your source for professional liability education and networking. when good people disagree:...

Your source for professional liability education and networking.

When Good People Disagree: Divergent Interests Among D&O Insurers, Insureds and Defense Counsel

Sponsored by PLUS Diamond Sponsors:

Professional Liability Underwriting Society

The information and opinions expressed by our panelists today are their own, and do not necessarily represent the views of their employers or of PLUS. The contents of these materials may not be relied upon as legal advice.

A copy of the presentation slides will be available following this webinar, on the PLUS website at: www.plusweb.org

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Meet The Presenters

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Donna J. Ferrara, Esq.Senior Vice President and Managing DirectorGallagher Management Liability PracticeChicago, IL

John C. Minett, Esq.Senior Vice President and CounselEndurance InsuranceNew York, New York

H. Stephen Grace, Ph.D.PresidentH.S. Grace & Company, Inc.Houston, Texas

Moderator – Joseph P. MonteleonePartnerRivkin Radler LLPHackensack, New Jersey



The Beginning of the Claim Process

• Insured(s) are sued

• They give notice to their broker

• Broker notifies insurer(s)

Everyone Loves One Another

• Broker, Insureds, Defense Counsel, and Insurers

• Everyone is enamored of their defenses to the claim

• Everyone feeling the love, except for plaintiff’s counsel

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But, What Happens When and If The Insurer(s) Deny Coverage?

•Insureds can sue for declaratory relief then or at a later time

•No legal obligation to communicate or cooperate with insurers once there is a denial of coverage, but oftentimes communication lines are kept open by mutual agreement and without waiver

•The same issues we will discuss on the following slides will apply, but they will simply be addressed later and/or in the context of coverage litigation

•Issueso What can insurer(s) contest retroactively

o Do consent to settle and other policy provisions fall by the wayside?5



• When and how the honeymoon comes to an end

o The first defense bills arrive

o Who should receive these?

o Who should have a say in what gets paid

o The curious case of Royal Indemnity Co. v. C.H. Robinson Worldwide, Inc., (Minn. Ct. App., July 21, 2009).

• The “Balkanization” of Interests

Insureds

The Corporate Entity

The Executive Officers

The Independent Directors

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The “Balkanization” of Interests (continued)

Insurers

The Primary Insurer

Excess Insurers

Side A Only DIC Insurers

Other Interests

Defense Counsel

Insurers Counsel

Broker

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The Defense Bills Battles

•Who minds the store?

•Should the corporate general counsel get involved?

•Privilege and confidentiality issues

•Should excess insurers get a “second bite at the apple” beyond payments made by a lower layer or primary insurer?

•White Hats vs. Black Hats or, perhaps more appropriately, Dopes vs. Crooks

•What’s the poor broker to do?

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Defense Bills Battles – Some Practical Tips

• Don’t sweat the small stuff

• Try negotiating percentage discounts, rather than having line by line battles over the invoice

• Enlist the help of general counsel, broker or other “neutral”

• Be realistic – you are not going to defend a securities class action at $350 per hour

- The “Omaha exception”

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Is the primary or other insurer just going through the motions?

•Outside coverage counsel is suddenly dismissed

•Participation in insurer-defense counsel calls ceases

•Insurer declines to attend mediations

Has that insurer become the proverbial “toast”?

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Excess Insurers Need To Become More Involved

•Need to be copied on all defense invoices

•Primary should apprise excess of what has been submitted and what has been paid

•Need to receive all status reports

•There should be periodic status updates by teleconference – to the entire tower

•Broker needs to be proactive

•Insistence on written reports needs to be carefully considered in light of attorney-client privilege concerns

•None of this puts an undue burden on insured, defense counsel or primary insurer 11



The Time to Settle Arrives

•Says who?

•When and how

oIs a mediator indispensable?

oCan a single mediator and mediation proceeding deal with causation, liability, damages and coverage issues?

•Alternatives to settlement

o Continued motion practice

o Try the case

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• Bringing an expert or consultant to the settlement and mediation tableo The apocryphal tale of The Disney Company and the Michael Ovitz

litigation

Recounting the Disney/Ovitz saga

The Delaware Chancery Court decision of May 28, 2003o Who retains the expert/consultant

Defendants

Pros and Cons

Insurers

Pros and Cons

When excess insurers have a legitimately different interest

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Role of the Expert

•Consulting or testifying– In the Disney litigation, the charge was to determine settlement

value based on the “business merits” of the case at hand, not a statistical evaluation of settlement ranges in similar cases

•Who is the client?

•Should the expert come to the mediation or settlement table?

•How can the expert bring value and build trust?

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Questions

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Panelist Contact Information

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Donna J. Ferrara, Esq.Senior Vice President and Managing DirectorGallagher Management Liability PracticeChicago, [email protected]

John C. Minett, Esq.Senior Vice President and CounselEndurance InsuranceNew York, New [email protected]

H. Stephen Grace, Ph.D.PresidentH.S. Grace & Company, Inc.Houston, [email protected]

Moderator – Joseph P. MonteleonePartnerRivkin Radler LLPHackensack, New [email protected]


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Thank You Diamond Sponsors


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Thank you for your time.

A replay of this webinar will be available to PLUS Members at: www.plusweb.org

your source for professional liability education and networking. when good people disagree:...

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