CONTRIBUTION & INDEMNITY IN AN ETHICAL WAY

1. CONTRIBUTION & INDEMNITY IN AN ETHICAL WAY

2. Ethical Settlement • Goes hand in hand with trial • Must set the case up for trial • Be aggressive about the set-up

3. Keys to Successful Settlement • Thorough trial preparation • Client/Insured Interview • Impression to the other side that the case is ready for defense • Attention to detail is key to this impression • Minimize surprises

4. Settlement • Know the social value of your case • Don’t underestimate the human factor • Be honest but stern

5. Settlement v. Expenses • Key Expenses • Records • Deposition (Attorney, Court Reporter & Videographer) • Experts • Mediation • Trial [Attorney, Court, Expert, Exhibits Guy] Uncertainty

6. Ethical Settlement • Evaluation of settlement possibilities • Background of parties • Witnesses • Circumstances of accident • Damages (Do they get worse?)

7. Ethical Settlement • Tort Reform 2003  • Purpose • Penalizes those who reject reasonable offers • Rewards those making reasonable offers Shifting: • Litigation Cost • Court cost • Attorney fees • Two expert fees

8. House Bill 4 • All lawsuits filed on or after January 1, 2004 • Monetary relief only [Declaratory, Injunctive other Equities]

9. Claims Excluded • Class Action • Shareholder derivative • Action against Government • Action under Family Code • Workers Comp • Justice of the Peace

10. Reasonable Settlement Triggered • Statute says anyone can claim reasonable settlement • Not triggered until Defendant’s Declaration • Under this statute, Plaintiff can be Defendant if: Counter Claim Or Cross Action

11. Reasonable Settlement Triggered • Multiple Defendants? • Each Defendant must file separate Declarations • The Declaration must be made no later than 45 days before the case is set for trial [Good cause can change]

12. Reasonable Settlement Triggered • Rule does not apply to: • “Any offers made during mediation / arbitration” • “Any offers not following Rules don’t trigger fee-shift”

13. Reasonable Settlement Triggered • Requirements • Writing; • Made under Rule 167 and Chapter 42 Texas Practice Code; • Identify parties making offer and parties offer made; • State terms all monetary claims, attorney fees, cost and interest – may settle; • State a deadline – must give at least 14 days • Be served on all parties to which offer is made Tex. Civ. Prac. & Rem. Code § 42.003; Tex. R. Civ. P. 167.2(b)

14. Reasonable Settlement Triggered Conditions • They may have reasonable conditions • Condition Rejected?? No Shifting!

15. Time Limits To qualify, an offer may not be made • Before a defendant’s declaration is filed; • Within 60 days of the appearance in case; • Within 14 days of trial; [offer can within 7 days in response to other] Within 14 days of trial; [offer can within 7 days in response to other] Rationale Can’t join and make immediate offer • Not on courthouse steps

16. Time Limits • Successive offers  Yes, as long as favorable • Withdrawal  Yes, in writing • Acceptance  Yes, in writing [must be filed with request to enforce same to the Court] • Rejection  Be careful…

17. Time Limits Rejection – Offer made. If offeree does nothing, that triggers the shifting of fees.

18. Time Limits “Litigation Cost” Triggered when the Judgment is significantly less favorable to Rejecting Party. • Plaintiff – His award is less than 80% of the rejected offer • Defendant – The Plaintiff’s award is more than 120% of the rejected offer.

19. Accident + Injury = Negligence • Plaintiff damages $10,000 • Plaintiff Offers $20,000 • Defendant rejects offer • Jury Award $25,000 Fee Shift • Attorney Fees • Cost of Court • 2 Experts

20. Accident + Injury = Negligence • Plaintiff damages $10,000 • Plaintiff Offers $20,000 • Defendant rejects offer • Jury Award $15,000 Fee Shift • Attorney Fees • Cost of Court • 2 Experts

21. Accident + Injury = NegligenceQuestions • What constitutes judgment? • Interest • Modification • Take Nothing Judgment

22. Why do I have to have ethics, I deal with plaintiff attorneys all day?

23. Scenario #1 An employee of your insured, shot and killed a shopper at the Kroger grocery store (which you insure) and the person killed was the starting quarterback for the Dallas Cowboys. Your investigation is complete and it shows liability against Kroger is clear and the claim is covered. Plaintiffs’ attorney has been demanding your $1million limit for 2 years. Your adjustor hasn’t offered anything. The president of Kroger calls and demands that you settle the case or he is going to bring a bad faith lawsuit against you.

