Ordinarily, employers served with a lawsuit are free to retain counsel of their choice. However, an employer’s ability to choose counsel may be limited if the employer has purchased an Employment Practices Liability Insurance (EPLI) policy. EPLI protects employers against the cost of potential litigation involving employment disputes brought by employees, former employees, or prospective employees. Depending on the EPLI coverage purchased, companies may be restricted to choose from select law firms (“panel counsel”), who have been pre-selected by the particular insurance company. Panel counsel typically provide services at rates lower than the firm’s typical rates in exchange for the benefit of receiving a volume of cases from the insurance company.
Today, a significant number of employers possess EPLI. According to Advisen, as of 2014, the following percentage of companies had EPLI: 41% of companies with more than 1,000 employees, 34% of companies with 500 to 750 employees, 23% of companies with 200 to 500 employees, 32% of companies with 500 to 200 employees, and about 20% of companies with less than 50 employees. These figures are likely to continue to grow.
As a result of the increasing number of employers who possess EPLI policies, employment attorneys and law firms who are not on the insurance panel of the carrier are at risk of not being able to represent their clients and not being hired by potential clients. Not only will panel counsel be able to defend the employer on that particular matter, but that firm will then have the opportunity to form a long-term relationship with that employer, replacing one that previously existed.
Becoming Panel Counsel
The ideal situation for a law firm to avoid losing an insured client is to gain a pre-approved panel position with the carrier that provides EPLI coverage to that client. This, however, is not a quick or transparent process. Traditionally, defense law firms attained panel positions by building client relationships with insurance carriers, self-insured entities, and municipalities over the years. Today, however, these relationships are being replaced by formalized applications.
Panel Counsel Applications
Applications for a panel counsel position may be available on the insurance company’s website. The applications are rigorous and time-consuming due to the amount and nature of information requested – inquiring about the law firm’s demographics, legal experience of each attorney, technological capabilities, and workplace policies, including diversity and inclusion, among other factors.
Additionally, applications might only be considered when a need arises, which is difficult to determine from the outside. Because the law firm submitting the application is not guaranteed a prompt response (or any response at all), the process can seem pointless. However, there are ways to boost one’s application, such as networking with regional insurance adjusters at industry meetings and receiving a recommendation from a local claims adjuster.
A sample panel counsel application can be found here.
Introduction to the Panel Manager
Perhaps because of the drawbacks of the application process, some industry experts advise that getting in touch with the Panel Manager is still the most productive approach. However, this approach is not without its hurdles either. Connecting with Panel Managers can be an elusive task as many carriers do not identify the Panel Manager. Once the Panel Manager is identified, the business development process can be a lengthy one. The firm’s managing partner or lead rainmaker typically reaches out to the Panel Manger by an introductory letter or email. The partner makes an introduction to the firm and tries to arrange a phone call or in-person meeting to start building a report. Thereafter, the relationship should be maintained by periodically reaching out to the Panel Manager in meaningful ways to continue to build a positive impression for the law firm.
Requesting an Accommodation
Another avenue through which a firm can maintain its ability to defend a corporate client is to be named as counsel of choice in the client’s EPLI policy through a process frequently known as an “accommodation.” An accommodation is typically handled by the insurance agent or broker. If the accommodation is approved, the law firm’s name is recorded in the policy and applies only to that client. Accommodation is sought either when the policy is initially bound or when the policy is up for renewal. Law firms should avoid waiting to seek panel appointment after a lawsuit has already been initiated. To be included on an EPLI policy before litigation has commenced, law firms can informally survey employer clients to identify the status of their EPLI coverage to determine when would be the appropriate time to request inclusion on the policy.
Takeaway: Get an Early Start
Seeking a panel counsel position or being named counsel-of-record on an EPLI policy are drawn-out processes that should be commenced before the need to provide such legal services develops. Employment lawyers should begin to engage in business development efforts while they are in a position of strength and can take the time to market the firm effectively to the insurance carrier of choice.