Insurance Defense Lawyers: Who’s Your Daddy?

We are handling a red light/green light auto accident case that occurred in Towson, Maryland a few years ago that resulted in substantial permanent injuries to our client. Trial is a few months away. The insurance company for the Defendant is the Maryland Automobile Insurance Fund (MAIF). Their attorneys recently filed a motion to bifurcate the trial into two separate trials for liability and damages.

The Defendant would not seem to benefit if the case is bifurcated. The concern raised by Defendants – the cost and effort of the liability case – is of no consequence to the insured Defendant. So, practically speaking, why was this motion filed?

If the case is bifurcated, the chance of a bad faith claim against MAIF evaporates; it would simply offer its $100,000 (an extremely large policy for MAIF, parenthetically) policy limit in the event Plaintiff prevailed on liability because, as Defendant’s motion tacitly concedes, this value of the case is in excess of MAIF’s coverage. Accordingly, while bifurcation would be a loss for Plaintiff, it would also be a loss for the insured Defendant who will lose any leverage that he has to encourage MAIF to settle this case or any claim he has against them for bad faith should they not make reasonable efforts to settle the claim. Should the case be bifurcated and Plaintiff prevails on liability, Plaintiff will proceed on with the damages trial that will likely result in an excess verdict. This would leave MAIF in fine shape, fully insulated from a bad faith claim and protected from allegations that it failed to properly defend its insured by, for example, having a defense medical examination performed on the Plaintiff. Defendant would be left holding the bag.

This takes us back to the flip title of this post: Who’s your daddy? What are the chances the Defendant’s lawyer, who was hired and paid for by MAIF, advised his client of these personal risks to him when seeking bifurcation? When defense lawyers serve two masters, or sticking with the pop culture theme, two daddies, conflicts abound. Every defense lawyer in Maryland knows that these conflicts have to be resolved in favor of the client, not the insured.

Most insurance company lawyers our attorneys work with walk this delicate balance well. Obviously, I do not have all of the facts and, of course, there could be facts of which I may not be aware that would change the analysis, most notably the unlikely event that MAIF told the client or his attorney that it would cover any verdict in excess of the policy limits. But, somehow, I doubt it. There is no question that the tripartite relationship between the insured, insurance company and the insurance defense lawyer is complicated. But the insurance defense lawyer owes a paramount duty to his client even if the insurer hired him and pays his bill. While most insurance lawyers are mindful of this duty, it is still way too often forgotten.

  • Tony

    No doubt some insurance defense lawyers walk that fine line better than others. For my part, I’ve worked for honorable people who have supported me in doing my ethical duty on behalf of the individual client, first and foremost.

    In this case, I’m not so sure that bifurcation lets MAIF out of a a bad-faith cliam if the matter could have been resolved within or at policy llmits.

    On the question of bifurcation into two trials, why would plaintiff’s counsel agree to it? Certainly, I’ve had liability-only trials, but usually it’s with a stipulated judgment in the event of a plaintiff’s verdict. Plaintiff saves the costs of experts on damages, my client is saved the exposure of an excess verdict, and everyone gets their shot on liability. I’ve had a number of plaintiff’s counsel agree to proceeding in this fashion which amounts to option 1 in your scenario. And they know perfectly well that in this arrangement, they don’t get to parade their client’s injuries to the jury in the liability phase which might influence a jury’s view of the evidence.

    However, with all due respect, it sounds like you won’t take the policy limits anyway since you intend to try the case on damages should you win on liability. I’ve had only one case (out of hundreds in 15 years of practice) where a plaintiff’s lawyer was determined to pursue my client in excess of his policy limits. Retaining a bankruptcy lawyer and subsequent prospect of a significant delay in getting paid, both the lawyer and the plaintiff, prompted a change in attitude.

  • Ron Miller

    Couple of comments to Tony’s well reasoned post.

    First, I notice a huge difference between in-house and outside counsel on these issues. Ironically, I think in-house counsel does a better job of keeping first things first than outside attorneys. But, as I said, I think MOST lawyers walk this balance well.

    Second, our posture is a little different. We would absolutely accept the policy limits. We would not accept the policy limits in a bifurcated trial because it would be just silly to do so in a case like this where we are certain to pop the policy if we prevail on liability.

    Bifurcation generally hurts plaintiffs. The authors of Federal Practice and Procedure, did an analysis of statistical data concerning bifurcated trials in personal injury actions, and wrote:

    “[A]lthough defendants win in 42% of the cases tried routinely, they win in 79% of the cases in which the liability issue is submitted alone. These figures suggest that juries are moved by sympathy when they have heard evidence of the extent of the plaintiff’s injuries and that this influences their decision on the liability issue. The orthodox theory of the role of the jury, particularly its role in tort litigation, regards this as quite undesirable. But when it is seen that the split trial reduces by more than half the cases in which personal injury plaintiffs are successful, it is apparent that bifurcation makes a substantial change in the nature of the jury trial itself. Many persons naturally question whether a change of this significance appropriately can be made . . . .”

    Given this kind of data, which complies with our common sense understanding of jury/human psychology, a plaintiff would be foolish to bifurcate by consent without getting something in return. Here, there is nothing to offer.

  • Tony

    I agree with your conclusions on bifurcation. No reason for a plaintiff to do it unless they get a bargained-for exchange of value, i.e. a stipulated judgment in the event of a plaintiff’s verdict, or even a high-low (gives the plaintiff assurance of some recovery). A second trial on damages is not it.

    I’m a little surprised that defense counsel would bother with a motion to bifurcate in your case unless they have an idea about the judge’s inclinations. Wthout a good reason, bifurcation just eats up more court resources than one unified trial. Most judges will deny the request out of hand. However, I remember a particular circuit court judge who would nearly always propose bifurcation between liability and damages in tort cases. I had only a couple of matters before this particular judge, but I heard the same story from other lawyers. Needless to say, this attitude on bifurcation suggested to me a defense bias on the court’s part for the very reason you cite from the Federal Practice treatise. I counseled other defense lawyers in front of this judge to file motions to bifurcate — sometimes with the barest of justifications — because I knew that the judge would likely grant it. Better yet was waiting for the court itself to suggest bifurcation and jumping right on that.

    I also want to say thanks again for providing this forum. I did predominantly insurance defense work of one kind or another for 15 years and have moved on to other things in the last 5 years or so (20 years went by quickly). But it’s still fun to kick around ideas from the “old” days.

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