Worldwide, corporations across business sectors are under pressure to reduce the overall costs of legal services without compromising on either quality or service. Corporations are looking for and expecting from their legal counsel greater efficiency, predictability, and cost-effectiveness in the legal services they contract for and receive. As noted by one legal commentator, this basic change in client attitude has resulted over the past decade in fundamental changes to the legal market itself. These changes are “foundational and, in all likelihood, irreversible”.[1]

Until very recently, most in-house lawyers for corporations were monitors of the external law firms to whom they assigned the bulk of the company’s legal work. Corporate legal teams rarely handled large litigation or significant mergers and acquisition, contracts or intellectual property work. That has changed.  Corporate legal departments are expanding dramatically as more work of increasing complexity is brought in-house.^[2] We are now seeing innovative companies beginning to utilize in-house counsel to handle significant and complex corporate commercial and legal advisory matters, risk and regulatory compliance, and even conducting their own trials and appeals.^[3]  For example, Verizon recently disclosed that it spends only 20% of its legal budget on outside law firms, and Shell recently formed an in-house global litigation team to handle some of its biggest matters.[4] Having said that, for most corporations, when it comes to high-stakes, important business deals and litigation – at least for the near term – will still typically seek out (with exceptions for the sophisticated General Counsel with the most innovative and advanced legal departments, legal teams, and operational management and support)^[5] the most prominent and formidable external legal representation they can afford.

Prestige is a contributing factor in corporate counsel’s rise – in this milieu, some of the best and brightest lawyers in Canada, the U.S., the UK, Australia and Europe have moved “in-house as general counsel [and leaders] in the biggest companies, taking the interesting legal advisory work with them”, which includes for those companies that are prepared to invest in-house for their complex corporate matters and litigation, some of the top corporate and trial lawyers.^[6]

Accordingly, corporate legal departments across business sectors continue to expand dramatically as more work of increasing complexity is brought in-house.^[7]  More legal work is remaining in-house as it is more cost effective – where properly supported – for companies to use in-house counsel rather than external counsel. This also makes sense from an efficiency standpoint; in-house counsel better understand the business, its objectives and its risk tolerances, and are positioned to provide a professional cost effective response when legal concerns arise. [8]

Within this environment, similar to all corporations, insurance companies are constantly exploring innovative ways to better manage their business, improve operational efficiency, improve customer service, grow their share of the market, and appropriately control costs. Litigation expenses – in particular legal fees paid to external law firms – are a significant expense for insurance companies, and in particular for property and casualty (and other liability) insurance carriers.[9] Insurance companies have looked to control this expense by shifting more legal work to inside house counsel. This “group of highly professional and dedicated lawyers employed directly by insurance companies to defend their insureds are commonly known as staff counsel”.[10]

Staff counsel programs within insurance carriers are staffed with professional, skilled, and ethical trial lawyers. These lawyers are litigating cases of all levels of severity, exposure, and complexity, before trial courts, appellate courts, and administrative tribunals. As stated by the Courts themselves: “these are not second-class lawyers; these are first-class lawyers who are delivering legal services in an evolving format”.[11]

Overview

Corporate General Counsel are aware that simply hiring a traditional “law firm is no longer a tenable strategy when reporting to the C-suite and boards of directors.”[12]  General Counsel for large organizations, and Chief Legal Officers and legal managers within small- to medium-sized companies, are increasingly demanding more efficient legal services that deliver value for lower cost.[13]

In this demanding environment, many Chief Legal Officers are embracing the role of change agents, wielding their buying power, leveraging technology and process efficiency, and outsourcing to alternative providers, all to build a more effective and flexible legal function.

– Altman Weil, 2016 Chief Legal Officer Survey[14]

Not surprisingly, the legal profession in the U.S., the UK, Australia and Canada is undergoing a significant transformation.[15] Once insulated, law has become one of the most competitive markets in the new normal.[16] The combined forces of globalization, technology, and market liberalization are creating new services, new delivery mechanisms, and new forms of competition.[17]

Those changes are altering client needs and expanding client expectations. Disruption of the legal services market means that external law firms need a new, long-term strategy for business development and staying relevant in a changing landscape.[18] Clients want services to be quicker, cost effective, and smarter. They want more transparency and involvement, and they want to be and stay connected. The key to establishing a viable, competitive, relevant and representative legal profession is innovation — not just the development and adoption of technology-driven platforms and service delivery models, although they are critical, but also through new ideas about how lawyers are educated and trained, and how they are regulated to maintain professional standards while protecting the public.[19]

In this environment, some of the best and most effective lawyers have moved in-house to senior legal positions, and corporations and their General Counsel are bringing more legal work in-house.  They live in a world where traditional law firms certainly understand the expected competition from other law firms, but these law firms do not appear to fully appreciate that they also face significant new competition from lean and innovative alternative legal service providers and delivery models,[20] including – for the purpose of this article – in-house legal departments which continue to expand dramatically, taking in more work of increasing complexity.[21]

A new study out of the Faculty of Management at McGill University suggests that while Canadian law firms talk a good “innovation” game, little innovation is actually taking place.

– Mitch Kowalski, McGill study reveals ‘illusion’ of innovation at Canadian law firms[22]

Like all corporations, insurance companies are under constant pressure to drive operational efficiency,[23] while providing quality customer service.[24] Although particularly relevant for property and casualty (and other liability) insurance carriers,[25] litigation expenses are one of the most significant cost components of any insurance plan.

Within this dynamic, a substantial element of litigation expense for insurance companies is legal fees paid to external defence law firms. Insurance companies have attempted to control this expense by two approaches: (1) negotiating more favourable fee agreements with their external law firms, and (2) shifting more legal work to inside house counsel. This body of highly professional in-house lawyers employed directly by insurance companies to defend their insureds (in “third party” litigation)[26] – and to a lesser extent the corporation itself (in “first party” litigation claims)[27] – are known as “staff counsel”.[28]

These are not second-class lawyers; these are first class lawyers who are delivering legal services in an evolving format.

– New Jersey Supreme Court[29]

There have been significant changes in the relationship between insurance carriers and their external defence law firms. The growth of in-house staff counsel operations has become one of the most economically effective trends in litigation management in the U.S., Canada, and the UK[30] (and reportedly in Australia).[31] This effectiveness arises out of, among other things, zero-based budgeting:[32]

“The economics of this concept are simple, i.e., handling a high volume of cases in litigation at a fixed annual cost without a net earnings or profit objective. When the companies do their budgeting process … they know, with a great degree of exactitude, what their staff counsel operation will cost…. Compare that with a typical outside law firm … If an insurance company applies the same calculation to its nationwide operations, it is looking at significant expense savings. Without the need to meet billable hour objectives or profit goals, an in-house counsel operation can handle a larger volume of cases. This reduces the effective hourly rate on those cases as the year goes on even if caseloads increase, since costs are fixed. … is it a wonder why insurance companies find in-house counsel so attractive?”

As noted by legal commentators – there is “no reason to think that insurers would transfer work away from outside defense lawyers” if they provided “better service than staff attorneys at comparable cost” – judging from the size of staff counsel operations, the length of time they have been around, and their recent growth, one would have to conclude that insurance companies (and therefore premium-paying policyholders) derive great value from them. They have “withstood the test of time, and they have survived vigorous competition from outside law firms.”[33]

 A Changing World: Legal Departments & Other Alternative Legal Service Providers

Since the 2008 financial crisis and the downturn of the world’s economy, the power balance between lawyers and their clients generally across business sectors has shifted: ‘legal services have been demystified, and legal service consumers are more knowledgeable, sophisticated and connected than ever before’.^[34] Corporate client ‘clout’ generally is on the ascendancy, intensifying price-down pressure on traditional law firms, including BigLaw.^[35]  Armed with enterprise legal management technology systems, external counsel management metrics,^[36] ‘third party lawyer rating’ services, and disciplined business knowledge and practices (i.e. supply chain procurement practices, RFP’s, law firm convergence, pricing controls and value based legal fees, key performance indicators and industry benchmarks), corporations and their General Counsel in business sectors across the board have had their law departments bring more work in-house, required traditional law firms to participate in RFPs, and began to strategically rely on NewLaw[37] alternative service providers and outsourcing of unbundled legal services (for corporate or litigation matters) to obtain the benefit of economies of scale and supply chain economics.^[38]

The legal profession in Canada, the U.S., and around the world is in a period of major change.[39] In 2007, the Australian law firm Slater & Gordon became one of the world’s first public law firms, and is struggling of late as “shares tumble to all-time low”.[40] In the same year, the United Kingdom enacted the Legal Services Act[41] in an effort to modernize the delivery of legal services.[42] Over the last decade, BigLaw national and multinational law firms in Canada, the UK and the U.S. have dissolved due to financial and business issues (e.g., Heenan Blaikie, Blakemores, King & Wood Mallesons, Brobeck, Heller Erhmann, Dewey & LeBoeuf, Thacher Proffitt, Thelen, Coudert Brothers, and Howrey),[43] and numerous law firms have merged in order to better position themselves for the highly competitive legal marketplace.[44] Today we are now seeing the world’s largest accounting firms (outside of the U.S.) offering legal services through different forms of multidisciplinary practice models.[45]

Legal Providers Must Be Innovative and Cost Effective

However knowledgeable a lawyer may be in the “law”, clients will not continue to work with lawyers with antiquated processes and technology, and this includes a staff counsel operation.  Corporations expect law firms to deliver appropriate legal services for lower cost[46] – and to do so, they must be competitive, efficient and innovative in respect to appropriate processes, technology, and delivery model.  The emergence of a competitive and innovative legal services marketplace is forcing the legal profession in Canada, the U.S., and the UK (among other jurisdictions) to come to terms with the reality that the traditional law firm – the guild model of designing and delivering monopoly protected services under the rubric of “the practice of law” – may no longer be an acceptable response to clients demanding alternative legal providers who are innovative, competitive, and cost effective.[47]

Increasingly, sophisticated corporations are no longer seeing traditional law firms as a one-stop shop for their legal needs – and according to the Altman Weil 2016 Chief Legal Officer Survey there is a concern about “the lack of innovation in service delivery by law firms”.^[48]

The intensely competitive business environment and the need to manage the ever increasing costs associated with litigation is one of the major reasons why insurance carriers have invested in the development of their Staff Counsel programs.

– Thomas McNally[49]

A law firm providing excellent legal advice and services is a basic client expectation. This is table stakes.  The key to inspire commitment and a long term relationship is whether the law firm is capable of delivering innovative “cost effective” legal services and provide actual value.[50] Within corporate organizations there is heightened attention on resource optimization – the right resources, doing the right work, in the most cost effective and efficient manner.[51] External law firms are not just competing with other law firms, but also in-house staff counsel departments. The intensely competitive business environment and the need to manage the ever increasing costs associated with litigation is one of the major reasons why many insurance carriers have invested in the development of their Staff Counsel programs.

