Insurance company litigation management guidelines—dictating the carrier’s protocols for billing and for handling of the insured’s defense—are the bane of existence of the insurance defense bar and the subject of occasional controversy for coverage counsel. Although we have (at different times) worn all three hats (defense counsel, coverage counsel for insurers and coverage counsel for insureds), in the latter capacity we have recently witnessed some over-the-top behavior by insurers warranting pushback, as discussed below.

In particular, we have witnessed one insurer’s onerous oversight of defense counsel in a complex high exposure matter, including (1) its past handling of defense bills by imposing reductions which have been arbitrary and massive and (2) its ongoing restrictive instructions severely limiting defense counsel’s ability to perform activities necessary to mount an effective defense for the insured client.

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