How To Overhaul Your Panel Counsel Network

Establish a Task Force

There are several phases to establishing an approved panel list. Thus, by creating a short-term task force, you will be able to obtain a varying perspective. Be sure to have both home office/corporate personnel involved as well as branch/field personnel. You will want both management personnel and the end-user (i.e., claims representatives).

Create a Mission Statement

While this sounds simple and one might wonder why you start here, the key is that you need to communicate to all your outside panel counsel what it is that you are hoping to accomplish. The statement should be focused, concise, and self-explanatory.

Once the core mission statement is established, it may be worthwhile to establish specific goals and objectives. The purpose of this article is relative to establishing your panel counsel, and thus we will not deal with this subject at this time.

Assess Your Needs

You need to establish statistical analysis for where your suit volume is and what your anticipated needs will be. This assessment should focus on lines of business (LOB) needs as well as volume of suits. You will also want to look at total legal dollars spent. Depending on volume, you may want to create a map wherein you can overlay statistical results. As an example, let's say your company has workers compensation cases and general liability cases. Red dots could reflect where your workers compensation volume is and blue dots where your liability volume is. If there is significant volume, you may want to have a different map for each LOB. Then you use colors to represent volume. In other words, red equals 1–9 in an area; blue equals 10–49 in an area; orange equals 50–99 in an area, and so on.

Announce Your Intent

By using the verbiage from your mission statement, announce to all existing panel counsel firms what your intent is. Be brief and basic enough as to not bore them and also to not provide more details than necessary; yet, be specific enough to explain that your intent is to reconsider the role of every panel counsel for future business. This should be sent out in a letter format to the primary coordinator or managing partner for each law firm currently in your program.

If you have a firm that is already on some sort of probationary activity, and you feel certain they are not going to make the cut, rather than giving them false hope, it may be best to design a separate letter, which informs them what you are doing. It should let them know that in all likelihood they should expect to be removed from the program.

Be certain that you are keeping your options open based on the volume as indicated above. The last thing you want to do is accidentally eliminate all decent firms in an area where you have significant volume.

Also, depending on the design of your organization, be certain to involve your field personnel. In your announcement, be clear of what your intent is and encourage them to nominate their "favorite" firm. Just remember that this will probably increase your efforts, but it may prove worthwhile.

Have Established Guidelines for Billing, Handling, and Reporting

It has been wisely said: "If you don't know where you are going, you'll never get there." A primary objective in litigation management must be to ensure compliance to guidelines and achieving favorable results. While it has been said by many, as long as the end result is good, than nothing else matters. The only problem is what do we mean by "end result" and what do we mean by "good"? While it is true that we want to "win," the truth is that less than 3 percent of all civil tort suits ever go to trial. That means, over 97 percent either settle or get dismissed. During that process, there must be guidelines and procedures for handling.

For some companies, establishing litigation management guidelines may be a new thing. For others, it may be a matter of making modifications. Whichever the need, it is imperative that guidelines be an integral part of establishing a preferred defense counsel network. It is essential in establishing a "win-win" scenario for each approved firm to know what to expect.

In 1998 the Defense Research Institute (DRI) published Recommended Case Handling Guidelines for Insurers as well as a compatible set of Guidelines for Law Firms. These guidelines include handling, reporting, and billing guidelines. To view these guidelines, visit DRI's website. While in all likelihood you will want to establish specific "rules of engagement" for your company, the DRI guidelines are a great example.

Create an Application

Once you have established your core set of guidelines (keeping in mind that it is totally acceptable to alter/modify these guidelines, especially since you will be seeking input from your final selection of outside panel counsel), you will want to create an application to submit to each prospect firm.

It is critical that you coordinate your questions with your needs. Identify specific objectives of what you are wanting from a law firm. Remember to be forward thinking. It is much better to ask for more than you need than to not be thorough enough. It is my personal opinion that you gather as much information as possible. That may include requesting financial details, but be prepared for some push back.

The following is a listing of some things about which you may want to inquire.

• Names of principle partners
• Number of years in business
• Number of attorneys
• Other staff positions at firm (nurses, investigators, etc.)
• Martindale-Hubbell rating (AV, BV, or CV)
• Whether or not formation of firm was the result of a law firm spilt; if yes, obtain details
• Type of cases firm is more likely and less likely to handle (provide list to select from of your core business)
• Average hourly rate for senior partner, junior partner, associate, paralegal
• Internet and email capability and accessibility
• Electronic billing capabilities
• Other types of technology they utilize
• Conditions wherein they will do plaintiff's work
• Internal procedures for selecting/hiring experts
• References (at least three others with your core business)
• Names of at least two terminated clients with reason for termination
• Their familiarity with the DRI Handling Guidelines
• Their knowledge of the ABA's Uniform Task-Based Management System (UTBMS) task codes
• What percentage of time does firm submit a budget
• Amount of professional liability coverage ($2 million is the recommended minimum)
• Details of claims against their professional liability policy within the past 3 years
• Number of partners/associates have been involved in any bar association ethics review/investigation
• Openness to alternative billing arrangements

Create an Individual Attorney Profile

In addition to obtaining information on the overall firm, many will agree that it is as important, if not more important, to be certain you have the right attorneys within the firm handling your cases. That is why it is recommended that you go a step further and create an individual attorney profile form. This would be in addition to the firm application, but be specific for those whom you expect would be primary handling attorneys on your cases. The profile form generally does not have as many questions. However, it can get very specific.

The following are some examples of inquiries as part of the individual attorney profile.

