Will your Employment Practices Liability Insurance Carrier Allow Your Company To Choose Defense Counsel?

Author: Al Landegger, Esq

It is 2017 and there is no end in sight to the increase in employment-related litigation that our clients are facing every year.  We have seen an increase in all types of litigation, including lawsuits being filed by employees for disability discrimination, failure to reasonably accommodate and/or engage in the interactive process, retaliation, sexual harassment, wage/hour class actions and claims under the Private Attorneys General Act. Employment Practices Liability Insurance (“EPLI”) is a business necessity, just like your workers’ compensation insurance.  Our clients are now seeking and obtaining EPLI policies that permit our firm to defend them against an employment claim or lawsuit.  In short, doing this allows us to look out for your best interests; not the best interests of the insurance carrier. EPLI policies are “duty to defend” policies which typically allow the insurance carrier to decide who will be your attorney and defend you in a lawsuit. If your counsel of choice is not on the “panel list”, you do not have a choice.  At the time of renewal, instruct your insurance broker that you want a “choice of counsel” policy so that you can name the law firm that you want and not the law firm that depends on the insurance carrier for work.

Why is a “choice of counsel” policy so important to you and your business?  Let me give you an example from a recent case. My client was sued for (1) breach of a written employment contract, (2) wage and hour violations including overtime, rest period, meal period, pay stub violations and failure to pay final wages at the time of termination, and (3) disability discrimination.   The client asked the carrier to assign the matter to our firm to defend it in the lawsuit.  The carrier refused my client’s request citing it was a “duty to defend” policy.  The assigned “panel counsel” was a partner at a large national law firm who delegated the defense of my client’s lawsuit to a young associate who had only two years of experience.  The carrier took an adverse coverage position against my client stating that the breach of contract action and the wage/hour claims were not covered by the policy. The carrier’s coverage position was correct in that contract claims and wage/hour claims are not covered by an EPLI policy.   However, our client was not in violation of any of the wage/hour laws and had little or no exposure on the breach of contract claim. The carrier took the position that in addition to the $25,000 deductible, the client had to contribute an additional $25,000 towards the $75,000 settlement because of the uncovered claims. The “panel counsel” could not advise my client on coverage issues and did nothing to fight back against the insurance carrier’s demand for an additional contribution from my client.  That would never happen under our firm’s representation of our clients and it did not happen in this case.  We fought back and our client did not contribute beyond the deductible.  Since our client did not have a “choice of counsel” policy, our client needed to separately pay our firm’s fees to watch over “panel counsel”.

Our firm is dedicated to represent your best interests.  In doing so, we accept the insurance carrier’s low hourly rates and agree to follow the carrier’s litigation guidelines in order to assist you and find the best outcome in every matter that we litigate.   Send this article to your broker and ask your broker to shop for “choice of counsel” EPLI policies.

If you have any questions, please feel free to call us.

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