A Closer Look at Insurance Defense Litigation

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From LawHub, this is I Am The Law, a podcast where we talk with lawyers about their jobs to shed light on how they fit into the larger legal ecosystem. In this episode, Kimber Russell interviews an insurance defense litigator who talks about ethical conflicts in her practice and why litigation is not synonymous with trial practice.

Kimber Russell:

We are joined by Meghann Joyce. Meghann is an insurance defense litigator in South Dakota, and she is a graduate of the University of South Dakota in beautiful Vermilion, South Dakota, and she graduated in the year 2009. Now, prior to doing complex litigation for the Boyce Law Firm, she was a clerk for the South Dakota Supreme Court for two years. I have been to South Dakota a few times, and I know that the Supreme Court justices often are on campus, so could you talk a little bit about the exposure that you had to different types of litigators in the state and lawmakers?

Meghann Joyce:

The South Dakota Supreme Court actually holds their March term of court at the law school. The access that we have to judges, Supreme Court justices, and lawyers, I think, is really unparalleled. About 75% of the lawyers in South Dakota have graduated from the University of South Dakota, so if you really want to go practice at a big law firm in New York or Chicago, the University of South Dakota may not be the best place. But if you want to practice in the region, it's very affordable. And I really believe that law schools, like any experience, you get out of it what you put into it.

When you get out, you've got to really think about student loans and how those are going to impact your life going forward. And the reality is that if you're going to practice at a small or mid-size regional firm, you're likely just not going to be making the amount of money that you need to to pay back student loans from an elite institution.

Kimber Russell:

On the other end of that spectrum, if somebody from South Dakota or, say, another state chose not to go to a regional school and then decided to reintegrate back into the local bar, are there any sort of impediments to doing that?

Meghann Joyce:

It is more challenging, I think. When you graduate from the University of South Dakota and you come to practice in Sioux Falls and Rapid City, through internships and other things there may already be a fair amount of name recognition for you. But if you've gone to one of those other regional law schools and not had those opportunities to intern in Sioux Falls or Rapid City or some other town in South Dakota, that just might not be there, and you have to do a little bit more work to try to get your name out there.

Kimber Russell:

Now, you clerked at the Supreme Court, so I would imagine that meant that you were at the top of your class. Is that correct?

Meghann Joyce:

That's correct.

Kimber Russell:

Did that put you in a position where you could have gone out of state?

Meghann Joyce:

Yeah, I think I could have left if I had wanted to, but I was getting married after law school, to a kid from South Dakota, so I wanted to stay here.

Kimber Russell:

Let's turn to your actual job. You are working in insurance defense, and I'd like to know how do you define complex litigation? What makes it so complex?

Meghann Joyce:

I don't know, that's a good question. Yeah, I think it's a misnomer really because I think that all litigation is complex. One of my professors once told me that if you're bored in the practice of law, it's because you're not paying attention. I think that's really true, and so I think that if you're paying attention every case that comes before you has the capability to be interesting and complex.

Kimber Russell:

Do you think that the insurance defense realm just lends itself to being that little extra bit more complex? Is that why they've given it that moniker?

Meghann Joyce:

Well, I think here we do a lot of insurance defense that might be not how you typically think of insurance defense. A lot of insurance defense is personal injury, defense, car accident type cases. But we don't really do a lot of that here. We do a lot of other types of insurance defense like medical malpractice, a lot of construction litigation, a lot of employment litigation, and then a lot of commercial litigation on both the defense and the plaintiff's side.

Kimber Russell:

Now, I think one of the things that's confusing for a lot of folks outside the business about insurance defense is who really is the client in this situation? So can you tell us, from your standpoint, who is it that you're really working for?

Meghann Joyce:

The insured or the person who has the insurance is our client. Even though the insurance company is footing the bill, and even though the insurance company has actually been the one to hire us, the insured is actually our client.

Kimber Russell:

So are there any instances where the insured and the insurer tend to be at cross purposes?

Meghann Joyce:

Yeah, anytime in any kind of an insurance file, if you realize that there's some sort of a coverage issue, if you realize that there may not actually be coverage under the policy, then you are put in a tough position, and a conflict arises because your ultimate duty of loyalty is to the insured, your client, and not to the insurance company. So at that point, if the insurance company has a coverage issue that they may need to investigate and litigate, then they need to go find their own attorney to pursue that for them. We can't get involved in that discussion.

Kimber Russell:

Okay, so tell us more about that. When the insurance company then has to find their own counsel, how does that process work and what kind of a case might that situation arise from?

Meghann Joyce:

I think a good example would be a fire claim. If a house burns down, depending on how the fire started, the incident might fall under any number of different policy exclusions. For instance, if it started because of a car in the garage, there are car maintenance exclusions in a lot of homeowner's policies. So although you may be advocating for your client with the understanding that there is coverage and that exclusion doesn't apply, the insurance company may have a different view of that.