• Area of expertise
• Special designations held
• Martindale-Hubbell rating (this is done for individuals as well as firms)
• Partner level in firm
• Hourly rate
• Major clients
• State(s) licensed in
• State bar number (not all states have a state bar number)
• Organizational memberships
• Number of pending cases
• Number of cases in past 3 years that obtained successful summary judgment
• Number of cases that have they taken to trial during past 3 years
• What percentage of time do they "win"? (Be careful to maybe describe what a "win" is as there may be a case where a case is owed and thus a verdict is expected; however, you anticipate it at a certain amount or less … thus being a "win.")
• What percentage of their communication is electronic?
• On average, what is their success level for timely reporting?

Submit Application and Profiles

It is important that you not be too restrictive in who receives the application. Presume that some may choose to not participate. Thus, if you are too restrictive, you may get a response from a firm indicating they are not interested. This could leave you without a "back-up" plan.

As you send the applications out, be sure to establish a deadline date. Ideally you should look for responses in about 2 weeks. It is best to set specific dates (i.e., May 15, 2003) as opposed to saying "due in 2 weeks."

It may be acceptable to use the individual attorney profile as a Phase II approach. That is, you submit the profile form only to the firms you feel comfortable with after receiving the application.

Unless you feel very strongly about a particular firm and their willingness to proceed with your program and guidelines, you should consider sending the application to at least two firms in each major area of need. As the applications and profiles come in, begin your assessment of each.

Establish Acceptable Hourly Rates by Line of Business and Jurisdictionally

Decide what you are willing to pay by line of business and by jurisdiction. Ideally, you should establish the following rates.

• Senior partner rate
• Junior partner rate
• Associate rate
• Paralegal rate

Try your best to have some statistical analysis available that reflects what in fact "average" rates are for jurisdictional areas and by line-of-business. For those who opt for a blended-rate concept, you will still want to know what the averages are.

Require Signatory Compliance to Your Rates and Guidelines

Now that you have created guidelines, established an application process, and determined acceptable rates, be ready to submit copies of your final guidelines to your law firms. Require that they review and sign an agreement to abide by those guidelines. While these guidelines may (and probably will) be modified in time, there must be something initially to shoot for and be measured against.

As part of this signatory agreement, you should identify certain issues that you want to be made aware of should things change within the firm. For instance, you may want the firm to notify you within 30 days should the firm go through a split so that you are made aware of the changes. You again decide what the important issues are that you want to be made aware of and hold the firms accountable.

Begin the Selection/Elimination Process

Once the applications start coming in, be certain that you have established your minimum expectations. There are very few applications that will meet your expectations and/or desires 100 percent if you are thorough enough. However, by establishing a core list of essentials, you should be able to start your process of elimination and selection.

If hourly rate is a critical factor, be sure that you have established a maximum amount. However, if there is a firm that you feel favorable toward that comes in high, be sure to give them the "last shot" at reducing that rate to meet your satisfaction.

Create an acceptance letter and a rejection letter. The acceptance letter should speak for itself. The rejection letter should be cautious as to not burn your bridges.

Announce/Publish Results

When you begin the elimination process, be certain to communicate that to all firms. As indicated above, be cautious not to burn your bridges. I suggest sending your acceptance letters first and waiting a week before sending out the rejection/removal letters. You never know when someone might change their mind at the eleventh hour and you have already sent your Dear John letter.

Once you have established your list, be sure to share the names with each firm. They may want to have contact with other firms for referrals and/or assistance.

Create a Name

Some may not like this idea at all, but I encourage you to create a name for your panel counsel. At Crawford, ours is referred to as our client Preferred Defense Counsel Networks (or PDCN for short). This provides the thought of ownership and provides for some sort of name-branding. To just refer it as company XYZ's List of Panel Counsel really does not give justice to all the work that has gone into the process.

Establish an Annual Review Program

Just like you review the performance of your employees each year, there should be an annual review of each firm. Ideally, this should be automated, but that all depends on whether or not you have set-up your network of attorneys with technology. It is sad that on average, insurance defense firms get an increase in the hourly rates about once every 3½ years. In fact, in many cases, in order to be invited to participate, firms are often asked to reduce their rates.

While we do not have to address this subject as part of this subject content, be sure that you are treating your firms fairly. Use technology and results to establish a program for annual law firm performance reviews. Increase in hourly rates should be based on results. Likewise, remaining, or being removed from a program should be contingent on the results during the past 12 months. Evaluation should be of compliance to billing guidelines, handling guidelines, reporting guidelines, and overall results.

Conduct a Meeting

Now that the "group" has been formed, it is strongly suggested that you have a meeting to bring all firms together. At this meeting, you should go through your guidelines and allow for input and interaction. This is where you "lay down to law" and explain future consequences.

Set a Goal To Put List Online

In time, you will want to establish an online database of your firms. This can be very basic, simple search and locate, or can be more complex. Also, decide whether you want to provide access to all or you want to restrict access. You also can opt to have open search capabilities, with limited access to certain areas. For an examples of what these might look like, visit the FindLaw and Martindale.com websites.

Closing Comments

There have been many issues shared here. Trust me, this is not a "one size fits all" concept. While I do believe these principles can be applied universally, you will not that there are opportunities for modifications. Two keys are: (1) be open minded (not afraid to think outside the box), and (2) be informed. Make sure you have the right information.

The views, content, and opinions expressed herein are solely those of Michael Boutot and are not necessarily those, nor intended to be those, of Crawford & Company and/or the membership and/or board of the International Litigation Management Association (ILMA).