Insurance Companies and In-House Staff Counsel Programs

For those innovative and strategic insurance carriers in the U.S. and Canada who have decided to bring more legal work of increasing complexity in-house, these companies’ confident investments have allowed for: (a) the widespread use of state of the art legal technology, (b) expanded training in substantive and procedural law, ethics, law practice management (business management and leadership in the legal context),[52] and time management, and (c) the acquisition, development and retention of impressive legal talent.[53] This is not just true for insurance companies, but also a number of national and international corporations across the board:[54]

“Corporate legal departments are expanding dramatically as more work of increasing complexity is brought in-house.^[55] We are now seeing innovative companies beginning to utilize in-house counsel to handle significant and complex corporate commercial and legal advisory matters, risk and regulatory compliance, and even conducting their own trials and appeals.^[56]  For example, Verizon recently disclosed that it spends only 20% of its legal budget on outside law firms, and Shell recently formed an in-house global litigation team to handle some of its biggest matters.[57] … More legal work is remaining in-house as it is more cost effective – where properly supported – for companies to use corporate counsel rather than external counsel.”

As noted, one of the most significant elements of expense for insurance companies is legal fees paid to external defence firms. As noted, insurance companies have attempted to control this expense by two approaches: (1) negotiating more favourable fee agreements with their external law firms, and (2) shifting more legal work to inside house counsel.[58]

The utilization of Staff Counsel operations by insurers is one of the more mature aspects of the transformation of the legal profession and traditional law firms, and the development of alternative legal service providers providing legal services to institutional clients as a result of the economic and technological changes taking place in society. Companies are rethinking the way legal services are provided, and liability insurers are using in-house Staff Counsel lawyers to handle an increasing volume of their claims litigation (trials, administrative hearings, and appeals). The growth of in-house legal counsel has had a significant impact upon traditional law firms and their provision of insurance defence legal services.

The practice of law by staff counsel has been in place for at least a century in the United States,[59] moving into high gear in the 1990s (at that time employing more than 8000 lawyers nationwide within the staff counsel operations structure)[60] – and migrating to Canada through American insurers in 1998[61] and adopted across the board by essentially every major Canadian and international property and casualty insurer operating in Canada in the 2000s.[62] Staff counsel have professionally represented hundreds of thousands of insureds in the U.S.[63] and Canada.

Despite this long tradition and history, U.S. legal commentators have suggested that “there are lawyers practicing with outside firms who [may] hope that staff counsel will simply disappear”[64] –  the issue being law practice economics. Staff counsel complete with external counsel for assignments from insurance carriers and defence lawyers may see a significant amount of business going to in-house staff counsel. Daunting economic forces pull and tug on private defence law firms from every direction.[65]

While use of employee lawyers is an issue that has been simmering for many years, growing market pressures on law firms have brought it to a boil all over the country [in the U.S.].

– William Barker, Laying the Foundations for Staff Counsel Representation of Insureds[66]

In this atmosphere, there have been numerous challenges in the U.S. to the ethical and legal use of Staff Counsel by insurers. These challenges in the U.S. to the legality and ethical propriety of salaried staff counsel operations are referred to as “staff counsel challenges”. The attacks rely upon the Rules of Professional Conduct for lawyers, and are based on two grounds. The first challenge rests on the principle that corporations cannot practice law – that the use of salaried counsel to defend insureds engages the insurance corporation in the unauthorized practice of law.[67] The second challenge is that the employment relationship creates an environment of actual or potential conflicting interests.[68]

Virtually every jurisdiction in the U.S. that has addressed the question has upheld the propriety and appropriateness of the use of staff counsel, with the more recent decisions acknowledging the overwhelming weight of authority in support of staff counsel.[69]  With outside defense lawyers and plaintiffs’ lawyers allied against them over the years, it is surprising that challenges to staff counsel operations have fared as poorly as they have.[70] The vast majority of ethics opinions issued by U.S. courts and advisory bodies permit staff counsel lawyers employed by insurers to defend liability suits against insureds.[71] In line with the weight of the law and ethics opinions, there have not been any staff counsel “challenges” in Canada.

The American Bar Association first approved a properly structured staff counsel program – within a property and casualty insurance company – “in 1950 in a formal ethics opinion[72] and has reiterated its support of staff counsel in subsequent informal opinions” in 1976 and 1977,[73] including the seminal ABA formal ethics opinion of 2003.[74]

I believe marketplace arguments should stay in the marketplace and that the attacks on the ethics and existence of staff counsel have no serious merit.

– Richard P. Campbell, The View from the Chair (Tort and Insurance Practice Sections, ABA)[75]

As insurers look to appropriately address “legal and indemnity costs in the litigation area”, Staff Counsel operations have increased, to the extent that today many lawyers join staff counsel operations in the U.S. and Canada as a career. The salaries have become more competitive as many of the top insurers recognize the importance of hiring well qualified lawyers. The working environment – to avoid what are referred to as “staff counsel challenges” with respect to the legality and ethical propriety of salaried staff counsel operations within an insurance company – usually reflect the professional status of the lawyers. Most strong staff counsel leadership “insist that their employers assure that their working environment comports with high ethical standards”,[76] which is particularly important “considering the political forces seeking to limit or eliminate staff counsel operations”, as “even an appearance of impropriety can fuel legal or legislative action”.[77]

Richard Campbell – then Chair of the American Bar Association’s Tort and Insurance Practice Section – has noted that the Rules of Professional Conducts should not be used by the organized bar “as a tool of economic protectionism”.[78] Ronald Mallen – “lawyer of the year” in 2014 and co-author of the leading treatise in the field of legal malpractice – has noted that although “some critics are sincere; others may be reacting to an actual or threatened loss of business”.[79]

Virtually every major property and casualty insurance company in the U.S. and Canada, including the Insurance Corporation of British Columbia for automobile insurance in the Canadian province of British Columbia, have a staff counsel program.

Ultimately, the marketplaces … will sort this out … We find nothing in our Rules of Professional Conduct to prevent the parties from continuing to duke this issue out in the marketplaces without interference from the judiciary.

– Indiana Supreme Court[80]

Tripartite Relationship: Insurance Companies, Insured policyholders, and Defence Counsel

Individuals and businesses purchase insurance to shift risks to their insurers. In addition to providing for indemnity with respect to claims, liability insurance policies (i.e. motor vehicle liability policy, homeowners policy, professional liability or professional indemnity insurance, directors and officers liability insurance) almost invariably contain provisions requiring the insurer to defend certain types of law suits brought against the insured.  For example, in a typical accident in which a policyholder may have been involved, the home or automobile insurance policy will usually indemnify the policyholder up to the limits of the policy, and also provide the policyholder with a defence lawyer to defend them. Accordingly, if an insured policyholder is involved in an at-fault accident and they are sued by an injured third party, the insurer will appoint defence counsel to defend their case on their behalf.  This is one of the most important benefits that is purchased by a policyholder under their home and automobile policies, and which the insurer stands behind.

There is no doubt that a liability insurer owes a duty of good faith to its insured in the defence of a claim.

– Ontario Court of Appeal[81]

As a general rule, the insurer’s duty to defend is co-extensive with the duty to indemnify. Under the terms and conditions of a liability insurance policy, an insurer promises to pay on behalf of its insured any amount for which the insured is liable for claims falling within the policy’s coverage. The insurer also assumes the duty to defend the insured against those claims. In exchange, the insured cedes to the insurer control over the direction of the defense and settlement authority. Liability insurance contracts generally stipulate that the insured must co-operate with the insurer with respect to the defence of all claims made against the insured which are covered under the policy.[82]

To the insured, the cost of lawyers to defend litigated claims is part of the risk to be shifted. To the insurer, defence lawyers have a critical role in minimizing insurance costs by appropriately defending the insured against the third party claims (of liability and damages) that if proved the insurer will pay.[83] In defending the plaintiff’s claims against the insured, the insurer cannot take a position contrary to the interests of its insured, and must act in the best interests of its insured.[84]

As you would expect, insurers have more expertise than insureds in managing litigation and stronger incentives to do so efficiently than would insureds who expect their insurers to pay the bill. Accordingly, most liability insurance markets have settled on contract terms that provide for the insurer to manage the defence, giving it the “right and duty to defend”.[85] This contractual provision gives rise to the tri-partite relationship[86] – the unique relationship of the insurer, the insured, and defence counsel.[87]

The tripartite relationship is the relationship between the defense lawyer, the insurer, and the policyholder that is created when the defense lawyer is hired by an insurer to defend a suit against the policyholder.

– Jamie Carsey[88]

By terms of this relationship, the insurer, when notified of the lawsuit by the insured, will then retain defence counsel for the insured. Lawyers appointed by the insurance company may be panel counsel (external law firms) or in-house staff counsel. Regardless of the label, the appointed defence lawyer has a business or employment relationship (often a long-standing one) with the insurer.[89]

Absent a legal conflict, the defence lawyer represents the insured (and in some jurisdictions the insurer as well).[90] In either case, “the duty on defence counsel is the same: “namely, to defend the case on the basis that is most favourable to the insured”.[91] Once the client-lawyer relationship is established with the insured, the rules of professional responsibility, not the insurance contract or the lawyer’s employer, govern the lawyer’s ethical obligation to his or her client.[92]

This works well for insureds, who typically have no interest in how a defence is handled, so long as the insurer is going to pay any judgement or settlement.[93] Most cases defended by insurers are fully covered. Even in limited cases where there is some risk of personal exposure of the insureds, the insurer and the insured will have the same interest in securing an outright dismissal of the action.[94] The insurer and insured will have an interest in keeping the claim below the policy limits, and in most cases there will be no basis for the insurer’s losing the right to instruct counsel.[95]

Lawyers are required by ethical considerations to give undivided loyalty to the insureds whom they represent, even where this may be contrary to the interests of the insurer.

– Gordon Hilliker[96]

Whenever an issue does arise as to coverage, or when the claim exceeds the policy limits, then the potential exists for a conflict of interest between the two parties (insurer and insured) to the insurance contract:[97]

“Counsel appointed by an insurer to defend the claim on behalf of the insured must be careful to avoid representing the insurer in those areas where its interests are at odds with those of the insured. As a practical matter, this is accomplished at the outset by a clear delineation of the scope of the retainer. Counsel appointed to defend the claim against the insured should restrict the retainer to the defence of issues of liability and damages in the underlying action. Issues as to coverage or as to the obligations of one party to the other [insurer and insured] under the insurance contract must be considered to be outside the scope of counsel’s retainer”.

Defence lawyers are required by ethical considerations to give undivided loyalty to the insureds whom they represent – to fairly ensure the defence of the insured and fully protect his or her interests – even where this may be contrary to the interests of the insurer.[98]  As well, both the insurer’s obligation to pay covered settlements or judgements, and its liability for any inadequacy in the defence, provide significant protections to the insured even in cases where the insured may have some potential exposure.[99]

In this legal environment, insurers utilize two primary methods for addressing their contractual obligation to defend their insureds. First, insurers hire defense lawyers who practice in private law firms. Second, insurers retain staff counsel (employees of the insurance company) to represent insureds.[100] By fostering a competitive atmosphere, the carriers promote innovation, technology, and excellence; and minimize complacency.

There is an ethical equivalency of staff counsel and outside counsel in complying with issues that arise in the tripartite insurance defense relationship.

