Allocation oct2013 defense allocation final
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This document appears to be the agenda for a conference on issues related to the selection and payment of legal counsel in insurance defense cases. The agenda covers topics such as when the insured or insurer selects counsel, how defense fees and costs are shared between multiple insurers, common areas of dispute over rates and defense shares, and insurer guidelines for defense counsel. It also addresses issues like allocating fees for joint and non-insured activities, additional insured rights, and mechanisms for resolving fee disputes.
Allocation oct2013 defense allocation final
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- 3. Lawrence A. Hobel Covington & Burling LLP One Front Street San Francisco, CA 94111 Linda B. Morrison Tressler LLP 18100 Von Karman Ave., Suite 800 Irvine, CA 92612 3
- 4. When Can the Insured Select Counsel and When Does the Insurer Select? ◦ Common situations and standards ◦ Statutory provisions 4
- 5. Who selects counsel if one insurer is entitled to control the defense, and another is not? How are defense fees and costs shared? Common areas of dispute ◦ Rates ◦ Share of defense 5
- 6. Insurer pays “reasonable” fees and costs incurred in the defense of the insured Disputes over Counsel Selection and Rates ◦ Time/skill required ◦ Complexity of issues ◦ Novelty of issues ◦ Fees customarily charged in locality ◦ Nature/length of attorney relationship with client ABA Model Rules of Professional Conduct, Rule 1.5(A) 6
- 7. Lawyer Activities ◦ Case Staffing Partners / associates Multiple attorneys undertaking overlapping tasks or appearing at same hearing Work delegation Value of time spent in relation to impact on case Experts Who, how many, rates and “approvals” E Discovery Providers/rates Jury Simulations 7
- 8. Block billing Clarity of entries Paralegal Work vs. Administrative Cost Cost Categories Client professionals and staff ◦ Per se inappropriate, presumptively inappropriate or presumptively acceptable. ◦ Privilege Issues ◦ Nit-picking vs. too vague 8
- 9. Under what circumstances can the insurer require compliance with guidelines that insurer imposes on counsel it retains? Can guidelines preclude insurer payment if counsel believes activities are necessary to defense of insured? Is insurer obligated to pay when independent counsel’s bills do not comply with guidelines? 9
- 10. Disputes Over Whether Appropriate ◦ Most insurers: Dependent on circumstances and claims Not unreasonable per se; but can be hard to manage Firms should have discrete roles to minimize overlap and duplication Consider specific specialties, expertise of firms National Counsel and Coordinating Function may raise issues 10
- 11. Can insurer apportion “unreasonable” fees to insured? Must insurer pay entire defense and seek to apportion later? If insurer pays amounts determined to be “unreasonable” or not necessary to defense of insured, can it later recover from— Insured? Insured’s counsel? 11
- 12. Must insurer pay for defense fees incurred ◦ For joint activities benefitting both insured and noninsureds? ◦ For activities solely benefitting non-insureds? Who bears burden of allocating? 12
- 13. Additional insured entitled to full defense Statute may limit rates insurer pays to defend additional insured Impact of indemnity agreements ◦ Can additional insured indemnitee recover rate differential from named insured if defense already provided? ◦ If so, is insurer obligated to reimburse named insured for additional fees? 13
- 14. Negotiate At Outset Evaluate whether issues can be resolved by audit process or independent auditor Establish mechanism for resolving disputes ◦ Rates ◦ Guidelines Applicability ◦ Arbitration as required by some statutes absent agreement? ◦ Mediation At set intervals after submission of bills if disputes arise? Binding? Litigation 14
- 15. Defending insurer seeks to recover from nondefending insurer Non-defending insurer not allowed to second guess defense Non-defending insurer bound by defending insurer’s decision to provide independent counsel 15
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- 18. Lawrence A. Hobel Covington &Burling LLP 415.591.7028 lhobel@cov.com Linda B. Morrison Tressler LLP 949.336.1234 lmorrison@tresslerllp.com 18