To Settle or To Defend - California Association of Joint Powers

Jack Blyskal
Heather Fregeau
Carl Fessenden
Porter Scott
Have you ever seen this?
 A claim is in litigation, proceeding toward trial
 Trial is now about 30 days away
 Defense costs are above $200,000
 The attorney calls you to say:
Have you ever seen this?
I think we better try to settle this claim!
(Why wasn’t that considered $150,000 ago?!?)
Have you ever seen this?
On a related note,
 The claim includes civil rights allegations, or some
other count that triggers third-party attorney fees
 Plaintiff attorney fees are 2-3 times your defense costs
to date
 Again, why didn’t we try to settle this earlier, before the
fees were so high?
Plaintiff Attorney Quote
“Instead…the County engages in months of
litigation and racks up legal fees. And then
they settled. Who’s the Einstein that settled
on that strategy?”
Michael Thomas, attorney
Costs of defense
Legal fees and expenses represented as a percentage of
total paid on a claim is:
29% (for $100.6M)
(from CSAC EIA closed claims, dates of loss 7/1/05
through 6/30/11. Plaintiff attorney fees are not
captured in our data so not available. Where they
apply they are usually more than the damages.)
Why are these costs so high?
Why are they allowed to continue?
Rarely is an early assessment done on a case as to
whether it should be settled
2. Rarely is an early demand elicited*
3. Cases are frequently driven by fees rather than the
merits of the case (both sides)
4. Unrealistic demands
* See next slide
Who’s on First?
 Should you make an offer?
 Should you wait for a demand?
 Does it make a difference?
 Pros and Cons
Elements which indicate
 Clear liability, or
 Low share of liability (settle out)
 Policy limits case, or
 Minimal damages
 Possibility of plaintiff attorney fees
 Minimal number of defendants
 Poor defense witnesses
 Heavily emotional issues (damages, facts, etc.)
 Jurisdiction issues
Elements which indicate defense
 Low liability (Can’t settle out)
 Multiple defendants
 Large damages (but not policy limits)
 Unreasonably large demand
 Plaintiff attorney “churning”
 Favorable jurisdictions
 Political considerations
Elements which indicate
Clear Liability
 No defense to owing something
 Might admit liability at trial
 Only issue is damages
Discovery should focus in this area
 Try to negotiate directly, or set early mediation
Low Share of Liability (Multiple Defendants)
 Try to settle out your share, let others go to trial
Elements which indicate
Policy Limits Case
 Full coverage is exposed
Why incur expenses beyond limit?
 May be able to get an “early payment discount” for settling
now, to reflect the time value of money
Why erode limits, if defense costs do so?
Why spend time and energy?
Elements which indicate
Minimal Damages
 Exposure is low
Why spend far more than the case value on discovery?
 May be political or “message” reasons to do so
May need mediator to get the plaintiff to realistic number
Elements which indicate
Plaintiff Attorney’s Fees Owing
 Frequently the plaintiff fees exceed the case value
Why allow the fees to grow?
May need mediator to get the plaintiff attorney to realistic
 May need to make statutory offer to make him realize ongoing
fees will not be reimbursed
Elements which indicate
Poor defense Witnesses
 Even if the facts are on your side, if your witnesses don’t
“sell” the story, you probably won’t win
Timing of settlement prior to witness depositions may
improve the value you can reach
Like with clear liability, you probably won’t win the case
Sensitive documents
 Settle before they are discovered
Elements which indicate
Heavily Emotional Issues
 Cases involving sympathetic minors and/or catastrophic
injuries impact juries, lead to awards
Recognize reality and try to settle case early and reasonably
Like with clear liability, you probably won’t win the case
If you can’t settle, try to have case heard by judge
Elements which indicate
Jurisdiction Issues
 Some jurisdictions, especially with some defendants, are
not likely to get defense verdicts
In many areas the police are viewed as the enemy, or corrupt
In some jurisdictions if that city is the defendant, jurors tend
to rule for the plaintiff
Knowing the plaintiff attorney skills, local vs. outsider
The ethnicity of the claimant and defendant may have an
impact with some jury pools, both pro and con
When Settlement is Indicated
 Prioritize discovery and place on a timeline
 Keep discovery deadline in mind
 Get an extension for discovery
 Mitigating factors?