– Richard Campbell[101]

Foundation for Staff Counsel

Staff Counsel Substantively and Economically Effective

The overwhelming weight of authority is that Staff Counsel representation of an insurance company’s insureds in third party litigation is permissible “whenever it would be permissible for outside counsel to represent both insurer and insured”.[102]

Liability insurers must hire lawyers to perform the contractual duty to defend insureds, for example when they are sued by third parties for conduct that is an insured peril under an automobile or home owners policy of insurance. Based on experience and data analytics, insurers have found that they can obtain equally good (or better) results from full-time employee lawyers as with lawyers in traditional law firms – and, the legal fees are much lower with staff counsel employee lawyers.[103] By using the more economical employee lawyers, insurers can supply insurance at lower cost to insureds (the public) and improve their competitive positions by doing so.[104] This effectiveness arises out of zero-based budgeting:[105]

“The economics of this concept are simple, i.e., handling a high volume of cases in litigation at a fixed annual cost without a net earnings or profit objective.[106] When the companies do their budgeting process … they know, with a great degree of exactitude, what their staff counsel operation will cost…. Compare that with a typical outside law firm … If an insurance company applies the same calculation to its nationwide operations, it is looking at significant expense savings. Without the need to meet billable hour objectives or profit goals, an in-house counsel operation can handle a larger volume of cases. This reduces the effective hourly rate on those cases as the year goes on even if caseloads increase, since costs are fixed. … is it a wonder why insurance companies find in-house counsel so attractive?”

The intensely competitive business environment and the need to manage the ever increasing costs associated with litigation is one of the major reasons why insurance carriers have invested in the development of their Staff Counsel programs.[107] In using the more economical employee lawyers, insurers can supply insurance at lower cost to insureds and improve their competitive positions by doing so.[108]

As noted by legal commentators – there being “no reason to think that insurers would transfer work away from outside defense lawyers who provide better service than staff attorneys at comparable cost” – based on the size of staff counsel operations, the length of time they have been around, and their recent growth, “one would have to conclude that insurance companies (and therefore premium-paying policyholders) derive great value from them. They have withstood the test of time, and they have survived vigorous competition from outside law firms.”[109]

The growth of in-house staff counsel operations has become one of the most economically effective trends in litigation management.

– Joseph Petitta[110]

Sophisticated insurers that “properly” utilize staff counsel “also believe that quality of legal representation can be enhanced”. By training staff counsel in the particular liability lines written by the insurer, significant expertise and efficiency can be developed, which results from repeated handling of such cases.[111] Expertise, knowledge and best practices are shared, developed and utilized to the benefit of staff counsel’s clients.

In-house staff counsel legal operations specialize in tort and insurance litigation, and handle litigated matters from the routine to significant, high-exposure jury trials, arbitrations and appeals.  Staff counsel defence lawyers practice their speciality every day and exercise independent professional judgment in the representation of their clients. A staff counsel operation – properly structured – has a unique competitive advantage, providing insured clients professional, independent, specialized and cost effective legal representation.

Another Perspective

There is another perspective: “not all believe that the development of staff counsel operations to be beneficial”, but rather are “neither as competent nor as loyal to their clients as outside counsel”. In the U.S., critics in the main appear to be other lawyers, often external defence lawyers.[112] These critics “assert that the cost savings of a staff operation is achieved by providing less able and less loyal lawyers. Some remarks proceed from a distrust that insurers’ motivation is their economic interests over their insureds. That distrust taints salaried lawyers” – some critics are sincere, “others may be reacting to an actual or threatened loss of business”.[113]

According to legal commentators in the U.S., some defence lawyers have taken “the matter more personally. They found the proliferation of staff counsel operations threatening, at least partly because these operations compete with them for business. The most vocal critics of house counsel [were historically] the automobile and general liability lawyers who have long relied upon insurers as their principal client base.”[114] It’s seen by some legal commentators as “strictly an economic issue” as traditional law firm defence lawyers in the U.S. have seen “a significant amount of business going to staff counsel”.[115]  However, these lawyers are in a precarious position: they “have no interest in declaring war on the insurance industry” because they rely on insurers for business, but they have every reason to criticize staff counsel operations employed by insurers. As such, as noted by several legal commentators as far back as the 1990s, they needed “smart bombs they can lob at staff attorneys without seeming to target insurers, even though insurers ultimately bear the brunt of the blast:”[116]

“Professional ethics rules make perfect smart bombs. They apply only to lawyers. Consequently, disgruntled defense lawyers can use them against staff attorneys without seeming to be anti-insurer. They also enable defense lawyers to claim the high ground. Once the debate is framed in terms of lawyers’ ethics, discussion will focus on professionalism, consumer protection, interest conflicts, fears of unauthorized corporate practice of law, potential interference with attorney-client relationships, and incompetence. By suggesting dangers in these areas, lawyers who oppose staff counsel operations can cast themselves as defenders of high professional standards and as consumer advocates. Insurance companies will have difficulty countering this gambit. Not being lawyers, their competency to speak on these matters will be questioned. Their self-interest will also be transparent, and they will have difficulty countering assertions to the effect that, in the pursuit of economic gains, they will gladly sacrifice policyholders’ welfare and staff attorneys’ professionalism.”

Over the years, there have been numerous “staff counsel challenges” in the U.S. to the legal utilization of staff counsel lawyers by insurance companies. In the U.S. the legality and ethical propriety of salaried staff counsel operations have been challenged on two grounds. The first challenge rests on the principle that corporations cannot practice law – that the use of salaried counsel to defend insureds engages the insurance corporation in the unauthorized practice of law. Most jurisdictions prohibit a corporation from the practice of law, except for using salaried lawyers to represent the entity itself. The second challenge is that the employment relationship creates an environment of actual or potential conflicting interests.[117]

Virtually every jurisdiction in the U.S. that has addressed the question has upheld the propriety and appropriateness of the use of staff counsel (both in judicial decisions, and state and national ethics opinions), with the more recent judicial decisions acknowledging the overwhelming weight of authority in support of staff counsel.[118]

A comprehensive review of the ethical issues raised in the numerous staff counsel challenges was undertaken by the American Bar Association’s Standing Committee on Ethics & Professional Responsibility. The ABA’s 2003 Formal Opinion (“ABA Opinion”)[119] in effect concluded that:[120]

“Insurance Staff Counsel may undertake representation of their employer and their employer’s insureds in a civil lawsuit resulting from an event defined in the insurance policy as long as the following two conditions were met: Staff Counsel attorneys must inform all insureds being represented of their employment by the insurance carrier[121] and they must exercise independent professional judgment in advising or otherwise representing the insureds. The ABA’s Formal Opinion, which was based on the Model Rules of Professional Conduct as amended in 2002, affirmed its long standing position on the issue and went a long way in quelling opposition to the use of Staff Counsel.”

The American Bar Association concluded in the Formal Opinion that it is permissible for insurance companies to use in-house counsel to represent policyholders, reaffirming their earlier rulings that nothing in the ethics rules prohibits insurance staff counsel from defending policyholders.[122]

Unauthorized Practice of Law “challenge” – discussion, case law, and ethics opinions

On the substantive issue that insurance carriers were engaging in the unauthorized practice of law with the setting up of a Staff Counsel operation within the overall company, the Courts[123] have rejected the contention, and the state and national ethics opinions[124] agree. The rationale is based on the premise that the insurer is financially at risk to pay damages under its policy, and as such the insurer may act to protect its financial interest through the proper use of salaried staff counsel.

The substantial majority of jurisdictions that have addressed the issue have concluded that the use of insurance Staff Counsel does not constitute the unauthorized practice of law, including the California Court of Appeal in Gafcon Inc. v. Ponsor & Assoc.[125]  Out of all the challenges filed in the United States over the decades, only three jurisdictions (Arkansas in 2011, Kentucky in 1996[126] and North Carolina in 1986) out of fifty States, have interpreted their statutes to prohibit staff counsel operations.[127] Otherwise, in all other cases staff counsel challenges have been resolved in favour of the use of staff counsel.

Conflicts (Ethics and Rules of Professional Conduct) “challenge” – discussion, case law, and ethics opinions

On the issue of conflicts, two specific considerations have been expressed from an ethical perspective with respect to salaried staff counsel: one accusation is of undue domination and control by the insurer (as the employer) over the legal representation of the insured in a specific case; and the other criticism more broadly challenges the subjective influences over counsel for “continued employment, salary advancement and career opportunities”. The concern is that the insurer “may achieve an economic savings by not allowing counsel to do all that is necessary to defend the case”:[128]

“Subjective factors have been cited to support this criticism. A salaried lawyer-employee of an insurance company has additional relationships that increase the risk of a subjective bias in favour of the insurer. … staff counsel depends financially on one client. Advancement in salary and position requires satisfying that client. In other contexts, such pressures have been perceived to bear on professional independence. Another charge is that control ultimately lies with the attorney’s superiors, presenting a risk, if the supervisor has corporate responsibilities other than for the insured’s representation. The contention is that the employed attorney may be concerned that the insurer will not be pleased if he or she engages in a course of action detrimental to its economic interests, because of perceived ethical obligations, or may not want to receive candid but negative opinions.

The critics of staff counsel systems contend that these forces can combine to unduly influence the employee’s loyalties to favour the employer. Yet, an economic susceptibility to favour the insurer has been cited as a reason why outside panel counsel has a conflict.”

On the issue of inherent conflict of interest, a U.S. trial court held that there is in effect an ethical equivalency of staff counsel and external counsel in complying with issues that arise in the tripartite insurance defence relationship.[129] Similarly, the California Court of Appeal concluded:[130]

“Counsel’s status as a salaried employee of the insurer does not inherently create a temptation to violate or disregard ethical rules. We reject the argument that such a relationship supports the presumption that in-house counsel will always favour the insurer’s interests. Conflicts of interests may arise in such circumstances, but the same is true for an outside law firm that might be dependent upon a particular insurance company for a substantial amount of business”.

Legal commentators note that “fundamentally, the conflict problems faced by employee counsel are not significantly different from those faced by law firm counsel”.[131] While it is “true that the staff counsel lawyer has one source of insurance defence business, and the outside lawyer may have multiple sources (although in practice many outside defence lawyers have only a few sources of defence assignments), it is certainly odd to suggest a sliding ethical scale based on whether the business comes from one referral source or many. Clearly no one advocates the disqualification of outside lawyers with practices dominated by referrals from one insurance company. The lawyer’s obligation runs to his or her client, whether the lawyer is paid a salary, an hourly rate, or some other compensation agreement”.[132]

In the reported judicial decisions, the U.S. courts[133] have not found employed staff to be less loyal or able than their external counsel contemporaries.[134] These assessments are equally expressed in bar association ethics opinions.[135] Lawyers owe undivided loyalty to the client they purport to represent, not to the person who pays the compensation – when the interests collide, the lawyer “regardless of the quantum of his employment, must make the ethical decision. Both salaried and non-salaried lawyers are held to the same ethical standard”.[136] As well, a Texas Supreme Court has cautioned that where “an insurer attempts to compromise a staff attorney’s independent, professional judgement”, they “cannot use a staff attorney to defend the claim”.[137]

There is no basis for a conclusion that employed lawyers have less regard for the rules of professional conduct than private practitioners do.

