Tag Archives: epli

Sexual Harassment in Restaurant Industry

Sexual harassment lawsuits against another employee are not uncommon, but oftentimes employers overlook harassment of their own employees by customers. A 2014 Restaurant Opportunities Center United report about sexual harassment found that 78% of restaurant workers had been harassed at one time by a customer. Title VII of the Civil Rights Act requires employers to provide a workplace free of harassment. If the employer “knew, or should have known about the harassment and failed to take prompt and appropriate corrective action,” they can be held liable. Many guests don’t expect that their behavior will be questioned; many restaurants don’t want to make customers uncomfortable by correcting their behavior. So what is a restaurant to do when a customer harasses the staff?

The first step for restaurants to fix this problem is to have a strong HR department that is serious about preventing and dealing with sexual harassment. It’s clear when employers are using training as a pre-emptive legal defense and when they actually take it seriously. Employees will respond with equal seriousness. If workers don’t feel like policies against harassment will be enforced, they won’t report.

Another step that restaurants can take to prevent lawsuits is proper sexual harassment training. All restaurants need sexual harassment training, not just big ones with HR departments. There needs to be something written down somewhere that’s clearly visible — if this happens, this is how we will respond. In other words, employers can’t just say that all their employees deserve respect; they have to go out of their way to show that they won’t tolerate sexual harassment if there is to be any meaningful change.

See also: Sexual Harassment: Just the Start  

The final way to mitigate sexual harassment lawsuits is through employment practices liability Insurance. Some restaurants consider going without EPLI coverage. Others mistakenly assume they are covered under their general liability policies, which most often have a standard exclusion for employment practices liability exposures. Going without EPLI can be a costly decision. Even if a restaurant only has a few employees, it needs EPLI coverage.

You can find the full report here.

How Law Firms Can Win Panel Positions

Managing partners at many insurance defense law firms across the country are on an elusive quest to get on more insurance panels.

Defense law firms traditionally build client relationships with insurance carriers, self-insured entities and municipalities over many years. In today’s rapidly changing legal climate, however, these relationships are increasingly being replaced with a formalized application process.

Being named as panel counsel is not easy. For starters, it is frequently difficult to determine who is in charge of the hiring process.

This article provides some insight into the panel counsel selection process.

How to Become Panel Counsel for an Insurance Company

At one level, every insurance company panel is different. Listed below are the most common ways that insurance companies are organized to manage the panel process:

  • National overseers may review all panel counsel applications
  • Regional managers may have responsibility for multiple states
  • State-level coordinators may be the point of entry
  • Panels for multi-subsidiary insurance companies may be consolidated in one division
  • Purchasing departments increasingly are screening interested vendors
  • Online applications are also becoming popular

In some insurance companies, there may be multiple points of entry that could be used to gain consideration for a panel. Many carriers, for example, maintain multiple panels. Examples might include a separate employment practices (EPLI) panel or a construction defect panel. There may be an independent panel manager for each of these claims areas who has some independent hiring capabilities. While a variety of panels adds opportunities to counsel selection, it also adds to the complexity of the business development effort.

There are also many similarities in the panel application process:

  • Personal referrals are the best way to gain panel consideration
  • Periodic panel reviews (every one to two years) may be used
  • Even if a law firm gets on a panel, it may take time to establish a consistent stream of new cases

Finding the Panel Manager

There are several ways to identify the best point of contact within an insurance company, including:

  • Ask around within your network
  • Attend industry conferences
  • Conduct Internet research
  • Review insurance company websites
  • Make telephone calls to the carrier

Insurance company websites typically do not specifically identify an individual as the actual panel manager, but they might point an interested party in the right direction.

Claims adjusters used to play a significant role in panel counsel selection, but this is becoming less common. A law firm in search of new insurance defense panel positions may, however, find it worthwhile to explore professional meetings of insurance adjusters in its geographic area, particularly if there is an active claims association. A recommendation from a local adjuster can certainly help to reinforce a panel application.

