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J'accuse: When Insurance Carriers, Vendors Disagree

George Grieve | April 25, 2014

“The pound of flesh which I demand of him.  Is dearly bought. ‘Tis mine, and I will have it.”

Shylock, The Merchant of Venice

At the age of fifteen my mother had her first inklings that maybe I would not spend my professional life as a manual laborer.  Until that time I had, like so many working-class youths in rural England, spent most of my time and energy getting lost, getting stuck, getting hurt, and getting in trouble.  Getting smart was never on the agenda, until an inspiring teacher cast/forced me to take part in a Shakespeare play.

Macbeth is a story of murder, betrayal, witchcraft, obsession, madness and war.  What better way to snag the attention of a fevered adolescent imagination?  Since then, to paraphrase, all the world has been a stage and Will Shakespeare and his plays have been a constant companion, analyst, commentator, and illuminator of people with all their motives, foibles, weaknesses, conceits, and heroics. 

Last year I participated in a new and different play—the final act between carrier and vendor—a legal proceeding.  This project had gone so wrong that the carrier decided it was hopeless and filed for arbitration.  The vendor, in turn, felt the carrier was acting in bad faith and filed a counter claim.  When I appeared on the scene,  as the expert witness for the vendor, the proceeding had been underway for months and the lawyers for my client had amassed the largest amount of paper I have ever seen in one place in my life—enormous binders of system and project documentation, deposition transcripts, reports, opinions and what all else.

Despite the importance and intensity of what followed one of my abiding memories of that time is watching lawyers trucking plastic crates full of binders on collapsible wheelies down crowded streets and into elevators and conference rooms. I swear there will be paperless bathrooms before there are paperless legal proceedings.

But we digress.  The main reason for writing this is simple: Please, avoid a lawsuit or arbitration at all costs.  They are tiring, tense-making, unpleasant, demeaning, distracting, unpredictable, and expensive.  The basic set up of an arbitration is as follows: The carrier’s side is represented by executives and staff that participated in the project, an expert witness and legal counsel.  The vendor’s side was similarly equipped.  Then there were the arbitrators, three lawyers who would decide a “binding” outcome. 

Besides the arbitrators and the non-courtroom environment it was similar to what we have all seen on television or read in legal thrillers. Witnesses for one side get examined (relatively pleasant, this is the home team playing together and establishing their story as rehearsed), then they get cross examined (suddenly it gets very unpleasant as the opposing counsel takes his swing at the witness’s credentials, competence, integrity, motives, and recollections).

Our lawyer’s advice before taking the stand:  “Listen.  Then think.  Then speak.  Do not try to do two things at once.”  He wasn’t being patronizing, he just knew how easy it is to get confused and turned around by a professional from the other team.  Finally and thankfully, when opposing counsel is finished with you, you get “redirected” where the home team counsel attempts any needed damage control by lobbing softball reminder questions and prompts.

This is all done under oath and just like on television the opposing counsel is out to harass, confuse, trip up and anger you.  In my case I was kept on the stand late into a Friday afternoon as the time for my departure to meet my wife and catch a plane for an international vacation grew ever closer.   Also, by the time you get sworn in the opposing counsel has (in the case of an expert witness) read your report, deposed you, and trawled the Internet of any prior musings which might prove useful to his case.  You are known.  There is nowhere to hide and no advantage in “walking back” prior statements.

I was challenged to square statements from my Report of Findings with statements I made in published articles several years ago.  I left the arbitration convinced that with the possible exception of my mother no one else had read my writings as extensively or deeply as the opposing counsel.  It did occur at one point of stress-induced hilarity to offer him my autograph, but the gravity of the situation prevailed.

The lawyers were smart, focused and relentless.  They talked in terms of winning and losing and they did whatever was within the law to achieve those ends.  I was being paid for my opinions.  I expected to have to defend them.  Some other witnesses, young innocents from the project team, were caught in the crossfire and survived as best they could, which wasn’t always terribly well.

To be honest, the lawyers impressed the heck out of me.  These were very bright guys (the leads on both sides were males) who dug into the technical and insurance-related details of the case in a way that somewhat took me by surprise.  I had assumed that, being the “expert” would afford me some degree of wariness by opposing counsel. Would he really try to take me on in my own intellectual backyard where all kinds of unknown trap doors might swallow him?  Yes.  And he did very well and I struggled on more than one occasion.  But here was my realization; I knew what I knew, but I didn’t know what he was going to ask me, which he had time to plan, and to which I had little time to formulate a reply.  Playing defense for several hours is hard work.

Then there were the arbitrators.  These were the gallery to whom we were all playing.  They would choose the winners and losers and they did not have the background to easily absorb some of the complex arguments that we were all trying hard to simplify in order to tell our story.  It seemed to me that arbitration is what lawyers do when they are no longer sharp enough or aggressive enough to argue a case, but are not yet ready to retire.

There were several comical moments during the week of my involvement in the arbitration proceeding in which one or another arbitrator would ask a question that made it obvious they were not completely with the program.  In fact it was even open to speculation what the basis for a decision would be. According to the vendor’s counsel the case stood on whether the software was ready for user acceptance testing when the carrier pulled the plug; the carrier by contrast focused on the project execution, or purported lack thereof.

In order to participate in the arbitration many people flew a long way (across the U.S. and internationally), stayed in hotels, and spent weeks (in the aggregate) away from their day jobs.  The lawyers had to be paid.  The arbitrators had to be paid.  The expert witnesses had to be (less well) paid.  The proceeding took more than a year from beginning to end and absorbed thousands of hours.  By the time some of the witnesses were sworn in it was almost two years since the events under consideration had happened.  No one’s memory is that good, and (surprise) neither was the project documentation.

In the end the arbitrators found in favor of the carrier.  I was surprised by the outcome, as was my client and our lawyer.  The whole arbitration process was absorbing and quite riveting.  I learned a lot and I hope I am never involved in anything similar again.  I came back to my day job with one overwhelming reaction:  This will never happen to CastleBay Consulting.

The fact is there are ways to avoid a legal showdown but for people who haven’t been through it before and don’t know how unpleasant and costly it is, their focus tends to revolve around moral stances and company reputations.  The bleak reality is once two parties head down this road backing out gets harder and harder, opinions get more entrenched and the ability to see other viewpoints becomes limited.

The bleakest reality comes at the end.  There are winners and there are losers.  The arbitrators arbitrate and the losers feel offended and then scratch their heads.  The winners may feel vindicated, but they must face the simple math of deducting the costs of the arbitration from the settlement amount.  The final truth is as facile as an old cliché: In this instance the only folks that won were the lawyers.  Not that they didn’t earn every unnecessary penny.

The courtroom drama is a staple of the entertainment industry for good reason—from John Grisham to The Merchant of Venice—it is about those most human traits of intellect, argument, and persuasion.  But within the canon of William Shakespeare these plays are not comedies or histories they are minor tragedies.

(George Grieve is a popular writer and speaker on the subject of insurance technology solutions and is the author of the book Shop Talk. He is CEO of the consulting firm CastleBay Consulting. The views and opinions in this column are those of the author and do not necessarily reflect the views of the Insurance Technology Association and its members.)






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