How To Pursue and Win the Complex Claim

1. How To Pursue and Win the Complex Claim RIMS 2012 – Philadelphia, PA Wednesday, April 18, 2012 Ty Childress, Partner, Jones Day Los Angeles, CA tchildress@jonesday.com (213) 243-2422 John Frantz Vice President and Associate General Counsel Verizon Communications john.frantz@verizon.com (908) 559-5731 Sheila Small Assistant Treasurer, Risk Management Verizon Communications sheila.small@verizon.com (908) 559-5829

2. THE MEMBERS OF THE TEAM THE RISK MANAGER • POTENTIAL STRENGTHS • Understands the policy and underwriting history • Has a good grasp of the business relationship with the insurer • Can help assess impact of this claim on overall insurance relationship

3. THE MEMBERS OF THE TEAM THE RISK MANAGER • POTENTIAL WEAKNESSES • Less willing to pursue aggressive strategy if it involves conflict with professional relationships • Less attuned to legal arguments • Less knowledge of how similar claims are being handled by other policyholders • (Over)concern of premium impact on claim pursuit

4. THE MEMBERS OF THE TEAM THE IN-HOUSE ATTORNEY • POTENTIAL STRENGTHS • Can offer perspective of overall business objectives of client • Brings understanding of legal issues and legal strategy • Early integration in policy negotiations can enhance coverage • Can monitor cost-effectiveness of alternative strategies

5. THE MEMBERS OF THE TEAM THE IN-HOUSE ATTORNEY • POTENTIAL WEAKNESSES • Often focused on liability claims and brings defense‑oriented perspective • Coverage claim not always perceived as high profile within company • Workload limitations • Lack of insurance expertise

6. THE MEMBERS OF THE TEAM THE OUTSIDE COUNSEL • POTENTIAL STRENGTHS • Legal expertise in insurance issues • More familiar with insurer negotiating strategy • Able to marshal resources quickly • Not encumbered with internal company politics

7. THE MEMBERS OF THE TEAM THE OUTSIDE COUNSEL • POTENTIAL WEAKNESSES • Not as sensitized to internal company needs • May be less sensitive to impact to business relationship with insurer • Can let case take on a “life of its own” if not monitored

8. THE MEMBERS OF THE TEAM THE BROKER • POTENTIAL STRENGTHS • Familiarity with insurance industry • Potential commercial leverage

9. THE MEMBERS OF THE TEAM THE BROKER • POTENTIAL WEAKNESSES • Generally not privileged communications • Not familiar with legal issues • Not sensitive to internal company objectives

10. DEVELOPING THE STRATEGY Understanding The Underlying Claim • What is the exposure? • One-time or recurring issue? • What potential arguments in the coverage claim could be inconsistent with underlying defense? • Timing considerations

11. DEVELOPING THE STRATEGY Understanding The Coverage • What coverage is potentially implicated? • Were these exposures discussed during underwriting process? • Other parties’ coverage available?

12. DEVELOPING THE STRATEGY Understanding The Company’s Objectives • Is this a bet-the-company exposure? • Need for a defense? • Is company prepared to fully assert its legal rights?

13. TENDERING THE CLAIM Who? • By risk manager, in-house counsel, or outside counsel? • What message is sent? • Who is your “company witness”?

14. TENDERING THE CLAIM Which Policies? • All policies? • Third party’s policies versus company’s own policies? • “Targeted tender”

15. TENDERING THE CLAIM How? • Is there a risk of a forum battle? • Do you sue simultaneously? • Do you ask for specific acts or just precautionary notice?

16. NEGOTIATING THE CLAIM Role of Risk Manager • Can use outside counsel as “bad cop” to push insurer to negotiating table • Can offer perspective on overall insurance relationship

17. NEGOTIATING THE CLAIM Role of In-House Counsel • Uniquely situated to balance legal strengths, costs, and company objectives • Can facilitate team communications

18. NEGOTIATING THE CLAIM Role of Outside Counsel • Can aggressively advocate company’s legal rights • Can develop legal plan to maximize exit strategy opportunities

19. LITIGATING THE CLAIM Role of Outside Counsel • Brings legal expertise and resources to bear • Full understanding of procedural aspects of litigation

20. LITIGATING THE CLAIM Role of In-House Counsel • Monitors proper internal and external resource allocation • Coordinates underlying claim strategy with coverage strategy • Can help translate legal process to client constituencies

21. LITIGATING THE CLAIM Role of Risk Manager • Serves as critical company witness • Can monitor insurer conduct to assess future role of insurer in program

22. SETTLING THE CLAIM The Outside Counsel • Identify important timing issues for leverage • After filing suit? • After critical threshold motions decided? • After witnesses deposed? • On courthouse steps? • On appeal?

23. SETTLING THE CLAIM The Outside Counsel • Identify personality of mediator needed • Develop mini-trial presentation to show other side’s decisionmakers

24. SETTLING THE CLAIM The Risk Manager • Identify other side’s decisionmakers • May be able to add business elements to settlement • Identify renewal issues, impact on other claims

25. SETTLING THE CLAIM The In-House Counsel • Has broadest perspective on underlying claim legal strategy, coverage legal strategy, costs • Important internal advocate for claim team decisions

26. CONCLUDING THOUGHTS Risk Manager Perspective • Establish relationships with key insurer personnel • Maintain close working ties with Legal Department In-House Legal Perspective • Anticipate company exposures when negotiating coverage • Persistence matters Outside Counsel Perspective • Acknowledge team members’ strengths and weaknesses • Provide real-time practical guidance and expertise