Starting the panel research process from a blank piece of paper can be an extremely time-consuming and frustrating process. Trying to balance this research with the demands of a very busy law practice is particularly challenging.

Background on the Insurance Market

There are 2,700 property and casualty (P&C) insurance companies in the U.S., according to the U.S. Federal Insurance Office and A.M. Best. Insurers are regulated at the state rather than the federal level, meaning that each state maintains a department of insurance with information on the insurance carriers admitted to do business in that state. Insurers with primary corporate headquarters located in a given state are called domestic insurers.

Law firms starting a search for panel positions may find data posted on the website of their state’s insurance commissioner to be useful. Annual market share reports are frequently available, which identify the top 25 carriers in the state by service line, such as auto, commercial general liability, medical liability, etc.

Additionally, the department of insurance within each state typically provides an online list of all carriers admitted to sell insurance in that state. While this may appear to be helpful at first glance, the researcher who downloads a list of admitted carriers is frequently faced with hundreds of different insurance company names to sift through. Upon closer inspection, it becomes clear that many of the carriers admitted within a state are actually subsidiaries of larger insurance companies.

Business Development Is a Numbers Game

As discussed earlier, a personal introduction to the panel manager is generally the most productive approach. In today’s world of carrier consolidation and litigation centralization, however, it can be difficult to stay abreast of panel managers.

The law firm is faced with the challenge of first identifying the panel manager and collecting accurate contact information. Next, the firm’s managing partner or lead rainmaker needs to reach out to the manager and make an introduction to the firm. An in-person meeting is ideal, but difficult to achieve initially. Generally, an introductory letter or email can be used to try and arrange a phone call to start the business development process.

Here are some of the responses a law firm is likely to get from panel managers during this early outreach effort:

  • Request for more information about rates and services
  • Agreement to set up an in-person meeting (which is likely to involve travel)
  • Notification of the panel review cycle, with a promise of notification prior to the next cycle
  • Indication that the panel is full, with a promise to contact the firm in the event of a conflict
  • Silence (meaning no response)

While many law firms optimistically hope to be engaged by one out of every two or three carriers they contact, the more common reality is that business development can be a long and arduous process.

A law firm is best served by constantly screening dozens of insurance carriers, self-insureds and other prospective clients for business development opportunities. Firms that are expanding geographically or into new product lines may also be creating panel opportunities. Insurance companies that are consolidating because of mergers or the growth of in-house counsel should be avoided.

Never Stop Marketing

The best time to start looking for new clients is while the law firm is operating from a position of strength. Business development can have a long timeline, and it is impossible to predict when a prospect’s needs for legal services may develop. Delaying the start of a campaign until the law firm is desperate for new business is not advisable, because the firm may then be forced to accept a lower-quality client at less than ideal rates.

After making an initial introduction to a carrier, the challenge is to keep the conversation going. Reaching out to the panel manager in a substantive way every four to six months can be an effective way to build a positive impression for the law firm. Meaningful ways to stay in touch can include the following:

  • Send an article written by the law firm.
  • Keep carriers informed of favorable case outcomes
  • Offer to teach an in-house CLE
  • Submit an analysis of pending legislation or emerging market trends
  • Maintain an active social media profile, especially on LinkedIn

Dropping the ball on prospect communications, while understandable, can be deadly to a business development effort. Rejection is a common first response, but the successful rainmaker will be best served by considering a negative initial response from a panel manager to simply mean “not now.” An exception is the carrier that says something like, “We have used ABC law firm exclusively for the past 10 years and have no reason to change” or “Our case volume is so low that we handle most matters internally.”

The administrative assistant to the panel manager can also be your friend. Treat all members of the panel management team respectfully to build a positive impression of the law firm.

Industry conferences can be an ideal forum for meeting panel managers. Of course, many law firms are thinking the same thing, so it can be helpful to make advance appointments. The Claims & Litigation Management Alliance (CLM) and DRI are two leading organizations that bring claims executives together with insurance defense lawyers.