At that point, a couple different things can happen. Either you or the insurance company, once that coverage issue comes to light, can institute a declaratory judgment action just to have a court declare one way or the other whether or not that policy exclusion actually applies. That can be done either while the underlying lawsuit is going on, or it can happen after the fact. It just can take a number of different pathways depending on the particular facts of the case.

Kimber Russell:

Have you ever been put in a position where you've had to put the brakes on and then invoke that declaratory action so that the insurance company has to then go on and get their own attorney and you can fully advocate for your client?

Meghann Joyce:

I don't think I have had that arise in any of the cases that I have worked on. I may have been involved in cases where one of the other co-defendants had that issue with their insurance company, but I don't think that it's actually been an issue for my clients as of yet. I'm sure it will at some point.

Kimber Russell:

Well, from your standpoint, would you say that when you're... Because this is a very interesting predicament that I think an attorney would find themselves in. How would you say that having this kind of push and pull between the insurance company and the insured might affect your ethical duties to your client?

Meghann Joyce:

Well, I think it's hard as a lawyer because you don't want, from a business perspective, get crosswise with an insurance company because if your practice is largely dependent on getting files from them, you don't want to compromise that relationship. But at the same time, like I said, your duty of loyalty is to that client, and you can't drop the client and take up with the insurance company or something. When you took the case, you were bound to advocate for them in their best interests rather than the insurance company's.

And that conversation with the insurance company is always a little bit delicate too. What exactly do you say to the insurance company to indicate to them that there might be a coverage issue and that they need to go get their lawyer without actually saying those things, because by saying those things, then you may compromise your work product or the privilege? So it really gets to be a sticky situation.

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Kimber Russell:

Explain to us some more the process of this type of litigation. At what point during this process are you, as an attorney, involved?

Meghann Joyce:

It really depends. Every once in a while, especially in some of the professional liability cases, we will get a call from the insurance company right at the very beginning. If there's some sort of a administrative agency complaint or some sort of a professional association complaint, we will get a call at the very beginning then, to do just damage control in that administrative context. Whatever the outcome of that administrative process is might ultimately affect the outcome of the litigation too. But usually we get contacted at the point that a summons and complaint has been filed and served on our clients, and they've forwarded that onto their claims adjusters, and then their claims adjusters contact panel counsel.

Kimber Russell:

You mentioned the claims adjuster, and I understand that there's a difference in the way that these kind of cases are handled. So could you explain more about what is a claims adjuster and how would you, as an attorney, interact with that person?

Meghann Joyce:

One thing that you would learn very quickly in doing insurance defense is that every insurance company is different, and every insurance company has a different hierarchy, and each insurance company assigns different responsibilities to their claims adjusters. That's something that you're constantly trying to navigate. But generally, a claims adjuster is just your point of contact with the insurance company. You often have to provide them some sort of a budget or some sort of just preliminary analysis of the case at the very beginning.

Throughout the case, you just provide them updates of what's going on. But any time there's any kind of major action that you're going to take on the case, if you're going to file for summary judgment, if you're going to hire experts, maybe if you're going to hire a third-party vendor to do some sort of electronic discovery, then you have to go back to that claims adjuster and get authority to do those things because that's their money.

Also, the big thing too is when you're looking to settle a case, that claims adjuster has to be constantly apprised of what's going on with those settlement negotiations because they have to be giving you authority to make those offers because again, it is their money.

Kimber Russell:

So the claims adjuster though, I would imagine their goal is always going to be to settle without heading into litigation. Is that your assessment as well?

Meghann Joyce:

Not always. They obviously do always have an incentive to settle the case for less than what it's going to cost the insurance company to take it all the way through to the end. But every once in a while, especially in some of the insurance bad faith or in some of the insurance coverage issues, and we do those too, I do do some insurance bad faith defense, the insurance company then has an additional incentive to see the case through to the end to try to make law on a particular policy exclusion or policy practice or something like that.

Kimber Russell:

Tell us a little bit more about that bad faith thing you were mentioning. That sounds really interesting.

Meghann Joyce:

If somebody does sue their insurance company for bad faith or failing to cover their claim, then we are sometimes also on the other side of it where we represent the insurance company defending that bad faith claim.

Kimber Russell:

In what circumstance would a bad faith claim arise?

