August 3, 2009
All too often, a company’s liability insurance providers become a roadblock when a lawsuit is near settling. Insurance companies often claim that a pending settlement is not reasonable, and balk at paying to full policy limits. In such cases, defense counsel often turns to outside “insurance counsel” to bring the insurance companies on board and maximize their contributions. Anderson Kill often takes on this role. Such was the case recently when a leading publicly-owned pharmaceutical services company approached the endgame in negotiations to settle a securities class action suit. Two insurers indicated that they would object to settlement terms and would only contribute a fraction of their millions of dollars limit.The final negotiations were completed in a single day of concurrent meetings between the plaintiff and defendant and between Anderson Kill and the insurance companies. The insurers’ initial offers were about a third of their limits. Anderson Kill pointed out to the mediator that he had himself blessed the underlying settlement. The two holdout insurers settled for 80 percent and 90 percent of their limits, respectively. Such three-cornered negotiations are increasingly prevalent as plaintiffs, uneasy about defendants’ solvency, insist on insurance companies’ signoffs in advance of settlement.