Litigation Expense Management

Legal expenses, commonly the biggest part of a property and casualty carrier’s loss adjustment expenses, have challenged the industry forever. Only recently, however, have dramatic changes come to the traditional insurer-law firm relationship with respect to managing them. The original handle-and-advise instructions to defense counsel have been replaced by corporate manuals filled with “guidelines” (actually rules), and many of these have, in turn, been replaced or supplemented by legal expense audits. While some companies used internal audit personnel, there is now a full-fledged industry dedicated to assisting companies in legal expense management. Three or four large vendors dominate the market and, with some minor variations, operate the same way. They develop a template of legal activities for which the typical defense attorney bills time.