Lemonade Remains in the Red With $68M Loss in Q3  November 1st 2024

Are We Losing Our Negotiating Power?

The litigation defense community is facing a critical challenge: a growing data deficit that threatens to undermine its negotiating power. This issue is particularly evident in the industry's struggle to define the Best Alternative to a Negotiated Agreement (BATNA) in litigated claim files.

Our Industry Operates the World's Largest Negotiation Network

The insurance litigation defense community operates the most extensive negotiation network anywhere. With more than 30,000 claim professionals assigning approximately one million files annually to about 30,000 defense attorneys, its scale is unmatched.

Negotiation is the lifeblood of the property casualty claims industry. In terms of frequency, it’s undeniably successful– a staggering 97% of all litigated files settle before reaching a verdict. However, frequency isn't the only, or even most important, metric. The industry is tasked with securing "good" settlements, not "overpaid" ones. This is where the challenges begin.

The Elusive "Good" Settlement

Defining a "good" settlement has always been a struggle in the industry. Did we overpay in this settlement? Was that the right number? The difficulty in justifying settlement amounts has led to industry catchphrases like "a good file is a closed file." But this oversimplification masks a deeper issue.

To truly define a good settlement, the likely outcome of a verdict must be quantified. This is because, in our world of litigated claims, a verdict is the ONLY alternative to a negotiated settlement. Drawing the red line, where you opt for trial rather than paying a penny more, is the only thing standing in the way of unbridled escalation of plaintiff demands. A verdict is the only BATNA we have, and knowing your BATNA is the most important thing in any negotiation, no matter what industry you’re in.

The BATNA Dilemma

We have always struggled in the insurance defense industry to predict BATNAs. There has simply been a lack of good data. As a result, the methodology for estimating verdict outcomes hasn't changed significantly in 40 years. The industry relies on a polling process, seeking opinions from seasoned colleagues and experienced defense counsel. Based on this anecdotal input, a determination is made about what "the case is worth at trial.” READ ON

Taylor Smith, John Burge

Court advisory committee OKs look at third-party funding disclosure

The decision by the federal judiciary’s rules committee to create a litigation finance subcommittee comes after 125 big companies argued transparency is needed.

When the U.S. Supreme Court’s Advisory Committee on Civil Rules agreed earlier this month to create a subcommittee to look at litigation funding disclosure, it marked a big departure from the advisory board’s hands-off approach.

“It probably deserves a careful look, if for no other reason than we don’t know what we don’t know,” U.S. District Judge David Proctor said October 10 after the ACCR met and agreed to create a disclosure subcommittee. Proctor’s remarks and the action of the committee were reported by The American Lawyer.

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