insurance

Litigation Management

The process by which insurance companies handle, oversee, and control legal proceedings related to claims made against their policyholders. This includes selecting attorneys, setting legal budgets, making settlement decisions, and coordinating defense strategies to minimize costs and exposure.

Example

“The insurance company's litigation management team assigned an experienced defense attorney and set a $50,000 budget for the liability lawsuit against their policyholder.”

Memory Tip

Think 'Litigation Management = Legal Life Management' - just as a life manager handles all aspects of someone's affairs, litigation management handles all aspects of legal cases.

Why It Matters

Effective litigation management can save insurance companies and policyholders millions of dollars through strategic legal decisions, early settlement negotiations, and efficient case resolution. Poor management can result in excessive legal fees and unfavorable verdicts that drive up insurance costs for everyone.

Common Misconception

Many policyholders believe they have complete control over their legal defense and can choose any attorney they want. In reality, most insurance policies give the insurer the right and duty to manage litigation, including selecting defense counsel and making settlement decisions within policy limits, though they must act in the policyholder's best interests.

In Practice

When a $2 million lawsuit is filed against John's construction company, his liability insurer's litigation management team immediately assigns a specialized construction defect attorney, establishes a $400,000 legal budget, and sets aside $1.8 million in reserves. After 18 months of discovery and depositions costing $320,000, the litigation manager authorizes settling the case for $850,000 rather than risk a larger jury verdict. The total cost of $1.17 million is significantly less than the potential $2 million exposure, demonstrating effective litigation management.

Etymology

Combines 'litigation' from Latin 'litigatus' meaning to dispute in court, with 'management' from Latin 'manus' (hand) meaning to handle or control, reflecting the insurer's hands-on approach to legal proceedings.

Common Misspellings

Litigation ManagmentLigitation ManagementLitigation ManagemnetLitagation Management

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