Meghann Joyce:

It arises in a lot of different situations. There's both first-party bad faith, which is when, kind of like the house fire example that I gave, when you have the insurance that's at issue, and the insurance company is failing to pay you for damages that you think you are owed, or if they're failing to defend you in a lawsuit that's been brought against you. There's also third-party bad faith, which is a little bit different. A good example of that is in car accident cases. So you're in a car accident, and you are determined to be at fault. Someone brings a lawsuit against you. There is a settlement offer made that is within the policy limits, and the insurance company makes the decision not to take that settlement offer and to proceed to trial. The insurance company can do that, or they may decide to do that, because ultimately their maximum exposure is the policy limits.

From their perspective, it doesn't really make much difference whether they settle for the policy limits or whether you go to trial and there's a judgment against you for more than the policy limits. They're still just going to have to pay the amount of the policy. And so then if it were to go on to trial and a judgment were obtained against you for greater than the policy limits, then you might have a third-party bad faith claim against them that they should have settled initially within the policy limits and not exposed you to that additional liability.

Kimber Russell:

Can you give us an example of a time, if you feel comfortable doing this, where you might have had to bump heads a little bit with a claims adjuster? How do you handle that relationship in a way that's mutually beneficial?

Meghann Joyce:

Right. Yeah, it's hard. I have had cases where we get the initial demand letter before a complaint is actually filed, and the claims adjuster just wants to settle the case, from a cost of defense perspective. And we have to have that discussion of, "No, we're not just going to cough up money just because we get a letter from somebody." Yeah, that's always kind of difficult to have those conversations.

Kimber Russell:

Let's turn to the actual firm where you work. I understand you have about 20 attorneys in your practice. For a smaller regional market like Sioux Falls, how would you say your firm compares size-wise, and also how does that impact how a case is staffed?

Meghann Joyce:

We are probably about the third or fourth biggest firm in South Dakota. We have a practice here in our firm of double-staffing cases where a partner really making the decisions on strategy, is conducting some of the party depositions, maybe some expert depositions, and then the associate is really doing the answering discovery, producing documents, reviewing documents, doing all the research, the writing, and then any non-party depositions that might come up.

Kimber Russell:

So because your firm is smaller, would you say that that gave you an opportunity, as an attorney starting out, to handle more matters sooner than you would have had you been in a larger firm?

Meghann Joyce:

Yeah. When I started working here at Boyce, I worked with everybody and did a lot of different things, even some transactional things every once in a while, which really gave me a chance to be exposed to a lot of different things, including some of the really big cases that we had going on at that time. Of course, on those bigger cases, I was usually about the third or fourth attorney. My responsibilities on the case were reflected by that.

Kimber Russell:

Now that you've been with the firm for a number of years, how would you say that your job at the firm has evolved?

Meghann Joyce:

Yeah, I think when you first start, in a lot of ways as an associate, you're just like an extended summer intern. Still doing a lot of research, you're still tagging along to depositions and mediations just to learn and see how things are done. But at some point you're expected to more just be in the office and working.

And then I would say, sometime in your third or fourth year, you're really expected to start bringing in some of your own business, you're expected to have a greater understanding of the firm's billing practices and business practices, starting to show some interest in some of the business decisions that are made around the firm. And of course your responsibility on the cases increases too. You're expected to provide more independent thought or independent input into the cases and to take more of an initiative in drafting the discovery or motions and things like that.

Kimber Russell:

Now, at this point in your career, do you find yourself still being tasked with much in the way of document review?

Meghann Joyce:

Not a lot. Every once in a while I do have colossal document review things that I have to do, but that's kind of the exception. The colossal ones that I've had to do, I guess, are reviewing for privilege and very complicated situations that first-year associate or a paralegal may not be able to sort through. Obviously there is still document review litigators, no matter your number of years of practice, have to do that because you have to know what's in the file. You're going to take the case to trial, you have to know what those documents say. But I wouldn't say that that's even a majority of what I do.

Kimber Russell:

When you're in the document review process, what sort of content are you looking for and what does that process entail?

Meghann Joyce:

I think that electronic discovery has really revolutionized discovery. Because of electronic discovery there are a lot of things now that exist, and therefore have to be produced, that simply didn't exist before. Whenever we do discovery, we ask for any and all communications related to X. Any and all communications now includes emails, and 20, 30 years ago, those emails didn't exist. And so we get thousands and thousands of pages of emails.

When you're reviewing those documents, you're really looking for key exhibits that you're going to want to ask particular witnesses about at their depositions. And I think that you really try to use the documents to piece together a timeline of what happened and, perhaps more importantly, why it happened the way that it happened. I had a lawyer tell me one time that when you put all those documents together and you're looking at why the people did what they did, and you can't understand why they took a particular action, then you probably need to dig a little further because people don't just do things for no reason.

Kimber Russell:

In your practice, how often do you find yourself in the courtroom? How often are you at trial?

