Attorneys reveal how natural disasters kickstart legal work
Signs of stress: In addition to expected lawsuits, divorce and domestic abuse tend to increase after a catastrophe.
Florida’s Gulf Coast is still dealing with the clean up after facing two major hurricanes within weeks of each other.
Meantime, attorneys from different practices are preparing for a surge of activity.
The two storms are estimated to cost billions in damage on top of the dozens of lives lost. The aftermath is widely expected to kickstart litigation related to insurance coverage, homeowners association practices, taxes, state regulations and more.
Signs of stress
“Attorneys across the board, in all fields typically have an increase. I even mean criminal lawyers and divorce lawyers,” Chip Merlin, founder of insurance claim defense firm Merlin Law Group, said. “One of the sad statistics is that after major catastrophes, the incidents of divorce go up, the incidents of domestic abuse go up.”
An investigation conducted by Slate found that divorce rates tend to rise after natural disasters because dealing with the physical and financial destruction left behind can take a toll on relationships.
Merlin says that financial challenges tend to lead to more crime as well.
Expanded money worries
But more immediately, Merlin says that tax questions tend to be one of the first things that clients need help with after a storm.
“Any property that’s been damaged has a decreased value and people are able to make, at least on a temporary basis, a claim for a tax assessment that’s going to reflect the fact that the market value of a damaged piece of property is worth less money,” Merlin said.
Regulatory concerns
A more long-term issue Merlin is seeing after the last two hurricanes is that Floridians are changing their response to catastrophic damage.
“In these situations, people are forced to make a determination if they want to build back. Is it worthwhile or not?” Merlin said. “Some people are just saying, ‘Whether I can build back or not, it doesn’t matter. I’m just going to sell it and off we go.’”
If recent hurricanes are in fact making a large swath of people reconsider their desire to stay in disaster prone areas, it could have an impact on Florida, whose political and business leaders have boasted of population growth.
Florida legislators are expected to craft some sort of legislation to help solve some at least some of the issues the storms have raised, according to Beth Vecchioli, a Holland & Knight senior policy advisor in Tallahassee.
“I think that resiliency is going to be top of mind for the legislators,” she said. “I wouldn’t be surprised if they decide to open up the building code again this year.”
The damage that was left behind, compounded with the challenges that condos have been facing in complying with regulations that came after the Champlain Towers condo collapse, might bring a lot of attention to that area, Vecchioli said.
There were also issues with gas stations losing power and not being able to pump gas, so she expects some movement in requiring generators for gas stations throughout the state.
Coverage confusion
Another big issue is flood insurance. Although most flood insurance is covered by a federal program, Vecchioli expects some action to incentivize other options.
“There are a lot of insurance companies that write private flood insurance,” she said. “There might be a push to try and generate more of that type of business and to make people more aware that they need flood insurance,” she said.
Although many practices will be affected, insurance is the big question on everyone’s mind throughout the state. With an ongoing insurance crisis that has forced many providers out of business and out of Florida, many citizens are struggling with the higher premiums that came as a result.
“In the last five years, there’s been all sorts of changes from property insurance, and unfortunately, the problem is that when you make those changes to the law, it takes a while to work its way through the rates and that’s why we’re not seeing a dramatic fall in rates,” Vecchioli said. “We have noticed that there are more players coming into the market, which is a positive sign. Also many insurance companies have filed for rate decreases. The problem is, with these hurricanes, it could perhaps offset some of those rate decreases that we were starting to see because now there’s these huge losses. I do think that we can expect a rise in reinsurance rates next year.”
With regard to more insurers entering the market, they could either think twice about the decision after seeing all the losses from the storms or they could view it as a perfect opportunity to enter, since the immediate chances of another catastrophic hurricane are statistically smaller, according to Christopher Kuleba, a partner in Reed Smith’s insurance recovery group.
Tort reform
There’s also a question of whether tort reform measures will likely decrease the amount of insurance claim lawsuits that get filed in Florida. Although Kuleba is getting a flood of calls from clients about all sorts of issues, he’s expecting less work to go around for everyone than before.
“From a macroeconomic perspective, it makes sense that claims that are not valuable enough for lawyers to take them on a contingency are going to be less prone to getting pushed through to litigation than in the past,” Kuleba said.
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