– U.S. Trial Court[138]

The influential 2003 American Bar Association Formal Opinion – discussed above – has stated that insurance Staff Counsel may undertake representation of their employer and their employer’s insureds in a civil lawsuit resulting from an event defined in the insurance policy as long as the following two conditions are met: (1) Staff counsel lawyers inform all insureds being represented of their employment by the insurance carrier, and (2) they must exercise independent professional judgment in advising or otherwise representing the insureds.[139]

The American Bar Association concluded that it is permissible for insurance companies to use in-house counsel to represent policyholders, reaffirming their earlier rulings that nothing in the ethics rules prohibits insurance staff counsel from defending policyholders. The ABA Opinion stated that the two parties are not in conflict and, in fact, absent a specifically identifiable conflict, have a mutual interest in having a claim resolved within policy limits. The ABA Opinion stated that staff lawyers who are cognizant of the rules of professional conduct will have no problem in identifying the parameters and boundaries of this mutual interest and will be able to ascertain if and to what extent a conflict arises. At that time, they can and should make the appropriate disclosures to their respective clients and advise the insured to seek independent counsel. An important caveat pointed out by the ABA Opinion is that staff lawyers must inform the insured at the outset of the engagement about the full dimension of the relationship between the insured, insurer and staff counsel. Additionally, given the nature of tri-partite relationship, staff counsel must be at all times cognizant of the imperative of exercising independent professional judgment. Although the ABA Opinion was not directive on this point, it was inferred that the staff counsel should be operating in their own identifiable office space, even if on company premises, with their own set of files and administrative staff and support system.[140]

Recommended Structure for a Staff Counsel Operation

After numerous challenges in the United States to “their very existence, insurance company staff counsel programs have emerged virtually unscathed and poised for continued growth”.[141]

Based on extensive U.S. case law, bar association ethic opinions, and Rules of Professional Conduct in both U.S. states and Canadian provinces, staff counsel representation of insureds is appropriately independent and ethically proper where the staff counsel legal offices and insurer’s corporate environment does not restrict or imperil the ability of staff counsel lawyers to comport with their ethical requirements to their insured client.[142]

As an example, the importance of independence appears to have been a factor in a Michigan court decision in the United States. In this case, a lawyer who headed an insurer’s in-house legal department was awarded a judgment of over $1 million for constructive dismissal. The court decision found that the staff counsel lawyer was demoted “because he refused to accede to unethical requests and demands concerning representation of the insurer’s policyholder”. After the managing staff counsel lawyer was demoted, a claims person was inappropriately put in charge of the staff counsel operation.[143]

So, what does “independent and ethically proper” look like for a staff counsel operation?

The “preferable structure, which preserves the greatest independence of counsel, is for direct supervision by a lawyer whose responsibility is for the staff counsel operation”. How the staff counsel legal office is structured “has both direct and indirect influence concerning the resolution of conflict issues”:[144]

“A staff counsel department should be designed to be comparable to a law firm.[145] It should be a separate department with lines of supervision and control by senior lawyers.[146] Those who are responsible for employment review and promotion should be lawyers within the department. The exercise of professional judgment must be by staff counsel, not by claims personnel. Professionalism should be formalized with training, and the adoption of employment manuals or published guidelines. The attorney-client aspects of written records of insureds’ representation should be confidential from the claims department”.

Accordingly, an important consideration for a staff counsel operation in the U.S. and Canada is to implement a procedures manual, guidelines, and/or policies that support and enhance the independence of counsel and compliance with the Law Society’s Rules of Professional Conduct in each jurisdiction the staff counsel offices operate – and to recognize the importance of environmental safeguards that are comparable to those in place at law firms, including, for example, such matters as:

• Adherence to the Rules of Professional Conduct.
• Independence from the claims department.
• Separate identifiable Staff Counsel department and office space (even if on company premises), with its own set of files and administrative staff and support system, with lines of supervision and control by senior lawyers.[147]
• Persons responsible for employment review and promotion of staff counsel personnel should be staff counsel managing lawyers and operational managers within the staff counsel department.
• Exercise of independent professional judgment by staff counsel lawyers on behalf of clients.
• Staff counsel lawyers’ professional and ethical duties and responsibilities owed to the insured client.
• Staff counsel disclosure of employment affiliation to all their insured clients,[148] in writing at the outset of the solicitor-client relationship, including a clear delineation of the scope of the retainer[149] [150]

Although ethically permissible, a policy of non-representation whenever there is any substantive coverage issue is recommended. As noted by legal commentators, “considering the political forces seeking to limit or eliminate staff counsel operations, even an appearance of impropriety can fuel legal or legislative action”. Accordingly, an overly cautious policy may be appropriate.[151]

It should be noted that a managing lawyer within a staff counsel department has the same responsibility for the operation of the staff office as would a partner in a law firm. Even without an ethics rule, principles of civil liability may create a situation whereby a supervising lawyer may be liable for the negligence of a subordinate or reporting lawyer:[152]

“Those who manage or supervise lawyers in a staff counsel operation should be cognizant that they likely have ethical conduct and civil responsibility for the subordinate lawyers and staff.”

There is also a broad recognition within the insurance industry of the need to promote ethical behavior by staff counsel lawyers and a willingness to take the necessary steps to ensure that staff counsel lawyers have the necessary autonomy to represent the best interests of the insured clients. As noted by Professor Silver in his analysis of this topic,[153] liability carriers generally “have stronger incentives to ensure that staff attorneys act correctly in the first place and can be relied upon to protect insureds from the consequences of misconduct because their liability for staff attorneys’ errors is clear”. Experience shows that most insurers understand, respect and indeed, promote the compliance with the ethical obligations required of staff counsel lawyers.[154]  As well, there “is a heightened professionalism of salaried counsel, who insist that their employers assure that their working environment comports with high ethical standards”.[155]  If there are institutional issues within the insurer, William Barker in his article “Laying the Foundations for Staff Counsel Representation of Insureds” has noted as follows:[156]

“Employee counsel almost universally report to other lawyers, with the staff counsel management chain culminating with a senior executive. Staff counsel managers have told me that they would resist questionable directives from an adjuster by taking the matter up the claims management chain to which the adjuster reports or simply by disregarding any such adjuster directive. In their experience, the adjuster always backs down or is overruled. Outside defence counsel do not have the same security to resist adjuster directives or the same access to higher management”.

If issues or abuses arise within an insurer – for example the Michigan judicial decision previously referenced – the staff counsel lawyer must ethically act in the best interest of their insured client in accordance to their duties under the Rules of Professional Conduct, and the insured policyholder “may seek the aid of the courts or the insurance commissioner” (or similar government body within the relevant jurisdiction) – or law society – as against the insurer or defence counsel, or both.[157]

Marketplace issues will be decided in the Marketplace

Legal commentators have noted that while staff counsel challenges in the U.S. have been “dressed up in the clothing of ethics rhetoric, one real issue is law practice economics. Staff counsel can and do complete with outside counsel for assignments from insurance carriers”[158] and “defense lawyers” may “see a significant amount of business going to staff counsel”.[159]  As such, legal commentators have noted that although “some critics are sincere; others may be reacting to an actual or threatened loss of business”.[160] The mere potential for conflicting interests, a potential no different from that facing external law firm counsel, “does not require the abandonment of a mode of doing business the insurer finds efficient and cost effective”.[161]

Richard Campbell – then Chair of the American Bar Association’s Tort and Insurance Practice Section – has noted that the Rules of Professional Conducts should not be used by the organized bar “as a tool of economic protectionism”.[162]

The monopoly that the legal profession has traditionally enjoyed on the delivery of legal services, is eroding.  Historically, it was widely accepted that only qualified lawyers – practitioners vetted and certified by bar associations – were permitted to provide legal services to clients, and then only through specific types of organizations, such as partnerships. These assumptions no longer prevail.

– Justice McLachlin, Supreme Court of Canada[163]

The emergence of a competitive and innovative legal services marketplace is forcing the legal profession in Canada and the U.S. to come to terms with the reality that the traditional law firm – the guild model of designing and delivering monopoly protected services under the rubric of “the practice of law” – may no longer be an acceptable response to clients demanding alternative legal providers who are innovative, competitive, and cost effective.[164]

Traditional law firms providing insurance defence legal services will survive and even thrive in this changing environment because they bring value that no one else can – not because other legal service providers are regulated out of the market.[165]

For insurers, the “growth of in-house staff counsel operations has become one of the most economically  effective trends in litigation management”,[166] providing insurers and their insured policyholders with high quality, timely, and cost effective legal services for first party claims and third party litigation claims. Many insurance companies – particularly in the U.S. – are investing appropriate, and in many cases significant, resources into their staff counsel programs with respect to technology, training and personnel.[167]

Staff counsel has been referred to as being “in the midst of a modern day Renaissance”.[168] Two reports in 2015 noted that “most staff counsel litigation departments are growing rather than shrinking”,[169] and that 40 percent of insurers plan to expand staff counsel.[170]

Having said that, “paying the right amount, to the right defence firm [whether staff counsel or external law firm] continues to drive P&C operational effectiveness initiatives and investment decisions”.[171] Insurers will “continue to look for the right formulas to use” (whether that be staff counsel, or external counsel, or a combination of both) to appropriately address legal and indemnity costs in the litigation area”, and for those insurance carriers that do not continue to invest in the development of their staff counsel programs (particularly in technology), these insurers will likely have to return to an increased utilization of external counsel as their staff counsel operations become less efficient.

Property and casualty insurers will continue to use appropriate metrics to evaluate costs and performance[172] of external counsel and staff counsel, and the marketplace will judge the relative advantage of staff counsel employee lawyers relative to traditional insurance defence law firms.[173]

Ultimately, the marketplaces of ideas and premium charges will sort this out … We find nothing in our Rules of Professional Conduct to prevent the parties from continuing to duke this issue out in the marketplaces without interference from the judiciary.

– Indiana Supreme Court[174]

Staff Counsel Primer Going Forward: Innovation, Training, Technology, Analytics, and Processes

Staff counsel operations are led by experienced legal leaders who have the legal and business training to efficiently guide a modern day law operation in an extremely complex and competitive market place. The staff counsel management team is usually supported by an Operations Manager, and for larger staff counsel programs, an Operation Supervisor or supervisors as well.[175]  The staff counsel leadership team is a requisite professional and valuable function for the sustainable success of any staff counsel program.

The staff counsel department is staffed with highly professional, skilled, and ethical lawyers. These “first-class lawyers” litigate cases before trial courts, appellate courts, and administrative tribunals.[176]

Innovation

Staff counsel operations must be innovative enterprises as well as professional service shops, appropriately utilizing their budgets to invest in the future, while capitalizing on business processes and leveraging technology. Not surprisingly, there is heightened attention on resource optimization – the right resources, doing the right work, in the most cost effective and efficient manner.[177]

The key to establishing or maintaining a viable, competitive, and relevant staff counsel operation is innovation — not just the development and adoption of technology-driven platforms, although this is critical, but also through improved education and training, improved processes and analytics,[178] and confidence that they will be regulated by their Law Societies (regulators) in the same manner as their peers in private practice with respect to maintaining professional standards while protecting the public.[179]

However knowledgeable a lawyer may be in the “law”, sophisticated corporations will not continue to work with lawyers, law firms, legal departments, or staff counsel operations with antiquated processes and technology.  Corporations expect their legal teams to deliver appropriate legal services cost effectively[180] – and to do so, they must be competitive, efficient, and innovative in respect to appropriate processes, technology, and delivery model.