Specialized organizations targeting selected industries can also be helpful. Examples include the Trucking Industry Defense Association (TIDA) and the National Retail and Restaurant Association (NRRDA).

Maintain Attractive Marketing Materials

The business development cycle will generate the best results when backed by attractive and informative marketing materials.

The law firm’s website is an important foundation for any marketing effort, because the attorney bio pages are frequently the starting point in a prospect’s effort to become better acquainted with a candidate.

A “beauty contest” can be an apt descriptor for the competitive process of vying for coveted panel positions. While the primary goal is to have a law firm stand out from the competition in substantive ways, the techniques outlined below can significantly enhance an RFP or business presentation.

  • Graphic design. Extend the law firm’s brand by using the logo, color scheme and photo styles from the website.
  • Attorney photos. Four-color head shots start the get-acquainted process and help the prospect to envision a lawyer in a court representation.
  • Credential icons. Martindale, A.M. Best and the CLM logos all have high recognition value within the insurance industry.

When including a list of clients or references, client confidentiality guidelines suggest that the law firm first obtain written informed consent from each client.

In Summary

Marketing is a process and not an event. Managing partners of insurance defense law firms are advised to get started on a serious business development effort, perhaps backed to an active law firm marketing committee. Staying actively committed to an expansion effort, while challenging, will yield the best results in the long run.

Beware of Fee Shifting by Lawyers: The Hidden Danger of EPLI

Sometimes, it’s good to be a plaintiff’s attorney. Why? Fee shifting. You don’t need a big win in lawsuits where stat­utes allow the court to make the defendant pay the plaintiff’s legal fees. Even if the plaintiff only obtains a small award (as little as a dollar), a “win” entitles plaintiff’s counsel to submit fees to the defendant for reimbursement. It seems almost too good to be true! But that is what the law allows in most employment-related cases.

You might ask: What stops plaintiff’s counsel from submitting made-up or inflated fees for reimbursement? Nothing!

The plaintiff’s counsel submits the fee petition to the court, and the court is the only gatekeeper that decides the appropriateness of the request. In a perfect world, a court would review the fee petition carefully, scrutinizing counsel’s listed activities to make sure that those services were actually rendered and that the time billed to those activities was reasonable. But in the real world, courts usually only make reductions for entries or ac­tivities that are clearly duplicative, exorbitant or outrageous.

Based on these fee-shifting provisions, it is important to caution your clients that any employment claim, no matter how seemingly minor, can turn into a case that exhausts their insurance policy limits. For example, in a recent case in San Francisco (Kim Muniz v. United Parcel Service, Inc.), plaintiff Muniz had demanded $700,000 to settle her case. No settlement was reached, and the case went to trial. At trial, Muniz was only awarded $27,000. However, that award was soon followed by a $2 million fee petition by plaintiff’s counsel. The court reviewed the petition and reduced the fees submitted to approximately $700,000. Although the reduction was substantial, what was a minor victory for the plaintiff still resulted in a major victory for plaintiff’s attorneys.

When you add it all up, the bottom-line expenses for the employer in the Muniz matter would include the following: 1) plaintiff’s award of $27,000, 2) plaintiff’s counsel fee award of $700,000, and 3) estimated defense expenses at least equal to the plaintiff’s $700,000 fee and likely much more.

If your client had a $1 million employment practices liability policy, the policy would almost have been exhausted just by the client’s own defense expenses, leaving little to fund an award or the award of plaintiff’s attorney fees. Unless your client had other applicable insur­ance coverage, the client would have to dig into its own pocket.

What does this mean for your clients? It means that when clients seek insurance protection for employment-related lawsuits they should consider not only the potential award but also the possible fees for plaintiff’s attorneys if even $1 is awarded to the plaintiff. Even the smallest of victories for plaintiffs can still leave the employer holding the bag.

Buyers beware! Carefully consider your client’s EPLI coverage and ask yourself: Are their limits adequate?