5007 or firstname.lastname@example.org.