Training and Education

One factor that has contributed to the improved perception of staff counsel programs is the increased level of training and education being provided. Lawyers must train, as other professionals do, by incorporating more practical experiences earlier in their legal education, and training with more coaching and feedback in practice settings.[181] Continuing legal education requirements are the norm for lawyers in most U.S. states and Canadian provinces and provide a useful tool for lawyers to keep their knowledge and skills current and focused. The stronger staff counsel programs in the U.S. and Canada are also providing targeted in-house CLE training and education specifically geared toward their lawyers, in particular in respect to practical legal knowledge and skills, technological skills, law practice management, time management, and legal efficiency in their specific practice areas. Ethics training, “specifically with regard to the potential issues that can arise in the context of the unique tripartite relationship enjoyed by the insurer, insured, and staff counsel attorney is emphasized” by sophisticated and well supported  “managing attorneys of staff counsel programs”.  A lawyer “who is capable of efficient management of his or her caseload” in a professional and ethical manner benefits “the client, the firm and the carrier by achieving superior results in a timely fashion.[182]

Ethics training, specifically with regard to the potential issues that can arise in the context of the unique tripartite relationship enjoyed by the insurer, insured and Staff Counsel attorney is emphasized by the managing attorneys of Staff Counsel Programs.

– Thomas McNally[183]

A sustainable model of success for a staff legal operation will embrace training and education, innovation, and entrepreneurship.[184] The training of staff counsel managing lawyers in law practice management (including leadership and management to lead a legal team, an office, or the entire department), and technological skills are two of the most required competencies to meet that objective of sustainable success.[185]

 Operational Maturity: Technology, Analytics, and Processes

 All forms of innovation and technology will require intent and direction to produce a proper, valuable outcome. It is therefore important to clearly define the strategic goal, and effectively create and communicate a roadmap to achieve the desired outcomes, and then validate the actual results. Processes are required to organize and align the activities in support of achieving the goal or goals.[186]

Beyond personnel and metrics and process initiatives, technology is a crucial component of a legal departments’ efforts to improve efficiencies. Technology is a meaningful tool to deliver efficient cost effective value to legal departments. It is changing the landscape and is an integral part of every legal function. To remain effective in their jobs, in-house legal professionals must at minimum develop the technology know-how to make wise technology decisions and utilize the appropriate basics of technology.[187]

Having said that, corporate legal departments – including staff counsel operations – that are substantially along the path to, or have successfully achieved, operational maturity have usually encountered and learned the hard lesson that the best accomplishments and results come from making systematic and comprehensive implementation as opposed to simply deploying technology or changing a few processes. Technology, for example, is not a panacea for inefficient legal service functions. Prior to implementation and utilization, senior leadership must understand how three drivers – technology, analytics, and processes – will actually lead to improvements in operations and enhanced decision making. They need practical and systematic processes in place to determine what to invest in (in terms of time, resources, and money), when to invest, how to channel investments, and how to ensure that the technology, analytics, and/or processes that are invested into are in fact implemented and utilized in a manner that provides value.[188] As such, improving a legal department’s operational maturity and efficiency is best achieved by first addressing and considering the overall three drivers:[189]

1. Technology. A strong staff counsel operation requires enterprise-level systems that capture information, drive workflows and automate tasks. These systems help establish processes and make it more efficient to route matters, documents and information between parties inside the department and with external vendors.  Examples include matter management systems; imaging/scanning optical character recognition technology (paperless technology); e-billing; document/precedent management.

2. Analytics. Legal analytics is the identification, tracking and communication of meaningful patterns of data (metrics) relevant to evaluate and manage costs and performance.[190] This may include data that can look at staff counsel and external counsel spending and the outcomes achieved in litigated matters, or how long matters are taking and how lawyers are performing against budgets. Examples include metrics such as legal spend analysis, outcome analysis, counsel assessments, average total cost of case, legal expense per case, cycle time, and other specific custom benchmarks to a particular staff counsel office and staff.

3. Processes.The series of actions or steps taken to achieve a particular end – the processes – are the third driver of operational maturity and efficiency.  Here the goal is to streamline routine aspects of legal work. Examples may include the steps in opening and assigning a new litigation file to a lawyer; generating legal correspondence, documents, motion records, pleadings (automating document assembly / templates that automate recurring tasks); automated paperless process for electronic/digital client litigation file re pleadings, correspondence, documentation, etc.; legal research and legal briefs; e-discovery and discovery management; evidence management; managing, scheduling, preparation and attendance re standard litigation events (discovery/deposition, mediation, motion, pre-trial conference, trial, appeal); lawyer calendars, time management/docketing, To Dos/tasks, scheduling etc.; managing case inventories; managing/automated precedents, knowledge management; lawyer management, coaching, assessment.

It is about enhancement of value to our clients and also freeing up our lawyers to do the things they do really, really well and for which we can recover and which our clients really value… so nothing about innovation changes our strategy. Innovation, we are going to use to enhance what we currently offer and enhance our client proposition. That’s a very important part of it.

– Director of Legal Services Innovation, Top 50 firm, B2B[191]

Technology – if appropriately and strategically adopted and utilized – offers legal departments a way to leverage the power of algorithm-driven automation and data analytics to “productize” aspects of their legal work.[192] The goal is to review and implement only technology that make lawyers’ jobs easier and more cost effective. What makes artificial intelligence stand out is the potential – with appropriate leadership – for a paradigm shift in how legal work is done within legal departments. Productivity rises, efficiencies increase, and nonlinear scale becomes feasible as productized services take over high-volume tasks and aid judgment-driven processes.[193] From an organization’s perspective, if their legal departments use technology appropriately, it will improve efficiency and value, making better use of time and financial resources.[194]

Nearly all legal departments (across business sectors) have identified the need to improve the efficiency of their legal departments, but unfortunately most have not made actual significant changes to their approach to achieve greater efficiencies. For staff counsel programs supported by their insurance carrier, there has been an increased investment in technology, which has contributed to the evolution, leadership, and success of staff counsel for their clients. Technology improvements and innovations have been dramatic and have resulted in significant improvements in the operations capabilities and efficiency of both law firms and staff counsel operations that have invested and embraced them. Most insurance carriers recognize the importance of capitalizing on the efficiencies associated with the proper use of technology. Today’s law firms and staff counsel operations face competitive and cost effective pressures to use efficient and appropriate operating processes and systems.^[195] At minimum today, Staff Counsel operations in the U.S. and Canada should already have in place – or at least plans to implement within 18 months – the following basic legal technology:

• A comprehensive practice management system^[196] (cloud-based computing delivered over the internet is becoming increasingly de rigueur^[197] for legal technology utilized in legal organizations – low upfront fees, easy mobile access, simple setup and configuration, built in disaster preparedness – but client confidentiality and security continues to be an important consideration).
• Imaging/scanning Optical Character Recognition technology (a paperless legal office is an important priority for staff counsel operations).
• Communication and collaboration tools (secure interactive client portal and online document repositories for technology based information sharing; video conferencing software – often built into legal practice management software).
• A system that allows the legal department to clearly define the key legal and client processes.
• A document drafting system (standard legal precedents, documents, correspondence, and agreements that are regularly used with courts, counsel, clients, other relevant third parties.[198] Can live anywhere, including in a cloud-based software library, but most efficient in a law practice management system).
• Encryption and other security measures to protect privileged client communications (antivirus/antispam software).[199]
• Electronic discovery and other technology assisted review (TAR) tools for documents.
• Voice recognition software (speech to text dictation).[200]
• Legal research tools (ROSS lntelligence:[201] a legal research engine that uses AI to allow natural language processing – i.e. simply ask the legal questions – to search and provide legal information from citations to legal briefs; or online legal research tools such as: CanLII, Quicklaw, Westlaw, LexisNexis, Wolters Kluwer, Fastcase, Casemaker, Court official websites, free cloud based systems like Google Scholar, etc.).
• Trial software (i.e. trial presentations, evidence management, etc.)
• Word, Excel, and Powerpoint (this is passé and mandatory, and the actual lawyers need to know how to use these basic tools, and actually use them).

Another important development is the ability of lawyers to work productively from outside the office with electronic files. With the utilization of ‘secure’ smart phones and tablets, the internet, social media and the widespread availability of wireless connections, a lawyer can work efficiently from the courtroom, an offsite deposition / discovery, an airport, a hotel, or even from home or other offsite location.[202]

I don’t necessarily see an advantage of [an organisation] being on the cutting edge of experimenting with, investing in or attempting to deploy premature solutions around AI and machine learning as it relates to virtual assistants and that sort of thing. Once those are more fully developed, incorporating that might be great, a value add to customers. What we want now is a platform that is functional from day one, but also easy enough to improve or modify and expand going forward.

– Head of Innovation, Challenger Bank[203]

Going forward, a typical staff counsel operation (or law firm) should be planning to at least consider, if not accommodate, the next wave of (improving) disruptive technologies, such as virtual assistants, machine learning and automation –  to address, for example, document automation and contract review,^[204] answering routine questions,^[205] mining documents in discovery,^[206] legal research,^[207] predicting case outcomes,^[208] legal analytics, legal project management[209] – faster, better, cheaper and becoming more so with the assistance of intelligent software.^[210] AI is moving up the “legal vertical”, and “is not just about back-office administration, legal research and know-how – it is also front-end, client facing services and business development”, providing a competitive advantage “as firms that invest in AI can take on more work at competitive rates”.[211]

Embracing appropriate technology will allow lawyers to focus on “complex, higher-value work”.[212]

However, legal services must not lose their human touch. In the provision of legal services, staff counsel operations and law firms must continue to focus on clients rather than just “cutting-edge” technology: legal technologies “offer exciting possibilities for how legal processes might evolve or be reinvented for the future”, but such technologies are not “a fix for struggling business models and outdated processes”. It is suggested that:[213]

“Instead, the better approach often comes from a close tracking of client needs and expectations, followed by identification of how technology can help a firm better serve these needs. …

Technology by itself will not bring innovation to a firm. What will is a better understanding of business issues and the points where technology and business come together, and how that can be better understood and developed. …

Increasingly firms will be tasked with managing an augmented workforce that includes a new generation of smart technologies, virtual assistants, algorithms, automated processes and distributed devices alongside flesh-and-blood staff…

Future lawyers would be called on to combine human skills and computer skills. To do that, the lawyer must understand processes, how to improve them, and when to add technology. That does not mean the lawyer must become a process improvement expert, project manager, or a technologist. It does mean that a lawyer must become conversant in the ‘tools of the trade’ and perhaps maintain a sense of empathy toward coded colleagues if legal services are not to be fully digitised, but retain a touch of humanity. …

Legal businesses which use technology to deliver legal services focusing on smarter, more flexible resourcing, carrying out work in a more project management style and thinking in terms of process management and improvement, will look very different and work very differently to the pyramid law firm of the past. … The importance of borderless platforms and digital ecosystems will grow in the coming years as massive movements such as the Internet of Things, big data and data analytics evolve.

The ability of law firms to plug into these developments through technological innovation and collaboration will be an important factor for their success in future markets.”

