Before the Outbreak, Preapprove Defense Counsel with Insurer
When a food-borne illness outbreak happens, few food companies (especially those whose brand is at stake) want an unfamiliar defense lawyer who has little knowledge about food-borne illness responding to claims asserted against them. Unless a food company maintains a high, self-insured retention or has the lawyer of its choosing preselected, its insurer might appoint on the food company’s behalf low-cost defense counsel ill-equipped to respond to the claims and protect the brand.
Commercial General Liability insurance and Products liability insurance commonly maintained by food companies to protect them from the risks of food-borne illness outbreak usually will not cover the damage an outbreak can have on a company’s brand, stock value or sales. Lawyers appointed by insurers may have little understanding of the insured’s business or the impact the outbreak can have on its brand. Unlike in other areas, such as securities litigation, insurers are not as likely to have a panel or preapproved list of experienced food liability lawyers ready to deploy.
What a food company should consider before a food-borne illness outbreak happens:
1. Identify lawyers who are:
A. Familiar with (or will pledge on their dime to learn) the food company's business and brands;
B. Experienced in responding to consumer claims and food-borne illness; and
C. Knowledgeable about potential expert witnesses (about both those that the company will hire and those that plaintiffs will hire).
For companies with active crisis management plans , these lawyers likely have already been identified and included on the crisis management team.
2. Work with your broker, insurance coverage lawyer and preselected defense lawyer(s) to get preapproval of your chosen lawyers and agreement on their fees
For the sake of the business relationship (and self-interest), many insurers may agree to preapproval. Consider seeking preapproval at the time of renewal when a commercial insured may have the most leverage with an insurer.
For those with preapproved defense counsel, please consider sharing your experiences and insights. Comment or email.
The Billable Hour - Reflections on the CLE
I had the privilege of participating as a speaker at the Billable Hour CLE held recently at Seattle University School of Law. As an “outside” counsel, here were some of the most significant things I learned:
1. Clients may find the billable-hour system “frustrating.” Though for complex matters, lawyers and clients have to discover the perfect alternative.
2. For business clients, tension exists between alternative fee arrangements, such as fixed fee or contingent fee, and value received. Clients worry about whether alternative fee arrangements will yield lower-quality services and attorney windfalls.
3. For complex litigation (what I do), budgeting early and often is key. Some businesses require monthly budget updates. Designing realistic budgets and tracking those budgets as close to real-time as possible may be key.
4. In-house counsel have clients who are often more demanding than may be apparent to outside counsel. Outside counsel should recognize that their value is measured in large part by the degree to which they help in-house counsel make their own clients happy.
5. Business clients are very concerned about lawyer-firm staffing inefficiencies. Clients do not want to subsidize excessive salaries for new attorneys (often more than salaries for experienced in-house lawyers). Clients are also concerned that senior lawyers may be billing for tasks more appropriately accomplished by less-senior lawyers.
6. “Experts” in the legal profession expect the harsh economics of 2009 to be the best bet in decades for seeing significant change in the industry and the billable-hour paradigm.
