The Disruptive Lawyer Series: Sometimes, It’s About Knowing Your Audience

The Disruptive Lawyer was enjoying his morning cup of coffee on a crisp fall Friday when he received a call from a claims adjuster with a long-time insurance client. The adjuster told the Disruptive Lawyer that she was hoping he may be able to help her insured get out of a messy claim in San Diego.

The young adjuster seemed anxious, and shared that she had retained a reputable (and expensive) firm which specialized in aviation law and airplane accidents because the underlying claim involved a downed Cessna P210 airplane, in which the pilot died and the resulting wild fire in Box Canyon caused property damage to over 40 claimants. While the other law firm was an expert in aviation law, it was becoming clear that this case demanded a different expertise.

The deceased pilot had a $1 million insurance policy and no other assets. Although not nearly enough to answer for all of the claims, the insurer took the position that even that $1 million was not available. The insurer had filed a complaint for declaratory relief against the pilot’s estate alleging that no coverage existed because the deceased pilot had not satisfied the Pilot Warranty provisions in the policy by obtaining the proper flight training from a manufacturer-approved flight school. The estate, in turn, filed a complaint against the insurance broker which obtained the airplane policy, alleging that if the insurer ultimately prevailed on its declaratory relief complaint, the broker should be liable for having failed to advise the decedent pilot about the Pilot Warranty provision. The estate offered to all claimants an assignment of its rights against the broker in exchange for their respective releases, but none of the claimants (most unrepresented by counsel) understood the intricacies of insurance, let alone the claims asserted against the insurance broker, and so declined the assignment offered by the pilot’s estate.

The adjuster explained that there was a mandatory settlement conference in the federal district court the following Tuesday and that she had little faith that there would be resolution to the numerous claims. Nonetheless, she asked the Disruptive Lawyer to “helicopter in” on behalf of the insurer and see if there were a way to resolve the claims and, if possible, save some of the broker’s $1 million E&O policy limit.

That weekend, the Disruptive Lawyer reviewed the defense counsel’s 49-page pre-mediation report to the adjuster, the operative pleadings and the insurer’s pending summary judgment motion. On Tuesday morning, the Disruptive Lawyer entered the packed court room in which the settlement conference was being held.

Given the number of claimants, the conference was chaotic. The Disruptive Lawyer noted that the numerous claimants were unkempt, dressed far too informally for court, and all were speaking out of turn as to their respective grievances about the process taking too long. It was clear that the Judge had his hands full, so the Disruptive Lawyer asked if he could speak to the Judge privately in chambers. Request granted, the Disruptive Lawyer asked if he could present to the numerous claimants a proposal which might resolve their claims. The Judge expressed his sentiment that the issues were too numerous and too complex to likely yield a fruitful resolution that day, but he was happy to let the Disruptive Lawyer try.

The Disruptive Lawyer went back to the courtroom and stood before the gallery. He asked that everyone quiet down as he had some money to give away. The Disruptive lawyer explained to the claimants that he was sent by an insurance company which insured the insurance broker which sold the airplane policy to the pilot who crashed his plane and damaged their property. Needless to say, there was a lot of confusion among the claimants as to why the Disruptive Lawyer was speaking to them and how his involvement in any way affected their claims against the pilot’s estate.

The Disruptive Lawyer continued, “A pilot crashed his plane and the ensuing wild fire caused damage to your property. As you know, the pilot had no money and the pilot’s insurer states that there is no coverage because the pilot did not comply with the terms of his insurance policy. I cannot tell you whether the insurer is right or wrong. What I can tell you is that the insurer has a big, expensive law firm fighting for it and they are getting paid handsomely. They have no incentive to settle your claims today, or anytime in the near future. As such, in a year or two when this gets to trial, even if you win, each of you will be fighting for some small portion of what remains on that insurance policy.”

“I have a better proposal for you. The insurance broker is willing to pay to you $5,000 each today, in exchange for a release of your claim against the pilot’s estate. For some of you, this amount may seem too low, but remember that you may not otherwise get anything and, even if you do get something, it won’t be for a while. This will end this saga and put money in your pocket right now. If you wish to take me up on my offer raise your hand.” Eight hands shot into the air, followed by ten more, and then every hand in the house went up!

By the end of the day, the Disruptive Lawyer had obtained a release from all claimants and, in turn, a release of the broker from the pilot’s estate. All for $200,000 (40 claimants, $5,000 settlement to each).

Cost of defense budget going forward from defense counsel: $400,000
Cost of Disruptive Lawyer time: $3,600
Cost of settlement: $200,000
Savings to insurer (even if broker obtained a defense verdict at trial): $196,400