Employment defense law firms in search of EPLI panel counsel opportunities are feeling the pinch as national firms like Littler Mendelson and Jackson Lewis strengthen their relationships with national and regional insurance carriers offering employment practices liability insurance (EPLI).
Employment practices liability insurance generally covers employers for harassment, discrimination, or wrongful termination claims filed by employees. Whistleblower claims and Family and Medical Leave Act claims may also be covered.
Employment defense boutiques or practice groups often find that they are unable to defend an employer client in a claim covered by an EPLI policy if they are not named as an EPLI panel counsel member for the carrier in question.
Some insurance carriers will allow the insured to request their own counsel, which is known as an accommodation. However, this is not guaranteed and may vary by carrier and the size of the policy. Also, some carriers will grant one request but not another, so accommodations can be allowed inconsistently.
The best time for an employment defense law firm to be named as an EPLI panel counsel member (or, more accurately, to be granted the right to defend their individual client) is when an EPLI policy is first written. The next opportunity is when a policy is renewed.
Employment defense law firms are advised to stay in touch with employer clients on whether they currently have an EPLI policy or are planning to purchase one in the future. This can be a frustrating process, however, when the EPL insurance purchase is made by someone outside the HR department. An employment attorney is less likely to be on close terms with a chief financial officer (CFO) or an in-house risk manager, for example.
The worst time for a law firm to be accommodated as EPLI counsel is when there is an actual EPLI claim. This is not to say it doesn’t happen, but law firms should try to avoid being in this position. Some employer clients will still work with their own employment defense firm even if another law firm is appointed from the EPLI panel counsel pool.
Carving out a niche in the employment defense market might help an employment boutique or practice group get EPLI panel opportunities. Examples include:
- In-depth knowledge of reasonable and customary employment practices and working conditions within an industry, such as restaurants, retail, or trucking;
- A geographic presence in challenging legal venues, particularly smaller jurisdictions where the national firms do not have an office presence;
- Visible and proactive continuing education programs on risk management topics that can both build client relationships and position the law firm as a leader in the EPL field;
- Advanced attorney credentials and/or experience, like board certification in employment law; and
- Billing rates that are competitive with panel counsel pricing.
There are several factors driving the growth of the EPL insurance market, including media coverage of the #metoo movement, increasing numbers of older workers considering age-related claims, multiple forms of discrimination, and a plaintiff’s bar that is readily available to take action.
The use of EPL insurance is growing as the frequency and severity of claims rise. The 2017 Hiscox Guide to Employee Lawsuits™ reports that a quarter of employment charges resulted in average defense and settlement costs of $160,000 and took an average of about 10 months to resolve.
Many claims are ultimately determined to be frivolous, as Hiscox reports that 76 percent of claims are resolved with no insurance payment, yet the employer has to devote the time, energy and legal resources to defend itself. EPL insurance is gaining acceptance as an affordable way to offload the risk of going out of business due to an employment-related claim or class action filing.
Reduced Rates Challenge EPLI Panel Counsel Members
Insurance companies offering employment practices insurance have lower legal claims fees as national law firms offer reduced rates to attract and retain EPLI carriers, according to a Bloomberg Law article earlier this year titled, “Employers’ Liability Insurance Drives Business to Big Law Firms.” Jackson Lewis reportedly disclosed that approximately 40 percent of the firm’s annual billable hours are tied to EPLI defense, including half of the firm’s litigation practice.
Boutique employment defense firms or practice groups that concentrate in labor and employment may or may not want to reduce rates, with some firms actually turning down business. This can be particularly true when low negotiated rates and corresponding litigation guidelines prevent a law firm from delivering the quality of legal services to which they aspire.
Defensive EPLI Panel Counsel Actions
In some cases, it is becoming more difficult for smaller law firms to compete with larger national firms simply because the insurance carriers are dictating where clients are going.
EPLI has had both a positive and negative effect on law firm business. The good news is that if a law firm has a relationship with an EPLI carrier, the law firm may be able to obtain new clients who wish to have the law firm represent them in other matters once the EPLI representation is resolved.
On the other hand, a law firm may lose some clients if the employer has an EPLI policy that does not allow them to choose their counsel. Aggressive action by the law firm to get on EPLI panel counsel programs is advised.
Here are a few actions that a defense law firm can take when it is asking how to get on EPLI panel counsel appointments:
- Make a point of knowing which employer clients have EPLI coverage and which plan to purchase it in the future, as mentioned above. Try to get named as counsel of choice in the policy.
- Case a wide net in reaching out to national, regional, and local EPLI carriers. Business development is a numbers game, and law firms must plant a lot of seeds in the hopes of cultivating future clients.
- Get to know local commercial insurance brokers, who can help the law firm to understand which carriers are writing EPL insurance policies in their state and local market.
- Build your base of employer clients, with a focus on the high-employment industries like retail, restaurants, construction, and trucking. Many EPLI claims may be covered by a self-insured retention (“SIR”) provision at the employer level. The SIR is comparable to a deductible, which requires employers to defends lower-valued claims internally before any policy coverage is available.
- Help employers stay out of trouble in the first place, with a proactive and high visibility education program that stresses litigation avoidance.
EPLI Panel Counsel Marketing Consultant for Law Firms
If your employment defense law firm or practice group is asking how you can get on more EPLI panel counsel programs, call Margaret Grisdela at 866-417-7025. We have helped more than 125 insurance defense law firms nationwide pursue new insurance panel counsel clients.
Legal Expert Connections, Inc. offers three key benefits to insurance defense law firms nationwide:
- We are the leading U.S. legal marketing agency specializing in the insurance defense market. We know the panel counsel process and can accelerate your business development efforts by identifying who you need to contact.
- You get a structured business development process. We guide your law firm through a proven three-step campaign that brings discipline, focus, and productivity to your marketing efforts.
- Increase revenue with professional, Bar-compliant legal marketing campaigns. We do the research to identify insurance panel managers, so you can focus your time on the business development process.