Meghann Joyce:

I have only had one trial in the, almost now, four years that I've been practicing. I have had several evidentiary hearings. I do a little bit of family law just because that gets you in a court every once in a while, even though it is an incredibly challenging area of the law. Every once in a while we have motions hearings on motions that I've briefed that I'll get to argue. I have defended a few depositions and taken a party deposition, and I've also argued before the South Dakota Supreme Court one time.

Kimber Russell:

Tell us more about that. What was the circumstance that led you there?

Meghann Joyce:

Well, in the interest of full disclosure, we split the argument, and so the partner on the file got to do the majority of the argument, and I just took the one issue. He just wanted to give me an opportunity to argue since I had previously clerked. But it was because of my experience as a clerk; whenever there is an appeal around here, even if I may not have been involved in the case through trial or through summary judgment, they will sometimes get me involved in the appeal just because of my institutional knowledge of the court.

Kimber Russell:

Would you say that trial work is kind of on the wane just overall? Is there more of a tendency to settle through mediation? And if that's the case, at what point during a matter would you say that the mediation usually occurs?

Meghann Joyce:

Trial practice is definitely on the decline in South Dakota and everywhere else. It's really an issue in the practice of law, especially for young people, because the cases that do go to trial are often these incredibly, I'm going to use the term again, complex matters. As a practical matter, when those cases are tried, it's the older, more seasoned attorneys that are doing that. And so for a young lawyer to get trial experience is really pretty difficult.

To answer your question though, I think mediations can really happen at any point in a case. We've had mediations that have taken place before discovery was even done. Just because of the economic things that were going on in the case, before we engaged in discovery and spent all that money, we wanted to try to see if there was a chance to get it settled. Or sometimes mediations are held weeks before trial. Usually though, I think that the practice is to try to get at least some discovery, particularly the party depositions, done before you go into a mediation, because those give you a lot of ammunition to evaluate the strengths and weaknesses of your case. Once a mediation is held, even if the case does not actually settle at that mediation, that doesn't mean that negotiations are done. I've had several cases where we walked out of the mediation and had not settled the case, but the case then did settle couple days or weeks later.

Kimber Russell:

For insurance companies, is there a tendency now for them to try to do more work in-house as opposed to employing outside firms?

Meghann Joyce:

Yeah, absolutely. And that really depends on the type of insurance defense. They are doing a lot of their personal injury defense, some of their workers' comp defense, even some of their fire claims, that stuff that's a little bit more routine. They are finding that it's more efficient and cost-effective for them to have their in-house attorneys handle those cases. Now, with that said though, some of the, I'm going to use the word again, complex issues such as insurance bad faith, medical malpractice, any kind of professional liability, construction litigation, those sorts of things, we are not seeing that insurance companies are taking those sorts of claims in-house as much.

Kimber Russell:

Sounds like as that work is taken in-house, does that mean that the mix of work that you're seeing is leaning more heavily just to the complex matters as opposed to the general things? Has that changed the character of the insurance defense practice for outside firms?

Meghann Joyce:

We really don't do a lot of that personal injury defense, so we haven't really seen that impact. But I would imagine that some of the firms that do a lot of personal injury defense and those sorts of things are seeing a lot of their work dry up.

Kimber Russell:

It sounds like you've had a very rewarding experience working in this firm and staying in state, but could you tell us a little bit about maybe some things that you struggle with or a few of the frustrations that come hand-in-hand with this particular kind of job?

Meghann Joyce:

I think I'll go back to talking about trial experience. Just to give you some contrast, my husband is an assistant district attorney. He has been practicing almost exactly the same amount of time that I have, and he has had a dozen jury trials that he has tried by himself, and I've had one. So that that's kind of hard and frustrating because I think I, like a lot of law students, went into this profession because I wanted to be a trial lawyer. I wanted to be trying cases, I wanted to be in court. And unfortunately there just aren't a lot of those opportunities at all.

Most cases settle, that's just the reality. So that's been something that's been an adjustment for me, to temper some of those expectations because, even when you do get older, like I said, the trial work just isn't there like it used to be. So I guess my advice is often, to young lawyers, that if you're really passionate about trying cases, if you're really somebody that wants to be in the courtroom every day or every other day, private practice and civil litigation just may not be where you want to end up.

Kimber Russell:

That's really great advice. And just before we wrap up, I have one last question, which is, what's the best part of your job? What makes you happy to wake up every day and go to the office?

Meghann Joyce:

It's always different. Honestly, when I wake up every day and I go to work, I don't know what to expect. I might have a day planned in my mind where I think that I'm going to sit in my office and listen to the radio and drink coffee and write a Supreme Court brief all day, but I might get to work and I get a cold call from somebody in a family law situation that needs a court order right now because somebody's going to take off to another state with their kid, and so then you spend the whole day running down to the courthouse and trying to find a judge. It's just always different, and you never know what to expect.

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