3 Common Claims Resolution Problems and How to Avoid Them

Not too often, but often enough, we receive phone calls from concerned insureds inquiring about what they should do now they have become aware of a claim or potential claim. While taking the correct initial steps once a claim arises is important, your actions prior to becoming aware of the claim will very likely have a greater impact on the manageability of favorably resolving or litigating the matter. I have recently run across three specific issues that created problems in either limiting our options in resolving the claim or eliminating our ability to control the process at all.

1. Papering the Case File

We have a saying here at ALPS, if it is not in the file, it did not happen. What we are referencing with this statement is, regardless of what the insured says happened or did not happen, if the interaction or decision is not documented in the file then it functionally did not happen. This practice pointer is especially critical in documenting the advice you give and the decision-making process you go through with the client, and even more so when the client refuses to follow your advice. We often see claims come from instances where the client and lawyer are involved in making an important decision regarding the case. The decision is made and does not work out favorably for the client. The client then comes back and says something like “why didn’t you tell me this could happen”, or “I would have never made that decision if you had told me X”. The client then brings a claim because, for whatever reason, the client feels the lawyer is responsible for the adverse result. Documenting your file regarding the options available, the advice given, the potential legal ramifications discussed, and the client’s decision can mean the difference between being able to defend a claim or having to pay an ex-client for something you may not be responsible for. In this instance, if you did not document the entire decision-making process, then we have no support to lean on when either trying to resolve or litigate the case and our control over the outcome may be out of our hands. I know how lawyers feel about controlling a case so please, document your files so we have maximum control over the process if a malpractice claim ever comes.

2. Under Promise and Over Deliver

I know this saying is cliché and vague, but I very sincerely believe it is a good practice pointer when employed. An attorney is not a fortune teller and cannot predict the outcome of a case, regardless of how confident the attorney is in their facts or abilities. While it may feel good to mirror or justify a client’s emotions by telling them they will crush the opposing party or win a big verdict, the potential adverse consequences are not worth it. I have observed several claims come about recently because our insured pumped up the client’s expectations either on the strength or value of the case. I have never understood why an attorney would create unrealistic expectations and not counsel the client regarding the very real uncertainties involved in litigation or even business transactions. There is no benefit to creating a situation where the client’s expectations are not based in reality — instilling these unrealistic expectations will create a domino effect. First, those expectations will not be met. Next, the client with unrealistic expectations will carry those unrealistic expectations over to the malpractice claim. Then the client will persist in these unrealistic expectations and very likely will not be talked down from those unrealistic expectations. The client will then assume your malpractice carrier will deliver where you could not and, clearly, the malpractice carrier cannot satisfy these unrealistic expectations either. This creates a situation where we could lose a reasonable settlement opportunity, increases litigation or resolution expenses, and drains valuable time from the insured and the carrier in trying to curb the client’s expectations. This all could be solved by having a simple and honest conversation with the client at the outset to align expectations as to the reality of the case.

3. Investigate the Case Before Pleading Damages

This pointer is closely related to realistically managing client expectations. I have seen a couple cases recently wherein our insureds pled overinflated damages purely because “if you don’t ask for it, you can’t get it.” While this may be true, the situation this creates in the client’s mind is their case must be worth what is being pled. This becomes an issue when something goes sideways in the case and a malpractice claim is brought. Just as the client brings those unrealistic expectations, they will also bring the unrealistic value to the malpractice case. Instead, do not plead $2,000,000 of damages in a MVA case worth $50,000. It is also okay if you do not know the scope of damages when first taking a case but, be proactive in investigating and obtaining the necessary information to accurately plead damages when filing the initial pleadings. Do not wait until three months before the statute of limitations runs to request medical records. Once you obtain the necessary information, do not sit on it. Review the medical bills. Review the lost wage statements. Then proactively draft your initial pleadings. Procrastinating in the investigation and initial drafting will create a situation wherein you are filing pleadings with the Court that may not be fully informed by the facts. While it may not be your intention, overblowing damages will create an unrealistic expectation in the client that will backfire if a malpractice claim ever arises.