 Selecting a mediator
Elements which indicate defense
Low Liability
 If a plaintiff will not accept his/her level of contribution
to an accident, there may be no choice
Multiple Defendants
 It may be nearly impossible to reach an accord to
allocate liability among the parties
Consider defendants-only mediation
Elements which indicate defense
Large Damages
 Damages, especially if there are pre-existing conditions,
or questions as to causation, may impede the ability to
settle a case
 Ongoing damages may dictate to a plaintiff that they
want to wait as long as possible to try and get the
maximum consideration of what will be involved
 Sometimes too soon may be “too costly”
 Medicare considerations
Elements which indicate defense
Unreasonably Large Demand
 A demand does not necessarily resemble real value. But
if the plaintiff won’t “come to earth”, settlement will not
be possible
Don’t quit just because the initial demand is high, but be
aware of the problems this creates, including plaintiff
Elements which indicate defense
Plaintiff Attorney “Churning”
 Some attorneys see cases which award fees as
opportunities to go as long as possible to maximize their
May need to consider statutory offers to bring these cases in
line. If the attorney knows his fees are at risk, he is less likely
to put in the extra work
Elements which indicate defense
Political Considerations
 Some public entities decide they want to send a
message, make a practice not to settle, may have an issue
with the specific plaintiff or attorney, etc.
Try to explain the realities of the case, and the cost to them
Involve excess carriers and/or pools early in the process
Tools to Consider
 Statutory Offers
 CCP 998 – State jurisdiction
 Rule 68 – Federal jurisdiction
 Mediation/ADR
 Consider Hi/Lo when far apart
 May require additional discovery to prepare
Questions or Comments
Carl Fessenden
Porter Scott
350 University Ave, Suite 200
Sacramento, CA 95825
(916) 929-1481
Mr. Fessenden graduated with majors in Political Science and
Communications from the University of California, San Diego, in 1988. He
graduated from University of the Pacific, McGeorge School of Law in 1992.
Mr. Fessenden joined Porter Scott in 1994 and has been a shareholder since
Carl represents clients throughout the State of California in a variety of
forums, including the Superior Court, the Court of Appeals, the U.S. District
Court for the Northern and Eastern Districts, and the Ninth Circuit Court of
Appeals. He represents public entity clients in cases involving harassment,
discrimination, and retaliation claims; civil rights; labor issues; whistle
blower claims; contract actions; and dangerous condition of public property.
Jack Blyskal
CSAC Excess Insurance Authority
75 Iron Point Circle, Suite 200
Folsom, CA 95630
(916) 850-7300
Jack Blyskal has over 40 years multi-line experience in the insurance field, with most of that
time in Claims or Claims-related positions. In addition to both handling and managing
most areas of Claims, he has served as a Claims Training Manager, Recovery Manager and
Claims Audit Manager. He is currently the Chief Claims Officer for the CSAC-Excess
Insurance Authority, the largest Property/Casualty JPA in the United States. In this role he
oversees the Claims Functions for the Members’ JPA in Workers’ Compensation, Liability,
Property and Medical Malpractice.
Jack received a Bachelor of Arts Degree in English from Bucknell University, and a Master of
Arts in Organizational Management from the University of Phoenix. He also has the
insurance designations: CPCU, Associate in Risk Management, Associate in Claims,
Associate in Insurance Services, and Senior Claims Law Associate.
Heather Fregeau
CSAC Excess Insurance Authority
75 Iron Point Circle, Suite 200
Folsom, CA 95630
(916) 850-7300
Heather Fregeau has worked for CSAC EIA for over 10 years in
the Liability Claims Department. Prior to working at CSAC EIA,
Heather worked in Human Resources and management
positions. Heather has attended several mediations and
successfully resolved claims with a mind towards fiscal
responsibility, political concern, and what is right for the
exposure. Heather holds her AIC and is a graduate with honors
of University of Phoenix. She resides in Rocklin with her
husband and two children ages 9 and 7.

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