Minimizing the unpredictability of claims litigation

We live in a society where we can do nearly anything with a click of a mouse or the tap of a phone or tablet. However, litigation outcomes are distinctly human events that are the product of old-fashioned perceptions of credibility, appearance and sympathy. Juries and even judges can be wildly unpredictable; and for that reason, it is understandable that claims professionals might feel that all control over outcomes is lost once jurors retire to the deliberation room.

Employing outcome management                             

There is a different way of approaching the unpredictable nature of litigation outcomes by applying what I call “outcome management” to the entire claims process.

Outcome management begins with the premise that a policyholder has individual nuances of personality, learning aptitude and behavior that need to be understood and assessed from the outset of any third-party claim to individually tailor the insured’s preparation for litigation.

Some people are naturally more tolerant of stressful situations and events. Military personnel tend to be more stress-tolerant and are likely to perform well at deposition and trial. Their training allows them to be focused, disciplined, effectively take instruction and to focus more on the process of testifying than on the results.

In contrast, many people do not perform well under stressful conditions and tend to worry about the consequences of poor performance. However, there are effective ways to reduce the stress of testimony for these individuals.

Preparation is key

One lawyer who frequently speaks on deposition and trial preparation starts by asking each client, “What scares you about this?” Once he learns the client’s “stress points,” he tailors the preparation accordingly. The preparation protocol could range from something as simple as mindfulness exercises to something more elaborate such as viewing a preparation video or videotaping “dress rehearsals” of direct and cross examination.

Since policyholders may need to cooperate with you and your counsel in the claims and litigation process, it is wise to ask them some questions:

1. What is their educational background? Policyholders need to understand their responsibilities, as well as issues like document preservation, compliance with discovery obligations, or instructions on how to testify at deposition or trial.

2. Do they have specific fears or concerns about the claims/litigation process? Are they unduly anxious?

3. At first glance (e.g., from an interview) do they seem credible?

A face-to-face interview will help form these initial determinations to develop an individualized outcome management plan with counsel and address issues such as the degree of preparation required for deposition and trial should those events take place. The quality and performance of counsel also affects the outcomes of claims and litigation.

Employing data analytics

For insurers, data analytics holds the potential to help them analyze, and ultimately improve claims and litigation outcomes. The effective use of data analytics can result in termination or expansion of insurer relationships with outside counsel, and possibly the institution of additional protocols (e.g., client personality “triage,” video preparation) for counsel to follow in litigated matters.

There are case studies available online that demonstrate the relationship between the deployment of analytics and a reduction in loss ratios; these studies can serve as guideposts for the institution of analytics within your company.

Regardless of the approach, speaking with your policyholders and listening to their responses will provide much of the information needed to adequately prepare for a case.

Alan S. Fanger (alan@empowerlegal.net) is a Boston-based litigation attorney.