Everything in its place: litigation lifecycle management can streamline insurers' critical documents and give them greater control over the legal process.
In mid-August 2005, the stock of pharmaceutical giant Merck plunged 7.7% in one day after a Texas jury delivered a $253 million judgment against the company in the death of a man who used Vioxx, a Merck pain reliever taken by more than 20 million Americans. In a single day, $4 billion in shareholder value evaporated as investors realized that thousands of similar Vioxx suits were waiting in the wings.
The Fortune 500 today face unprecedented legal challenges and liabilities. Multimillion-dollar judgments, class-action lawsuits, litigation over Sarbanes-Oxley and regulatory investigations have become a permanent part of the business landscape, though the repercussions are anything but routine.
As the stakes rise, chief executive officers and boards of directors are rightfully asking this question: How do we avoid financial ruin caused by litigation?
The answer is not easy, but one successful approach used by a growing number of companies is to fundamentally re-engineer the litigation process for a new age of legal combat. Rather than treating litigation as a series of one-off events, as is common practice, innovative companies are establishing business processes that recognize the inevitability of extended legal action.
To that end, companies are implementing best practices and technology solutions to improve the litigation process--just as they have done in sales forecasting, customer satisfaction and imposing expense control. By building corporate infrastructure to support litigation management, companies are minimizing the bombshell-like quality of lawsuits that drives even the most level-headed CEO mad.
This evolution toward litigation preparedness is a critical step because it means greater control over the legal process and ultimately better management of a cost center with the potential to materially impact earnings.
Litigation Lifecycle Management
To demonstrate this emerging shift in thinking, consider the experience of two major insurance companies--one a property/casualty carrier and the other a life/health company.
Both companies face a growing volume of lawsuits that has hurt performance, and both responded by reengineering their existing approach to litigation by embracing the discipline known as information lifecycle management.
Much like a manufacturing company optimizing each part of the supply chain, litigation lifecycle management is the art of managing each segment of the litigation process for the best possible result. That involves creating best practices for the component parts of the litigation value chain from preparation, discovery and review to production and the archiving of information.
For both companies, litigation lifecycle management proved extremely successful because it addressed one of the greatest challenges facing any company burdened by a mountain of lawsuits--the collection of company documents involved in legal action.
When a suit is Filed, finding all the related documents is difficult at best. For nationwide insurance companies with thousands of employees in hundreds of offices, this poses a special challenge. The task requires gathering not only paper documents, but also all types of electronic files, such as claim files, policy information, underwriting data, word processing documents, e-mails, spreadsheets, PowerPoint presentations--any document that is potentially responsive to the case.
Much of this electronic information typically resides on a multitude of information systems within each company. Both companies couldn't easily identify and retrieve information that was often extremely difficult to find.
Recently, the importance of locating that information has grown even more critical. In years past, companies could hide behind the defense that providing documents in a timely manner was unreasonable because of the time and expense. In fact, courts today are less willing to accept that argument, as was demonstrated in a recent case involving Morgan Stanley. The Wall Street firm reportedly faces a large fine for failing to keep back-up tapes of e-mails involved in a probe of the company by the Securities and Exchange Commission.
Identifying and collecting information is only part of the problem for the carriers. Equally as vexing is the process of immediately freezing documents when new cases are filed. Preventing rank-and-file employees from inadvertently disclosing key documents--and allowing them to fall into the hands of plaintiffs' attorneys--is a top priority for all legal teams.
Finally, both carriers faced enormous challenges in managing the information needs of their legal teams. Collectively, the two insurers have more than 600 law firms working on their behalf. Both companies were incurring extraordinary fees as different law firms routinely reviewed the same documents. The problem was there was no central repository of approved documents that could be used repeatedly without additional legal review.
Improvements Deliver Results
Both companies confronted these challenges by first recognizing that litigation is part of their business. With that in mind, both embraced the practice of litigation lifecycle management and both began realizing immediate returns on their investment.
Both insurers started by breaking down their litigation process into its component parts, then concluding that technology could improve workflow and reduce costs. The carriers installed technology platforms that created a central document repository accessible by corporate counsel and outside firms.
That process alone has created enormous savings. Firms working for the companies can now access an updated information warehouse to retrieve a complete set of legal documents. These documents can be reviewed online by tiers of attorneys who can see the work of their predecessors.
Another benefit of the process improvement was that both companies can now exercise more control over the outbound information flow. By establishing a central repository, both companies can manage the exchange of documents far more effectively than if outsiders were in charge. That becomes especially important when legal teams turn over in cases that last five or even 10 years.
In addition, the security of legal documents was greatly improved. Both companies now have the capability to continuously monitor who is accessing critical documents. Because the duplication of documents is minimized, both companies reduced the likelihood of providing outdated or incorrect versions.
As litigation lifecycle management becomes more ingrained in companies across the country, there will be even more process efficiencies. In the meantime, corporate America no longer needs to reinvent the wheel for each new lawsuit. In an increasingly litigious world, that's better for customers, shareholders and employees.
* Innovative companies are recognizing that lawsuits are part of doing business and are building corporate infrastructure to support litigation management.
* Litigation lifecycle management creates best practices for the component parts of the litigation value chain.
* Technology platforms that create a central document repository can create savings for insurers when faced with a lawsuit.
Contributor Christopher Kruse is president and chief executive officer of CaseCentral.
|Printer friendly Cite/link Email Feedback|
|Date:||Jan 1, 2006|
|Previous Article:||Upgrading commercial lines: are process enhancements without product design changes really just an empty shell?|
|Next Article:||Way out 'West': when a company is scammed, who pays the insurance?|