24. What do you tell your adjustor? • You have to have written documentation on the lost wage claim before he can offer anything; • The Cowboys are good because of Coach Parcells and not the quarterback. Offer the plaintiffs $250,000 to settle. • To tell the president of Kroger that he can’t sue for bad faith because this is a third party claim. • Please settle ASAP and go read Rocor, 77 S.W. 3d 253(Tex.2002) to avoid a bad faith lawsuit.

25. Scenario #2 Your insured was in an auto accident and liability is not clear. Your defense attorney takes the depositions of two witnesses who say your insured was not at fault. Plaintiffs’ attorney, How Dewey Cheatham, calls and demands your policy limits. You refuse his offer. The Plaintiffs’ attorney then says he is going to get you for these unfair settlement practices and he is going to amend his pleadings to allege Breach of the Duty of Good Faith and Fair dealing against the insurance company.

26. What do you tell your adjustor? • You can now have the policy limits, we only respond to threats. • You need to go read Allstate v. Watson, 876 S.W. 145 (Tex. 1994) • Please don’t do that, I might get fired! • Didn’t you work for the Texas Hammerhead formerly known as the Smart Tough Lawyer?

27. Scenario #3 A Plaintiffs’ attorney known as the Texas Hammerhead calls your adjustor and asks about all insurance coverage which is applicable to a death claim from a trucking accident which caused a death. You know that your company has a $50,000.00 trucking policy and a $500,000.00 excess policy. What do you tell your adjustor to say to the Plaintiffs’ attorney?

28. The Adjustor’s Response • You must have the wrong insurance company we don’t have any coverage. • Hey, Mr. Hammerhead, you’re in luck, we got a $50,000.00 policy. • Tell him you got both policies, but that you hired Godwin Gruber, so he will never see a penny. • Ask him, Hey – what’s your yearly advertising budget?

29. Scenario #4 One of your adjustors is handling a claim by Mr. Procrastinator, an 82 year old who was rear ended by your insured. The date of loss is June 26, 2002. Mr. Procrastinator is not represented by counsel. You have the file reserved at $10,000.00. Your adjustor has been negotiating with the claimant for about 4 months. Your adjustor tells you that Mr. Procrastinator called this morning and offered to settle his claim for $4,500.00. Your adjustor’s last offer was $4,000.00. What do you tell your adjustor to do?

30. What do you tell your adjustor? • Tell your adjustor to call Mr. Procrastinator on Monday (June 28, 2004) and tell him that the gig is up and he gets NOTHING! • Tell your adjustor to call Mr. Procrastinator today and tell him that, after careful consideration, her revised (and final) offer is $2,500.00. • Tell your adjustor to call Mr. Procrastinator and tell him that he needs to get an attorney because the statute runs tomorrow. • Tell your adjustor to call Mr. Procrastinator and offer him $4,250.00 as a best and final offer.

31. Scenario #5 Your insured ran a red light and hit a car in which the mother was driving and her 6 year old son was the passenger. Thankfully, the mother was not hurt. The child, however, was transported from the scene due to loss of consciousness. At the hospital, the child was thoroughly checked out and the tests came back normal. The final diagnosis was a mild concussion. It has been one year since the accident and the child has had not further problems. The total medical bills are $1,600.00 The Plaintiff’s attorney accepts your settlement offer of $2,500.00; however, he does not want to have the case resolved with a friendly suit.

32. What do you tell your adjustor? • Cut the check for $2,500.00 and get the mom to sign a standard Release. • Tell the Plaintiff’s attorney that unless there is a friendly suit – and a minor prove up – there is no deal. • Cut the check for $2,500.00 and get the mom to sign a Release where she acknowledges that she is settling her son’s claim regarding the accident. • Call the Plaintiff’s attorney and see if $3,000.00 will convince him of the need to conclude the case via a friendly suit.

33. Scenario #6 Your insured has a $50,000/$100,000 auto policy. Your insured is speeding, runs off the road, and all five passengers in the car are injured. One of the passengers (a 17 year old girl) is in a coma and is diagnosed with a severe brain injury. Within 28 days of the accident, an attorney for the girl’s family makes a demand for $50,000.00.

34. What do you tell your adjustor? • Tell the adjustor that until you get a report from a neuropsychologist of your choosing, there will be no settlement offers made. • Tell the adjustor that you can’t pay $50,000.00 because that will leave only $50,000.00 for the remaining four passengers. • Tell the adjustor to get it done yesterday. • Tell the adjustor to wait six or more months and then agree to pay $50,000.00 on girl’s claim (see Calich vs. Allstate)

35. Thank You! Kirk Willis MEMBER 469-893-1870 kwillis@helmsgreene.com