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It wasn’t the lure of the slot machines or the roulette wheel that prompted Jeffrey Lyddan and Melissa Force to book last-minute flights to Reno over Memorial Day weekend. The two litigators with Carroll, Burdick & McDonough were responding to a call from insurance giant American International Group Inc., which had a multimillion-dollar personal injury claim set for trial seven days later. Though Lyddan usually represents self-insured corporations in product liability cases, rather than handling insurance defense, AIG turned to him after initial settlement negotiations with the plaintiff proved fruitless. Months later, the pair received a similar call from AIG, this time giving them four weeks to prepare for an automobile injury trial in Orange County. “This is a client that likes to try cases, and they’ve told me they will parachute me into any jurisdiction around the country that I can help them with,” says Lyddan. While courtroom experience is increasingly hard to come by among litigators today, attorneys like Lyddan are seeing plenty of action thanks to what appears to be a new insurance industry legal strategy. Instead of opting for the safety of a quick settlement, some insurance companies facing high-exposure, serious injury claims are adopting a harder line in negotiations and taking their chances at trial. “There seems to be kind of a trend now that they are trying more cases,” says Paul Cesari, a longtime insurance defense attorney in San Francisco. “In the past, they may have put in a few extra dollars to try to put the case to rest, but now they’re putting their best foot forward.” In 2003, Cesari says he tried half a dozen cases on behalf of insurance companies, compared with two or three cases the year before. Robert Cartwright Jr., a San Francisco plaintiffs attorney, has also experienced the trend, with six cases against insurance companies set for trial through March — about twice as many as usual. Insurance companies maintain that their philosophy toward settling is the same as it’s always been. “I don’t think that there’s any particular policy of taking more cases to trial or being tougher on negotiations,” says Farmers Insurance Group General Counsel Jason Katz. “I think the companies look at settling the cases fairly and appropriately.” While Katz says he isn’t aware of any increase in the number of cases that Farmers has tried, he notes that any fluctuations could be the result of things like questionable liability or the types of cases being filed by the plaintiffs bar. AIG did not return calls for comment. Joshua King, a spokesman for the Hartford Financial Services Group, a Connecticut-based insurer, declined to comment on the trend. “Generally, as a company, we prefer not to telegraph our litigation strategy,” says King. When it comes to automobile injury cases, insurance companies still settle the vast majority of claims. A 2003 study by the Insurance Research Counsel notes that 87 percent of claims are settled without a lawsuit being filed, 12 percent of claims settle before trial and only 1 percent are tried to verdict. But plaintiffs attorneys say they’ve noticed a significant shift in the attitude of insurance companies during settlement negotiations, particularly in serious injury cases with high damages. Cartwright says initial settlement discussions are much less productive than in the past, with insurance companies making laughably lowball offers. In one recent mediation, Cartwright says, the insurer offered $28,000 to his client, a car accident victim whom he claims suffered $1 million in earnings losses. “They’re completely unrealistic,” says Cartwright. “They are offers that essentially force the case to trial.” Robert Arns, another San Francisco plaintiffs attorney, says he believes insurance companies today are taking a more hands-on role in cases and appear less willing to defer to the advice of their own lawyers when it comes to settling a case. “If this were 25 years ago and [the insurance defense lawyer] said you better settle for these reasons, the insurance company would always do that,” says Arns. “Now it’s a crapshoot whether the insurance company will actually do it.” Besides overruling their lawyers, insurance companies are occasionally replacing their initial legal team when a decision has been made to go to trial. The tag-team approach has created opportunities for lawyers who don’t traditionally play in the insurance defense league. Carroll Burdick’s Lyddan was tapped for each of his insurance defense cases after separate firms had overseen the cases during the initial settlement proceedings. The first lawyers did a good job, he says, but they prepared the case with a settlement in mind rather than a trial. Lyddan’s marching orders were to try the case. In fact, he wasn’t even authorized to discuss a settlement with the plaintiff’s attorneys — a restriction that he says gives him an edge. “I come in, I don’t know these people, and I’m not talking settlement,” Lyddan says. “I’m going full bore towards a defense verdict, and it scares the hell out of them.” So far, the results of the strategy appear mixed. Lyddan boasts that he obtained complete defense verdicts in both the Reno and the Orange County cases; in the latter case, the plaintiff had proposed settling the matter with the insurance company for $7 million. Plaintiffs attorneys meanwhile cite their own catalogue of big verdicts in cases that they say should have settled. Arns, for instance, picked up a $10.5 million verdict last year after his $10 million settlement offer was rebuffed by an insurance company that wouldn’t pay more than $1.5 million. He also says he scored a $21 million verdict after the insurance company wouldn’t settle for anything above $2.5 million. Of course, insurance companies can’t simply contest every claim in the courtroom, as they can be fined or penalized by the state Department of Insurance for unfair claims practices that violate the insurance code. (A 2000 voter initiative, however, eliminated the civil cause of action against insurers for third-party bad faith). But Lyddan says the insurance companies aren’t enlisting his trial expertise to evade their obligations. If there’s liability, Lyddan says, they want to do what’s right during settlement talks. “But they don’t want, because of the threat of trial or the proximity of trial, to have that used against them to exorbitantly increase the settlement.”

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