Workers' Compensation

Managing the Attorney Landscape

In the state-by-state world of workers’ comp law, national companies face challenges in finding the right attorneys.
By: | February 2, 2018 • 8 min read

Companies with multi-state or national operations face unique challenges in selecting workers’ comp attorneys to represent them in legal environments that can vary greatly from state to state, and sometimes even within a state.

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Often, insurers or TPAs will provide panels of workers’ comp attorneys in each state. Under some policies, the choice of attorney is up to the insurer. But for those choosing their own attorneys, finding the right workers’ comp law firms and managing those relationships can be a challenge.

Some choose to bundle workers’ comp with other legal representation, but just because a firm excels in another area, doesn’t mean they will in workers’ comp.

“Workers’ comp attorneys aren’t allowed to say they are specialists, yet they are expected to be,” said Mike Fish, partner at Fish Nelson & Holden and president of the National Workers’ Compensation Defense Network, a national network of workers’ compensation defense firms.

Others rely solely on personal referrals.

“I get those calls all the time. Current clients will ask who I know and trust in another state.” said Fish.

“That’s one of the benefits of NWCDN. We have contacts in each state. I know each of them and see them once or twice a year. They are heavily vetted, there is one per state, and they have to be voted in by the other members.”

Mike Fish, partner, Fish Nelson & Holden; president, National Workers’ Compensation Defense Network

“You are going to ask peers, people you respect, people you know in the business, people you know in the community,” said Debra Levy, SVP, product management and national workers’ comp practice leader for York Risk Services Group.

“You’re going to start there and there’s certainly nothing wrong with that.”

But referrals should only be a starting point.

“You’ve got to interview firms,” said Levy, to make sure your legal philosophies are aligned, and to ask about their operations and priorities, and specifics like using associates instead of partners on depositions. “… There are all those things that usually don’t come up until there’s a problem, and then folks are like …’Why didn’t we know that about this?’ ”

Fish recommends other research, as well.

“How involved they are with national or state-wide organizations. Are they prolific speakers? Do they communicate new case law through blogs or newsletters, so you can see they’re on top of things? Are they well respected in the state? Are they on committees?”

“Workers’ comp attorneys aren’t allowed to say they are specialists, yet they are expected to be.” — Mike Fish, partner, Fish Nelson & Holden; president, National Workers’ Compensation Defense Network

Levy suggests looking at a firm’s impact on case law.

“The power of a firm is being able to not just settle a claim but successfully set new case law that benefits or is of use to the folks that come along later,” she said.

Data and analytics are an increasingly important tool in selecting workers’ comp law firms. But not everyone is convinced of their utility.

“In order for [metrics] to be useful you’ve got to make sure you’ve got apples to apples analytics,” said Levy.

“Otherwise it’s like anything — I can spin any number I want to make it say what I want to say.”

“Some say analytics don’t tell you the quality of the work,” said Fish.

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“They tell you the cost and the speed, but not the quality. And there’s no way to quantify that, so there’s no way to tell.”

Others are more upbeat about the power of analytics.

“We have a number of analytical tools that help us capture data to measure various aspects of a law firm’s performance,” said Bruno Para, assistant vice president and manager of legal strategic services for central territory at Liberty Mutual.

“Liberty Mutual has always been very analytical, and we are constantly improving our metrics, constantly improving our data, constantly looking at other ways to pull more information and insight out of our data to help us manage outside counsel performance.”

Liberty Mutual, and its Helmsman Management Services wholly-owned third party administrator, provides clients with analyses of the data, according to their preferences, through reports, discussions and a customer dashboard.

“A carrier or TPA should be helping a policyholder or customer with assessing the data, analyzing it, figuring out what is trending and how they can get the best results, but do it efficiently and cost effectively,” said Don Liskov, assistant vice president and senior corporate counsel at Liberty Mutual, and, along with Para, a member of the company’s legal strategic services group.

But data can only help so much.

“There are a number of performance factors beyond our data … that we include in a law firm’s profile,” said Para.

“What is the firm’s reputation in the legal community? Do they have a particular litigation philosophy? How do they manage motions? Do they try the right cases?”

Debra Levy, SVP, product management, national workers’ comp practice leader, York Risk Services Group

Other factors include staffing ratios, technology, and their usage and understanding of data and metrics in assessing performance against quality and financial goals.

“You can glean some of that through data and metrics, but a lot of that is subjective. It is sitting down with the firm,” said Liskov, so that the client, the attorneys and the carrier, if there is one, all know each other’s litigation philosophies. “… Making sure all of these align with each other is very important.”

Working with national firms can also seem easier, said Levy, with standardized billing and fewer relationships to manage. But she cautions that you still have to do your diligence.

“A firm can be great in this state, in this town and then you move clear across country to another and it’s a completely different approach,” she said.

“Do they maintain and keep that same energy and direction whether you’re in Idaho or in Miami, Florida?”

Starting out with a good fit may be the most important factor to a successful long-term relationship, but such relationships must be maintained.

“Data and analytics are essential to tracking how firms are performing,” said Para. They allow Liberty Mutual to visualize performance trends against other firms and against themselves, period over period.

“We also sit down with firms to share our key performance indicators. We build transparent relationships so law firms understand how they can use the data we share to make changes within their operations that will positively impact their performance trends in the future.”

Some, like Levy, think competition can keep law firms from growing complacent.

“I’m a big believer in keeping a few firms on hand,” said Levy.

“I think competition is the best way to get the best out of a law firm.”

Liberty Mutual prefers a more collaborative approach.

“Through increased engagement and transparency we are enhancing our relationships to drive legal performance and cost efficiencies ,” said Para.

“We frequently share knowledge with all of our law firms, so that they understand where they are in relation to our performance expectations and our internal standards. This type of benchmarking also incentivizes them to consider how they compare to one another and drives healthy competition.”

“We have a number of analytical tools that help us capture data to measure various aspects of the law firm’s performance.” — Bruno Para, AVP, manager, legal strategic services for central territory, Liberty Mutual

One thing everyone agrees on, however, is that communication is essential.

“It starts with frequent, transparent communication in terms of whether or not the guidelines, the expectations, and the goals of the relationship are being met,” said Para.

And if a once-good fit seems to have become less so, it is important to understand why and communicate that. Are the problems operational or systemic? Do they stem from changes to the law firm, or the client’s business?

The important thing is to communicate such changes.

“Once you identify the why, then you can address what to do about it,” said Para.

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Disconnects can also arise from strategic or philosophical changes on the client side.

“On any given day, company X might be more hard-nosed, or easygoing. If word gets out that they settle everything, they might see an increase in claims. So they say they can’t settle, and they litigate every claim, then they get dinged for $1 million, so they back off that hard-nosed position.”

Inevitably, sometimes, a client may need to make a change, but Levy advises a measured approach. “When clients see a change going on or see or feel something that’s not right, a lot of times they’re very quick to abandon this relationship,” said Levy.

“…We do try to encourage that you take a step back to examine: Is it one attorney at issue, is it the philosophy of the firm that’s changed? … Don’t just run away. Take some time to really make sure that’s what you want to do. And if you’ve had good results and there’s a way back to those results that match and meet your expectations, then hold on to it.” &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.