Florida insurance lawyers turn to corporate clients as ordinary cases face extinction
”The people who need help the most that are going to be the most hurt,” said Miami litigator Oliver Birman, describing the consequences of a tort reform measure enacted in March.
As insurance rates keep ballooning in Florida, lawmakers have passed several bills to curb insurance litigation across the state. Months later, commercial litigation is beginning to overshadow smaller cases, according to some within the space.
Because clients with deep pockets can still afford to litigate against insurers, lawyers on the corporate end of the insurance law spectrum continue to get plenty of work. But lawyers handling cases with less money attached to them are facing an existential threat that could affect people who aren’t wealthy and even cause ripples throughout Florida’s business community.
Back in March, Gov. Ron DeSantis signed a bill that aims to limit lawsuits against insurers. The bill’s statute that got rid of fee shifting is set to be the biggest change as it makes it harder to recover attorney fees, disincentivizing lawyers from taking the lawsuits to begin with.
“I’ve always handled a number of smaller claims. Sometimes I do it as a personal desire to assist a charity, for example … I’ve represented churches and schools and so forth. And I’ll do that because it makes me feel good, and because I’m helping the community by doing so,” said Miami-based Hugh Lumpkin, a partner in Reed Smith’s insurance recovery group. “I’m no longer in that position unless I want to do it pro bono.”
Lumpkin’s experience in the space dates back to 1986, and the recent regulations Gov. Ron DeSantis signed into law have forced him to focus solely on his commercial clients.
“I have enough experience to be able to evaluate a claim and say that this claim is not only valid, but is worth enough money over and above what the insurance company’s willing to pay for us, to go to court to try to secure that result,” he said. “I can do that because I’m secure in the knowledge that if I was right, then the insurance company is going to pay me a fee for prevailing. Because of the elimination of one-way fee shifting, that is more difficult to do today.”
Some firms have already begun shifting away from insurance work as well. For example, Cole, Scott and Kissane, which primarily represents insurers, is shifting its insurance practice towards more work on construction defects.
These days, Lumpkin is mostly working on directors and officers liability claims rather than more traditional claims. But like many Floridians who have to pay for homeowners insurance, he’s worried about the broader repercussions for the state’s booming economy if the insurance crisis doesn’t get solved and bills keep rising.
“It’s fine for a large private equity company to come into our market and open a headquarters here. But those employees that work at that company are going to need to buy a home and they’re going to have to be able to afford insuring it,” said Lumpkin. “You’re going to have to pay your employees more to live in Florida because of the insurance issues. And these people are moving to Florida because they’re good business people. They understand the value of finding affordable housing to attract the people that work for them.”
Lumpkin says that higher prices for housing could force future business migrations away from Florida. The issue is also top of mind for other industries, primarily real estate, which is already seeing its share of challenges related to insurance costs, among other things.
”The only people that are going to be hurt by this are attorneys/? That’s not the case. It’s really the people who need help the most that are going to be the most hurt,” said Oliver Birman, a Miami-based litigation partner at Perlman, Bajandas, Yevoli & Albright, who represents policyholders in coverage disputes.
Other firms have responded to the laws similarly. Philadelphia-based Marshall Dennehey Warner Coleman & Goggin, which represents insurers, started looking for more insurance attorneys as the laws went through the legislature.
Meanwhile, for ordinary homeowners, Hurricane Ian showed that flood damage could become more common, and it’s already harder to get flood claims reimbursed than those for wind damage. As storms grow stronger because of record ocean temperatures, many are left with even fewer options when their homes are damaged.