The pressure on fees and cost effective results in respect to personal injury legal work will likely accelerate the adoption of artificial intelligence (“AI”) in line with or faster than other areas of legal work. However, the “human side of a lawyer’s role in a serious injury claim is what most do the job for”, and resolution of these type of “complicated legal problems”  will in all likelihood continue to require an appropriate human touch.[214]

It appears that future technology – in particular artificial intelligence – may have the potential to “speed up the more laborious aspects of handling a personal injury case – like telling a lawyer which pages of medical records contain references to pain, spine, or similar groups of words so as not to miss anything”, but the goal “isn’t to change the nature of legal work or replace human lawyers, but to enable lawyers to concentrate on more cognitive tasks such as developing legal arguments, instead of spending long periods of time on routine duties like drafting and reviewing documents, extensive research of case files and other [from a sophisticated client’s perspective] un-billable tasks”.[215]

In the near future, technology may develop to an appropriate extent that it may potentially be considered for use “to evaluate medical outcomes on a scale that ensures expert opinions are so statistically accurate” that challenges to their conclusions may be appropriately reduced to the extent that resolutions between the parties can be reached based on objective medical evidence and non-partisan, fair, ‘independent and impartial’ expert opinions.[216] AI could then review the pleadings and past case records and outcomes – using data mining and predictive analytic techniques – to predict or forecast the outcome (i.e. liability or no liability; and the ideal percentage at which a specific offer would lead to an appropriate settlement) while accounting for litigation risk:”[217]

 “In the future, could agreed compensation be based on data from other cases evaluated by AI in a fraction of a second? Once investigations and evidence gathering are complete, could the outcome be predicted by a machine?”

I see [technology, AI] as a massive opportunity for the firm to do what our lawyers really value, which is to think and to have space to think. We don’t need third year associates to be doing verification, it shouldn’t be happening, and a lot of them are Cambridge double firsts, they don’t want to be doing that.

– Director of Legal Services Innovation, Top 50 firm, B2B[218]

Although AI offers tremendous potential, and is being used to a limited extent today,[219] before AI can be fully developed and utilized for implementation, “a number of [parameters will] need to be agreed and established”.[220] However, the potential for AI to predict the outcomes of legal disputes and proceedings is an exciting step to be watched, as it would “significantly aid lawyers in the general management of cases, by enabling them to make decisions based on the likelihood of a certain outcome taking place”.[221] The interaction of technology and human legal expertise supports potentially better decision making and adding confidence to legal advice, in particular for junior lawyers learning their craft – “It empowers people to make use of huge amounts of data to make better decisions and tell better stories.”[222]

Part of my role is almost internal advocacy for new opportunities, innovative ways to look at problems because I think lots of people would agree once you spend a certain amount of time in a certain area looking at problems in a specific way, it’s easy to lose perspective on what other ways might exist to look at those issues.

– Head of Innovation, Challenger Bank[223]

Revolutionary technologies such as ‘big data’ and improvements in artificial intelligence (such as IBM’s ‘Watson’ and the ROSS plain-language legal research tool) offer unparalleled efficiencies in the delivery of certain aspects of legal work in staff counsel operations.^[224] Technology investment will make matters faster, cheaper, more efficient and more accessible. Modern technology will be an important piece in the continued success story of staff counsel operations for insurance carriers and their insureds in the U.S., Canada and the UK.^[225]

Conclusion

The growth of in-house staff counsel operations has become one of the most economically effective trends in litigation management in the U.S., Canada, and UK (and reportedly in Australia).

It’s very easy to be protective and we’re trying to preserve the legal profession and individual firms and structures, but if you’re a client facing person and you sit in their offices and hear what they want, our industry owes it to itself to find a way to deliver that because if we don’t there are a bunch of other people that will.

– CEO, Top 200 firm, B2B[226]

Formidable forward-thinking insurance carriers are constantly exploring innovative ways to better manage their business, improve operational efficiency, grow their share of the market, improve customer service, and to control costs.[227] Insurance companies investing in the employment of trial lawyers into their staff counsel programs are offering a top tier professional defence to their insureds. Additionally, because they can point to convincing legal services and results provided to their existing insureds by these highly skilled lawyers, insurance carriers are also able to maximize their efforts to expand their staff counsel operations to represent corporate and other commercial insureds (in litigation matters involving professional liability, directors and officers liability, and other specialized areas of law that have traditionally been referred to external defence law firms).  The growth and development of this non-traditional specialized use of staff counsel[228] will rely on the continued delivery of superior legal services by the Staff Counsel firms.[229]

In-house legal departments continue to grow in size and influence, and are well positioned for further expansion as an important alternative legal service provider in the delivery of legal services to the insurance and financial services industry.[230] Clearly, staff counsel legal leaders must have a broader set of core lawyering skills and personal and professional leadership competencies to be successful throughout their careers, and to be capable of leadership within and on behalf of the staff counsel operation as the circumstances require.

What is the recipe for successful achievement? To my mind there are just four essential ingredients: Choose a career you love, give it the best there is in you, seize your opportunities, and be a member of the team.

–  Benjamin Franklin Fairless

It has been noted that “as a result of robust investments by the insurance industry, improvements in legal technology and a renewed focus on business management and training”, many of “todays Staff Counsel programs are in the midst of a modern day Renaissance”. Staff Counsel departments are staffed with professional trial lawyers and support personnel that possess the skills, passion and experience to compete professionally and economically with any private defense firm. There are thousands of staff counsel lawyers across the United States and Canada skillfully defending their clients on a daily basis in “trial and appellate level courts”. Staff counsel lawyers regularly appear in the highest courts in their jurisdictions, resulting in published decisions in areas of law that influence and effect not only their client’s position, but also the “entire legal, insurance and financial community”. In today’s “hyper competitive business world”, staff counsel is “well positioned to play an even larger role in the insurance and legal market place.”[231]

Eric Sigurdson

 

Endnotes:

[1] John Cunningham, The New Normal for Law Firms, WordPress.com, January 23, 2017; The ‘2017 Report on the State of the Legal Market’ Finds 10 Years of Stagnation Changing the Industry; Says Innovation Key to Law Firm Success, Georgetown Law.edu, January 12, 2017. Also see, Eric Sigurdson, A Way Forward: Disruptive Innovation, the Legal Profession, and the Client – what is the appropriate legal services delivery model in the ‘new normal’, Sigurdson Post, November 15, 2016; Eric Sigurdson, General Counsel, Chief Legal Offices & In-House Counsel: Five New Year’s Resolutions – Leadership, Operations, Metrics, Technology, and External Counsel, Sigurdson Post, December 13, 2016.

[2] Marilyn Odendahl, Trend of in-house counsel doing more internally likely to continue, Indiana Lawyer, October 19, 2016; Kristen Rasmussen, Can In-House Counsel Be Trusted with High-Stakes Litigation? Macy’s Thinks So, Corporate Counsel, November 8, 2016.

[3] Kristen Rasmussen, Can In-House Counsel Be Trusted with High-Stakes Litigation? Macy’s Thinks So, Corporate Counsel, November 8, 2016; Anthony Hilton, Why their profession’s failures mean lawyers don’t win top city jobs, Evening Standard, UK, September 22, 2016 (“allowed some of their best brains to move in-house as general counsel in the biggest companies, taking he most interesting legal advisory work with them”); Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort Trial and Insurance Practice, American Bar Association, Fall 2001; Mallen and Smith, Legal Malpractice (4^th ed): Chapter 28, “staff or house counsel”; R. Jeffrey Kelsey, Building an In-House Trial Team (Federal Express), Federation.org; IBM Watson Parks its AI Tank on Legal Compliance Lawn in New Venture, Artificial Lawyer: AI and Legal Automation News, September 30, 2016 [https://artificiallawyer.com/2016/09/30/ibm-watson-parks-its-tank-on-legal-compliance-sector-lawn-in-new-venture/]; Ron Friedmann, Automating Legal Advice: AI and Expert Systems, Bloomberg Law (bol.bna.com), January 22, 2106; Joe Mont, Rise of the machines: how artificial intelligence could revolutionize compliance, Compliance Week, August 2, 2016; Greg Wildisen, Is artificial intelligence the key to unlocking innovation in your law firm?, Legal Week, November 12, 2015.

[4] Mark A. Cohen, Corporate Counsel: Consumer Becomes Provider, Legal Mosaic, May 17, 2016.

[5] Kristen Rasmussen, Can In-House Counsel Be Trusted with High-Stakes Litigation? Macy’s Thinks So, Corporate Counsel, November 8, 2016; Mark A. Cohen, Corporate Counsel: Consumer Becomes Provider, Legal Mosaic, May 17, 2016; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort Trial and Insurance Practice, American Bar Association, Fall 2001 (“… virtually every major property and casualty insurance company has long had a staff counsel program. More than 8,000 lawyers nationwide currently practice insurance defence law within the structure of a staff counsel program”); Mallen and Smith, Legal Malpractice (4^th ed): Chapter 28, “staff or house counsel”; R. Jeffrey Kelsey, Building an In-House Trial Team (Federal Express), Federation.org (“Jeff Kelsey is a Managing Director in the Litigation section of the Federal Express Corporation Legal Department. FedEx handles the majority of its employment and commercial litigation using in house attorneys who act as lead trial counsel for the Company”).

[6] Anthony Hilton, Why their profession’s failures mean lawyers don’t win top city jobs, Evening Standard, UK, September 22, 2016; Kristen Rasmussen, Can In-House Counsel Be Trusted with High-Stakes Litigation? Macy’s Thinks So, Corporate Counsel, November 8, 2016; Mark A. Cohen, Corporate Counsel: Consumer Becomes Provider, Legal Mosaic, May 17, 2016; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort Trial and Insurance Practice, American Bar Association, Fall 2001 (“the practice of law by staff counsel has thrived for nearly a century … the late Jim Casey, chief attorney in Liberty Mutual’s staff counsel operation, was one of the giants of the Boston trial bar … virtually every major property and casualty insurance company has long had a staff counsel program. More than 8,000 lawyers nationwide currently practice insurance defence law within the structure of a staff counsel program”); Mallen and Smith, Legal Malpractice (4^th ed): Chapter 28, “staff or house counsel”; R. Jeffrey Kelsey, Building an In-House Trial Team (Federal Express), Federation.org (“Jeff Kelsey is a Managing Director in the Litigation section of the Federal Express Corporation Legal Department. FedEx handles the majority of its employment and commercial litigation using in house attorneys who act as lead trial counsel for the Company”).

[7] Marilyn Odendahl, Trend of in-house counsel doing more internally likely to continue, Indiana Lawyer, October 19, 2016; Mark A. Cohen, Corporate Counsel: Consumer Becomes Provider, Legal Mosaic, May 17, 2016; Jordan Furlong, You’re not selling what we’re buying, Law Twenty One, November 30, 2016:

“Insourcing continues to be the most common alternative destination for law department spending. Fully 68 percent of managing partners and chairs told the 2015 Altman Weil survey that they’ve already lost business to corporate law departments insourcing legal work. Confirmation comes from the 76% of law departments reporting reductions in outside law firm spend that said they’ll re-allocate this work to their own in-house legal staff.”

[8] 2016 Legal Department In-Sourcing and Efficiency Report: The Keys to a More Effective Legal Department, Thomson Reuters; Mark Haddad, Improving In-House Efficiency: The increasing role of legal department operations professionals, Metropolitan Corporate Counsel, November 7, 2016; Mark A. Cohen, Corporate Counsel: Consumer Becomes Provider, Legal Mosaic, May 17, 2016.

