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Litigation and lawsuits are a reality of our society. Most agents will sometime become involved in
litigation. Longstanding relationships between an agent and customer can become strained or broken when
there's an uninsured loss. After a loss, no one may be considering you as a possible defendant; six
months later you could become the primary target in litigation. If you receive legal papers or threat of litigation, advise your E&O carrier immediately. The E&O carrier will review the claim documents for coverage, then (assuming the claim is covered) assign the defense to an attorney who will protect your interests. The Complaint: |
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A lawsuit begins with the filing of a complaint. Then an answer must be filed on your behalf within a
certain number of days, or a default judgment may be entered against you. At the same time you file your
answer, you may wish to file a "counterclaim," stating the reasons why you should recover damages or
other relief from the plaintiff. The same rules for complaints must generally be followed for a
counterclaim. The complaint contains a series of allegations, which form the basis of the plaintiff's case against you, and asks for money damages or some other type of relief. Sometimes the plaintiff also asks for punitive damages, over and above actual out-of-pocket expenses, to punish the defendant(s) for the alleged wrongdoing. Even if the suit against you is frivolous, it must be taken seriously, and certain procedures must be followed before your E&O carrier can ask the court for a dismissal. Discovery: Once the lawsuit gets underway, it goes into "discovery," which consists of depositions, interrogatories, motions, requests for admissions, and production of documents. Depositions: Depositions are used to size up important witnesses. Even if you're not a party in a lawsuit, you may be called to testify about how you handled a particular matter in your agency. As a result, you find yourself living with what you said for a long time to come. One wrong answer may come back to haunt you in trial and can cause serious harm to the agent and agency. For that reason, you should never agree to give a recorded statement or deposition testimony without the benefit of an attorney approved by your E&O carrier. You will need to plan to spend substantial time with that attorney in preparing for your deposition. Interrogatories: Interrogatories are written questions sent to your lawyer that you must answer. It is important to provide your defense attorney with a complete copy of your file to assist in answering interrogatories. Motions, Requests for Admissions, and Production of Documents: Motions can serve many different purposes, and the law strictly controls when and how motions can be made. Requests for admissions call for the responding party to either admit or deny statements made by the opposite party. A request for the production of documents requires the responding party to product documents or other items upon which it is basing its claim. |
| Settlement, Trial: |
| Some cases present an opportunity for settlement prior to trial. At that time your E&O carrier must decide, based on the evidence, the extent, if any, of your liability and the real damages involved. If a case goes to trial, you will be required to attend, even if you have already given deposition testimony during the discovery process. |
| Appeals: |
| Following the verdict, the losing party may choose to appeal the judgment to a higher court. However, appeals are costly and time-consuming, and they are undertaken only when the chances of reversal are good. |
| Alternative Dispute Resolution: |
| The term "litigation" is sometimes used to distinguish lawsuits from "alternative dispute resolution"
(ADR) methods, such as "arbitration," in which a private arbitrator would make a decision, or "mediation"
where the parties and an independent third party work to structure an agreement or settlement of the
matter. Mediation is a non-binding process that helps parties narrow the issues and explore settlement. Arbitration may be binding or non-binding and involves a decision by an impartial arbitrator. Many courts require parties to a lawsuit to submit their claims to ADR prior to trial. |
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Successful life insurance professionals typically are independent by nature and have an entrepreneurial
spirit. As a result, the attitude of "I can do anything and no one can stop me", can work to your
detriment when confronted with litigation. For this reason, it is extremely important that you notify
your E&O carrier of any claims made against you prior to responding to lawsuits. Litigation is not a pleasant experience. But if you report the matter to your E&O carrier, listen to your lawyer and prepare for discovery as requested, you'll be able to make the best case for you and your agency. |
