Gary Markham, Legal Solutions Group


With information technology playing an increasingly substantive role in the running of captive entities, its application in law, claims management and e-billing are explored.


G


ary Markham, chief executive of the Legal Solutions Group, provides insights into three areas of information technology and litigation that pertain to the captive sector: litigation management, retention and deductible tracking and the attractions of e-billing.


Where does your organisation fit on the ‘scale of sophistication’ in litigation management?


Litigation management, including its related cousins of legal spend


and cost control, is not a new phenomenon. They have all been around in various guises, especially in the insurance market, for well over a decade, but litigation management is evolving rapidly in the economic downturn. With the advent of universally applied invoice or billing formats, the science of litigation management has evolved.


Demonstrable performance measurement data show that the use of


technology in the field of litigation and legal spend management generate an economically sound business case for adoption and implementation.


Figure 2 presents a more definitive explanation of the various stages,


as well as the benefits that each stage offers to organisations that choose to upgrade their litigation management strategy.


SIR and deductible tracking: relieving the risk of E&O claims, coverage disputes and exposure


As world economies have tightened, so has the trend in the insurance industry towards larger self-insured retentions (SIRs) and policy deductibles. By increasing an SIR or retention limit, premiums can be negotiated downward by the insured or client. The flipside of reduced premiums is increased responsibility on the part of the insured for settling (in the case of SIR) or contributing towards claims costs (in the case of retention), in the event of an occurrence which triggers the insured’s policy with the insurance carrier/s.


As SIRs are the sole responsibility of the insured, there has been greater focus and attention to detail on the part of the carrier, to ensure that full and proper fiduciary duty has been met and that erosion of the SIR may be demonstrated.


With larger deductibles, insurance carriers are being challenged legally


as to their rights of settlement, where the deductible forms a significant part of the claim payout, for both allocable claims adjusting expenses and indemnity or damages. Several cases related to deductibles have been tried in favour of the carrier.


Coverage disputes


Coverage disputes are not uncommon in the insurance industry. However, a growing and worrying trend is beginning to emerge related to claims for coverage, where the SIR has to be fully and properly


Figure 2: Added benefits of stages of litigation management Definition


Stage 0: Stage I:


Stage II


• •


• •


• • Stage III


• • •


Manual, paper-based system • Paper-free billing


Opportunities for Bill Review


Paperless claims feed & matter creation


Electronic invoice review & approval


Vendor selection, on-panel/off-panel


Budgeting Case planning tools Report cards & MI reports • • Stage IV • • •


Ability to monitor internal case handling


Advanced budget billing controls


Detailed senior management reports


• •


•


• •


• •


•


Added benefit None


Cost and time savings Guidelines compliance


Centralised data repository


Guaranteed management oversight


SarbOx & internal audit compliant


Budget tracking tool to measure cases


Reports to review LSP performance


Paper completely removed from process


Higher levels of compliance


Proactive litigation management principles embedded in company culture


demonstrated as completely eroded. Effectively, coverages are being disputed where it cannot be shown that full erosion or exhaustion of the SIR is proved. Several cases can be cited, with a proportion spawning fresh errors and omissions (E&O) claims for claims mishandling or alleged negligence in fiduciary duty, among the most common.


Figure 1: The evolution in litigation management


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