[9]  Most litigated claims covered under P&C insurance company policies involve claims for damages and injuries as a result of motor vehicle accidents (i.e. motor vehicle liability policy), but can range from a flood, to a neighbour being bitten by a policyholder’s dog or being injured in a pool (i.e. homeowner policy), to contributory negligence due to failure to utilize a seatbelt, to a brain injury in a soccer game, to even injuries arising from a fight. Commercial insurers also provide coverage for commercial insureds in litigation matters involving professional liability insurance (also called professional indemnity insurance), and directors and officers liability insurance.

[10] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001.

[11] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; In re Weiss, Healy & Rea, 109 N.J. 246, 536 A.2d 266 (1988).

[12] Ed Sohn, Alt.legal: If We Build It, Will They Come? The Problem of Legal Tech Adoption, Above the Law, September 14, 2016.

[13] Felicity Nelson, Uberfication Hits Law Firms, Lawyers Weekly (Australia), October 9, 2015; Danny Ertel and Mark Gordon, Points of Law: Unbundling Corporate Legal Services to Unlock Value, Harvard Business Review, July-August 2012; Joanne Goodman, How to: Outsource Legal Work, Law Society Gazette (UK), August 12, 2013; Peter Archer, Outsourcing the law gets new look, Raconteur, April 24, 2014; Scott Forman, Perspective: How Law Firms Can Embrace Unbundling, Bloomberg Law (bol.bna.com), May 4, 2016; Milton Regan and Palmer Heenan, Supply Chains and Porous Boundaries: The Disaggregation of Legal Services, 78 Fordham Law Review, 2010  —  “The economic downturn could mark a moment of transition for law firms less because of its immediate financial impact and more because it has highlighted and accelerated the trend toward the disaggregation of legal services that had begun before it. This trend reflects the maturation of legal services sector into a highly competitive industry driven more forcefully than ever by pressures for efficiency. How law firms, clients, and organizations connected with this industry respond could shape not only the future of law firms, but of the legal profession itself.” ; Public Policy, Legal Strategy 101: It’s Time for Law Firms to Re-think Their Business Model, Wharton.upenn.edu, April 29, 2009. Also see: Eric Sigurdson, General Counsel, Chief Legal Officers & In-House Counsel: Five New Year’s Resolutions – Leadership, Operations, Metrics, Technology, and External Counsel, Sigurdson Post, December 13, 2016.

[14] Altman Weil, 2016 Chief Legal Officer Survey [http://www.altmanweil.com/dir_docs/resource/e32f33b3-eeb3-4af6-82c8-4f6f7d9824f6_document.pdf].

[15] International Bar Association, ‘Times are a-changin’: disruptive innovation and the legal profession, IBA Legal Policy & Research Unit, May 2016; Canadian Bar Association, Futures: Transforming the Delivery of Legal Services in Canada, August 2014; Law Society of England and Wales, The Future of Legal Services, January 2016; ABA Commission on the Future of Legal Services, Report on the Future of Legal Services in the United States, August 2016. Also see, Beverley McLachlin, Legal Profession in the 21^st Century: Remarks of the Right Honourable Beverley McLachlin, P.C. Chief Justice of Canada (2015 Canadian Bar Association Plenary), Supreme Court of Canada, August 14, 2015; George Beaton and Imme Kaschner, Remaking Law Firms: Why and How, June 7, 2016; Richard Susskind, Tomorrow’s Lawyers: An Introduction to Your Future, 2013; Deloitte, Future Trends for Legal Services: Global Research Study, June 2016; Benjamin L. Barton, Glass Half Full: The Decline and Rebirth of the Legal Profession, 2015; George Beaton and Imme Kaschner, Remaking Law Firms: Why and How, June 7, 2016; Jason Moyse and Aron Solomon, Remaking the law firm ecosystem, Canadian Lawyer, July 4, 2016;  Marilyn Odendahl, Trend of in-house counsel doing more internally likely to continue, Indiana Lawyer, October 19, 2016; Dr. Tara Chittenden, Capturing Technological Innovation in Legal Services, Law Society of England and Wales, LawSociety.org.uk, January 2017.

[16] Sandee Magliozzi, How Moving from ‘Best’ to ‘Next’ Practices Can Fuel Innovation, Santa Clara Law Faculty Publications, November 2015.

[17] CBA Legal Futures Initiative, Futures: Transforming the Delivery of Legal Services in Canada, Canadian Bar Association, 2014, page 6.

[18] John Cunningham, The New Normal for Law Firms, WordPress.com, January 23, 2017; Maniti Barot, 2017 ALSP Study: Understanding the growth and benefits of these new legal providers, Thomson Reuters.com (Legal Solutions UK & Ireland Blog), February 6, 2016; The ‘2017 Report on the State of the Legal Market’ Finds 10 Years of Stagnation Changing the Industry; Says Innovation Key to Law Firm Success, Georgetown Law.edu, January 12, 2017 [http://www.law.georgetown.edu/news/press-releases/legal-market-report-2017.cfm]; The 2017 Alternative Legal Service Study: Understanding the Growth and Benefits of These New Legal Providers, Thomson Reuters.com [http://legalsolutions.thomsonreuters.com/law-products/solutions/legal-outsourcing-services/outsourcing-insights/alternative-legal-service-provider-study-2017?cid=70113000000w4IC&chl=pr].

Law firms must find new ways of adapting to permanent and growing shifts in the way that corporate clients fill their legal needs. Clients are demanding lower costs per matter and disaggregating services, sending many tasks to alternative legal service providers, and when retaining traditional law firms often reducing the use of less efficient first- and second-year associates.  Alternative legal service providers is not just about lower cost, but also about access to specialized expertise and alternative modes of delivery.  They are increasingly putting fixed caps on total fees per matter as well, forcing law firms to figure out how they can be more efficient in process improvement and project management. Clients are also favoring firms that have figured out how to deliver services at fixed or predictable costs or even on contingent fee arrangements.

[19] CBA Legal Futures Initiative, Futures: Transforming the Delivery of Legal Services in Canada, Canadian Bar Association, 2014, page 6; John Cunningham, The New Normal for Law Firms, WordPress.com, January 23, 2017; The ‘2017 Report on the State of the Legal Market’ Finds 10 Years of Stagnation Changing the Industry; Says Innovation Key to Law Firm Success, Georgetown Law.edu, January 12, 2017.

[20] See, for example: Eric Sigurdson, A Way Forward: Disruptive Innovation, the Legal Profession, and the Client – what is the appropriate legal services delivery model in the ‘new normal’, Sigurdson Post, November 15, 2016:

“Since the 2008 financial crisis and the downturn of the world’s economy, the power balance between lawyers and their clients has shifted: ‘legal services have been demystified, and legal service consumers are more knowledgeable, sophisticated and connected than ever before’. Client power is rampantly on the ascendancy, intensifying price-down pressure on traditional law firms, in particular BigLaw, and speeding up legal innovation and the development of competitive NewLaw ‘alternative legal service providers’ (i.e. NewLaw models, with some overlap, include among others: secondment firms, law and business advice companies, law firm accordion companies, virtual law firms and companies, and innovative law firms and companies).  NewLaw has segmented the legal marketplace with its reliance on non-traditional and efficient business models, leveraging flexible work and billing arrangements, and disruptive business practices and technology (i.e. virtual workspace, value based fixed fee pricing, outsourcing, and legal technology). …

It is clear that, as law firms compete for legal business, they face new competition from ‘lean’ and innovative alternative legal service providers, including the large accounting firms (outside of the U.S.), in-house legal departments, legal process outsourcing companies (LPOs), and legal technology providers. …

Traditional law firms understand the expected competition from other law firms adopting innovative technology, processes and delivery. However, they now also face three new and different business model competitors: (1) corporate legal departments, which continue to expand dramatically as more work of increasing complexity is brought in-house ….”

[21] Eric Sigurdson, A Way Forward: Disruptive Innovation, the Legal Profession, and the Client – what is the appropriate legal services delivery model in the ‘new normal’, Sigurdson Post, November 15, 2016; Marilyn Odendahl, Trend of in-house counsel doing more internally likely to continue, Indiana Lawyer, October 19, 2016; Anthony Hilton, Why their profession’s failures mean lawyers don’t win top city jobs, Evening Standard, UK, September 22, 2016.

[22] Mitch Kowalski, McGill study reveals the ‘illusion’ of innovation at Canadian law firms, National Post, January 26, 2017; Aly R Haji, The Illusion of Innovation at Canadian Law Firms, McGill University (Faculty of Management, Supervised by Prof. Karl Moore, mentorship support and guidance from Mike Ross and strategy consultant Juniper), jnper.com, January 2017.

[23] Strategic and forward thinking insurance carriers are constantly exploring innovative ways to better manage their business, improve operational efficiency, grow their share of the market, improve customer service, and to control costs. See, for example: Opportunities await: How InsurTech is reshaping insurance, Global FinTech Survey, PWC (pwc.com), June 2016; Dennis Ferenzy, Kristen Silverberg, Conan French, Bart van Liebergen, Innovation in Insurance: How Technology is Changing the Industry, Institute of International Finance, September 2016; Sreedhar Alavalapati and Krishna Prasad, Here are 5 insurance tech trends you’ll see this year, Property Casualty 360, January 18, 2016; 2016 EY Canadian property and casualty insurance outlook, EY (ey.com), 2016; A New World of Opportunity: The insurance innovation imperative, KPMG (assets.kpmg.com), 2015; Emma Sheard, 3 Steps to Achieve Successful Insurance Claims Automation, LinkedIn, February 6, 2017 (citing The Humans Fight Back: The Hunan Touch in Insurance Claims Automation, Insurance Nexus, 2017); Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[24] Frank Strong, Litigation Costs Study: How P&C Shops are Keeping a Lid, Business of Law Blog.com (LexisNexis), September 15, 2015; Dan Ruderman, US Property and Casualty Litigation Management and Cost Control Strategies, Lexis Nexis Counsel Link, September 2015.

[25] Liability insurance policies include automobile insurance and homeowner insurance (which provide both First and Third Party coverages), and general liability, professional liability, and directors and officers liability (which provide Third Party coverages). In a typical third party liability claim, the insurance policy provides the insured indemnification for any judgement or settlement obtained by a third party up to the limits of the policy, and a provision requiring the insurer to defend the law suit against the insured for all claims falling within the coverage provided. As a general rule, the duty to defend is co-extensive with the duty to indemnify.

[26] Third Party Claim defined – Liability insurance is purchased by an insured (“first party”) from an insurer (“second party”) for protection against claims of another (“third party”). Liability insurance (i.e. automobile or home policy) protects the insured for litigated claims that come within the coverage of the insurance policy. A third party insurance claim is made by someone who is not the policyholder or the insurance company (the insurance company can be referred to as the second party). The most common type of third party insurance claim would be a liability claim. For example, if the insured policyholder causes an accident in his or her car on a highway and injures a passenger in the other vehicle, that passenger in the other car can file a legal claim against the at-fault insured/policyholder’s insurance company. In this case, because there is no contract/policy between the insurance company and the injured passenger (i.e. third party), the injured passenger is entitled to make legal claims for their injuries and damages against the at-fault insured (i.e. pain and suffering, loss of wages, medical expenses, etc.). A third party claim is commonly referred to as a liability claim because the at-fault insured policyholder is liable for the injuries suffered by someone else, the third party. If the insurance company is unable or unwilling to reach a settlement with the injured third party on behalf of their insured policyholder, the third party can bring the liability claim against the insured to the Courts re liability and damages. Examples: General Liability, Professional Liability, Directors and Officers Liability. [Note: homeowner insurance and automobile insurance are examples of insurance policies with both ‘first party’ and ‘third party’ coverages].

