Order in the Court: Litigation Management Strategies
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The document discusses litigation management strategies from an enterprise risk management perspective. It outlines how litigation management maturity has evolved from an insurance carrier-driven approach to a more sophisticated model driven by risk management. A mature litigation management program takes an integrated, business-focused enterprise risk management approach where risk, legal, claims, and business partners work collaboratively. It emphasizes metrics and management by outcomes to contain costs while meeting business needs.
Order in the Court: Litigation Management Strategies
- 1. David Herman, Esq. Managing Counsel – Insured Litigation, Nestlé USA David Smith Divisional Vice President – Risk Management, Family Dollar Scott Rogers Executive Vice President – Casualty Operations, Sedgwick Wednesday, April 24, 2013 Session Time: 10:30 to 11:45 a.m.
- 3. Current assessment • John Hopkins University School of Medicine • Attorney involvement results in longer claim durations and higher cost • California Workers’ Compensation Institute • 44% of all indemnity claims were represented • Workers’ Compensation Research Institute (WCRI) • Feel threatened • Possible claim denial • Employment jeopardized • Economic impact • Unemployment • Healthcare • Cost and frequency of litigation has grown by double digits since recession ended in June 2009
- 5. Workers’ compensation litigation costs • Litigated files are 3 times more expensive • Litigated = $90,750 • Non-litigated = $30,004 • Average TTD is over 3 times higher for a litigated file - 261 days compared to 80 • Litigated files take significantly longer to close - 2.7 years vs. 4.6 years • Outside of manufacturing, the range for the cost of a litigated file is within $10,000 across remaining industry groups (between $82,000 and $92,000) • State range is 2 to 6 times more expensive for a litigated file for the top 10 states
- 6. Workers’ compensation average cost - litigated vs. not litigated by state $25,126 $21,570 $25,973 $29,807 $27,785 $26,888 $28,648 $32,070 $27,755 $28,671 $99,811 $80,221 $83,416 $172,062 $70,027 $59,591 $128,684 $72,382 $100,380 $114,655 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 CA FL IL MI NY OH PA TN TX WA Not Litigated Litigated
- 7. Workers’ compensation average cost - litigated vs. not litigated by industry $25,552 $20,196 $40,302 $24,988 $23,572 $50,590 $27,264 $19,205 $81,835 $89,449 $111,779 $87,945 $85,374 $91,664 $87,280 $82,874 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 Not Litigated Litigated
- 8. General liability litigation costs • Litigated files are 28 times more expensive • Litigated = $65,756 • Non-litigated = $2,362 • Litigated files take significantly longer to close - 5 months vs. 2.9 years • State range averages 32 times more expensive for a litigated file versus not litigated for the top 10 states
- 9. General liability average cost - litigated vs. not litigated by state $1,810 $2,198 $4,157 $1,864 $2,599 $1,540 $3,123 $1,743 $3,108 $1,297 $48,712 $61,790 $77,226 $78,421 $59,989 $115,409 $65,654 $38,110 $55,185 $58,311 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 AZ CA FL GA IL NC NY OH PA TX Not Litigated Litigated
- 10. General liability average cost - litigated vs. not litigated by industry $1,590 $15,898 $16,455 $2,181 $1,622 $3,001 $1,918 $2,221 $72,130 $104,320 $98,163 $118,775 $54,556 $92,625 $70,687 $133,500 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 Not Litigated Litigated
- 11. Automobile liability litigation costs • Litigated files are over 10 times more expensive • Litigated = $115,507 • Non-litigated = $11,435 • Litigated files take significantly longer to close - 1 year vs. 2.9 years on average • State range averages 19 times more expensive for a litigated file versus not litigated for the top 10 states
- 12. Auto liability average cost - litigated vs. not litigated by state $10,594 $2,325 $17,583 $7,954 $10,787 $5,629 $6,018 $17,077 $18,158 $14,165 $191,998 $170,169 $171,418 $173,971 $75,745 $98,902 $116,979 $107,870 $179,634 $131,498 $0 $50,000 $100,000 $150,000 $200,000 $250,000 CA DC FL IL LA MD NC NJ NY TX Not Litigated Litigated
- 13. Auto liability average cost - litigated vs. not litigated by industry $14,120 $6,883 $14,072 $6,284 $9,262 $12,241 $6,169 $9,100 $171,174 $140,071 $206,505 $99,026 $129,317 $197,201 $89,281 $143,871 $0 $50,000 $100,000 $150,000 $200,000 $250,000 Not Litigated Litigated
- 15. Dave Smith Divisional Vice President – Risk Management Family Dollar
- 16. ERM approach to litigation management • ERM or Enterprise Risk Management - the strategic evolution and integration of a holistic risk management approach, identifying and addressing strategic, operational, financial and business risks throughout the entire enterprise. • Litigated claims are defined as: • Claims in suit • Represented claims • WC claims with hearing requests • This discussion explores the application of an ERM approach to the management of litigated claims
- 17. ERM approach to litigation management • Corporate risk management maturity and its influence on litigation management • Typical approaches to litigation management • Measuring performance – Analytics and metrics • Considerations for process improvement • What is the risk management maturity of your organization? • Who drives litigation management in your organization? • Management without measurement? • Evolving to the ERM approach
- 18. Perspective & point of reference
- 19. Risk management maturity model • Traditional • Risk transfer/guaranteed cost/deductible • Defensive • Integrated • Loss avoidance • Loss cost management • Sophisticated performance analytics • Risk transfer • ERM • Broad scope, addresses the enterprises strategic, operational, financial and business continuity risks
- 20. Litigation management maturity Litigation management model • Insurance carrier driven • Frustration Risk Legal Human resources Corporate • Inefficient and expensive • Ownership absent • Management control • Poor • Traditional • Defensive • Risk transfer/guaranteed cost/deductible Risk maturity model
- 21. Litigation management maturity Litigation management model • Insurance carrier is partner • TPA/carrier claims examiner • Sophisticated performance analytics • Approved panel list • Risk management leads • Selective corporate legal engagement • Inconsistent approach • “Formulary” approach • Stress: risk vs. legal • Management control • Developing – intermediate/high • Integrated • Loss avoidance • Loss cost management • Sophisticated performance analytics • Risk transfer Risk maturity model
- 22. Litigation management maturity Litigation management model • Strong partnership and comprehension: • Risk management • Legal • TPA • Involved business partners • Insurance carrier • Driven by: • Understanding risks • Business decision mentality • Enterprise mission and culture • Sophisticated management • ERM • Broad scope, addresses the enterprise’s strategic, operational, financial and business continuity risks Risk maturity model
- 23. The mature litigation management program • The ERM approach • Enterprise business strategy to litigation management Inclusive/integrated Economic Creative Rejects “formulary” management Smart use of counsel and expert resources Management by success (and failure) • Metrics Not an end state • CPI/QA
- 25. David Herman, Esq. Managing Counsel – Insured Litigation Nestlé USA
- 26. Order in the court : Litigation management strategies
- 27. Order in the court : Litigation management strategies
- 28. Order in the court : Litigation management strategies
- 29. Order in the court : Litigation management strategies
- 30. Order in the court : Litigation management strategies
- 31. Potential solutions & strategies - litigation avoidance
- 32. Potential solutions & strategies - litigation management