[27] First Party Claim defined – An insurance policy is a contract between two parties (insured and insurer). If the terms of the contract are not met, either party can sue. A first party insurance claim is between the insurance company and the policyholder. These claims are contractual by nature and are contingent on the specific language of the insurance policy (i.e. contract). An example of a first party insurance claim would be a homeowner who suffers fire damage to his or her home. In this case, the homeowner will make a claim with the insurance company to cover the damage and repairs. The insurance company will compensate the homeowner according to what is in the insurance policy.  Examples: Property, Fire, Casualty and Marine; Life Insurance; Disability Insurance; Title Insurance; Sureties and Bonds. [Note: homeowner insurance and automobile insurance are examples of insurance policies with both ‘first party’ and ‘third party’ coverages].

[28] Joseph P. Pettitta, The Way We Were, For the Defense (Defence Research Institute), November 2000; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999; Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[29] In re Weiss, Healy & Rea, 109 N.J. 246, 536 A.2d 266 (1988).

[30] Mark A. Cohen, Corporate Counsel: Consumer Becomes Provider (the Sequel), Legal Mosaic, May 23, 2016.

[31] Gabriella Khorasanne, From Captive Firms to Mini Firms: The Future of In-House Departments, Find Law, October 30, 2013. – “The use of captive firms in the insurance industry is both accepted and widespread”.

[32] Joseph P. Pettitta, The Way We Were, For the Defense (Defence Research Institute), November 2000.

[33] Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98. Also see: Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[34] Clayton Christensen, Disruptive Innovation, ClaytonChristensen.com, October 19, 2015; Clayton M. Christensen, Michael E. Raynor, Rory McDonald, What is Disruptive Innovation?, Harvard Business Review, December 2015; Richard Susskind, Tomorrow’s Lawyers: An Introduction to Your Future, 2013; Ray Worthy Campbell, ‘Rethinking Regulation and Innovation in the U.S. Legal Services Market’ (2012), 9 (1) NYU J L & Bus 1, 11; International Bar Association, ‘Times are a-changin’: disruptive innovation and the legal profession, IBA Legal Policy & Research Unit, May 2016; Canadian Bar Association, Futures: Transforming the Delivery of Legal Services in Canada, August 2014; Law Society of England and Wales, The Future of Legal Services, January 2016; ABA Commission on the Future of Legal Services, Report on the Future of Legal Services in the United States, August 2016.

[35] Dr. George Beaton, 10 reasons BigLaw managing partners are not sleeping very well, Beaton Capital, August 15, 2015.

[36] For example: until recently, the majority of corporate clients who managed lawyer performance, did so based solely on legal fees.  Sophisticated clients are now using “big data” to track and compare law firms and lawyers on important law firm / lawyer efficiency metrics such as: lawyer performance by jurisdiction and case type, cost per closed case, cost per phase of legal matter, cycle time, win/loss rates (for litigation), etc.

[37] Alternative service providers are referred to as NewLaw. NewLaw was devised as a term in 2013 by consultant Eric Chin. NewLaw has been defined as “any model, process, or tool that represents a significantly different approach to the creation or provision of legal services than what the legal profession traditionally has employed” [Jordan Furlong]. See, Ilina Rejeva, What is NewLaw and How It is Changing the Legal Industry Forever, LegalTrek, April 26, 2016. For example: NewLaw ‘alternative legal service provider’ models may include, for example: secondment firms, law and business advice companies, law firm accordion companies, virtual law firms and companies, and innovative law firms and companies.

[38] Joe Borstein, Alt.Legal: The Biglaw ‘Caste System’ – An Impediment to Innovation?, Above the Law, March 9, 2016; Altman Weil, 2016 Chief Legal Officer Survey [http://www.altmanweil.com/dir_docs/resource/e32f33b3-eeb3-4af6-82c8-4f6f7d9824f6_document.pdf]; The Larger the law department, the more likely it undertakes data analysis, JurisDatoris, November 13, 2016; Daniel Katz, Law + Tech + Design + Delivery: Observations Regarding Innovation in the Legal Industry, 2016, 366 slide presentation; International Bar Association, ‘Times are a-changin’: disruptive innovation and the legal profession, IBA Legal Policy & Research Unit, May 2016; Dr. George Beaton, 10 reasons BigLaw managing partners are not sleeping very well, Beaton Capital, August 15, 2015; Danny Ertel and Mark Gordon, Points of Law: Unbundling Corporate Legal Services to Unlock Value, Harvard Business Review, July-August 2012; Joanne Goodman, How to: Outsource Legal Work, Law Society Gazette (UK), August 12, 2013; Peter Archer, Outsourcing the law gets new look, Raconteur, April 24, 2014; Scott Forman, Perspective: How Law Firms Can Embrace Unbundling, Bloomberg Law (bol.bna.com), May 4, 2016:

“But the environment has changed drastically since the Great Recession, and clients now view the scope of legal services as a pyramid. They are still willing to work with traditional lawyers for matters that fall in the middle to the top of the pyramid – matters that require varying levels of specialized knowledge. However, they are demanding more cost-effective solutions for commoditized tasks. For example, some larger companies are starting to require more routinized work such as document review to be handled by contract attorneys.

Successfully integrating an unbundled service approach involves looking at each aspect of a legal matter and determining the most efficient and effective method to address each task, whether it be alternative staffing, technology solutions or a traditional partner/associate team. For instance, in a typical employment litigation matter handled through our Littler CaseSmart platform, we bring in FlexTime Attorneys who focus on specific aspects of the litigation process (i.e., fact investigation, research, discovery and brief writing), data analysts to scrub data and work on damage modeling, e-discovery attorneys, and project managers. FlexTime Attorneys and other legal professionals work side-by-side with associates and shareholders, with each attorney handling a discrete task as part of a larger team. The staffing model is designed to match the right person to the right task, while technology is also applied to streamline the process. The result is the cost savings increasingly demanded by companies, while the law firm continues to deliver high-quality legal work.”

[39] Eric Sigurdson, A Way Forward: Disruptive Innovation, the Legal Profession, and the Client – what is the appropriate legal services delivery model in the ‘new normal’, Sigurdson Post, November 15, 2016. See, Matt Fawcett, Things Lawyers Do …, LinkedIn.com, February 14, 2017.

[40] Peter Lattman, Slater & Gordon: The World’s First Publicly Traded Law Firm, Wall Street Journal, May 22, 2007; Slater & Gordon: The saga of a publicly listed law firm, CBA National (nationalmagazine.ca), August 31, 2016; Neil Rose, Gloomy Slater & Gordon sees shares tumble to all-time low after warning of UK trading difficulties, Legal Futures (legalfutures.co.uk), February 16, 2017.

[41] Legal Services Act, 2007, c. 29, sch. 13 (Eng.).

[42] See, Justin D. Petzold, Comment, Firm Offers: Are Publicly Traded Law Firms Abroad Indicative of the Future of the United States Legal Sector?, 2009 Wisconsin Law Review 67, 81–82; John S. Dzienkowski, The Future of Big Law: Alternative Legal Service Providers to Corporate Clients, 82 Fordham Law Review 6, 2014.

[43] See, Jessica D. Gabel & Paul R. Hage, The Belly of the Beast: Law Firm Insolvencies, Unfinished Business, and Jewel Waivers, Business Law Today, August 2013; John S. Dzienkowski, The Future of Big Law: Alternative Legal Service Providers to Corporate Clients, 82 Fordham Law Review 6, 2014; Allan Dodds Frank, The end of an era: Why Dewey & LeBoeuf went under, Fortune.com, May 29, 2012; Amanda Bronstad, Heller Ehrman’s fate echoes Brobeck’s collapse, National Law Journal, September 29, 2008; Nathan Koppel, The Rise and Fall of Thacher Proffitt, Wall Street Journal, March 2, 2009; Erin Guchs, The Eight Most Crushing Law Firm Implosions in the Nation’s History, Business Insider, June 24, 2012; Julius Melnitzer, Another U.K. law firm collapse costs 250 jobs, Financial Post, March 12, 2013; Mark Cohen, The King & Wood Mallesons Collapse: Déjà vu All Over Again, Forbes, December 17, 2016; Jeff Gray and Sophie Cousineau, Death of a law firm: Behind the collapse of Heenan Blaikie, The Globe and Mail, February 7, 2014; Theresa Teesco and Brian Hutchinson, How Heenan Blaikie’s stunning collapse started with a rogue African arms deal, National Post, February 14, 2014; Julius Melnitzer, Another Canadian Law Firm will follow Heenan Blaikie to collapse in 2014, Deloitte report said to predict, National Post (Financial Post), March 12, 2014.

[44] John S. Dzienkowski, The Future of Big Law: Alternative Legal Service Providers to Corporate Clients, 82 Fordham Law Review 6, 2014; Sandra Rubin, Law Firm Mergers: The Canadian Rationale, Lexpert.ca, January 18, 2016; Jonathan Ratner, Canada’s legal giant Gowlings gets new boss, Financial Post, November 9, 2015. Also see, Eric Sigurdson, A Way Forward: Disruptive Innovation, the Legal Profession, and the Client – what is the appropriate legal services delivery model in the ‘new normal’, Sigurdson Post, November 15, 2016.

[45] Maria Jose Esteban and Professor David Wilkins, The re-emergence of the Big 4 in law, Thomson Reuters, April 27, 2016; Attack of the Bean Counters – Lawyers Beware: the accountants are coming after your business, The Economist, March 19, 2015; Peta Tomlinson, Accountancy Firms Make the Move into Legal Services, ACCA, October 1, 2015; Thomas Connelly, Big Four accountancy giants are expanding their legal services arms globally – and solicitors are getting worried, Legal Cheek, January 28, 2016; Michael McKiernan, Accounting firm enters business law market, Law Times, March 14, 2016; Caleb Newquist, It’s Only a Matter of Time before Big 4 Firms Offer Legal Services in the US, Going Concern, May 9, 2016; Ellie Clayton, The Big Four threat to legal services, January 28, 2016; Heather Suttie, Adding More Legal Might to Canada’s Big Four, HeatherSuttie.ca, March 20, 2016; Mitch Kowalski, Deloitte’s deal with Conduit Law continues its march into legal services, National Post, March 22, 2016; Anthony Hilton, Why their profession’s failures mean lawyers don’t win top city jobs, Evening Standard, UK, September 22, 2016.

[46] International Bar Association, ‘Times are a-changin’: disruptive innovation and the legal profession, IBA Legal Policy & Research Unit, May 2016; Beverley McLachlin, Legal Profession in the 21^st Century: Remarks of the Right Honourable Beverley McLachlin, P.C. Chief Justice of Canada (2015 Canadian Bar Association Plenary), Supreme Court of Canada, August 14, 2015; George Beaton and Imme Kaschner, Remaking Law Firms: Why and How, June 7, 2016; Richard Susskind, Tomorrow’s Lawyers: An Introduction to Your Future, 2013; Canadian Bar Association, Futures: Transforming the Delivery of Legal Services in Canada, August 2014; Law Society of England and Wales, The Future of Legal Services, January 2016; ABA Commission on the Future of Legal Services, Report on the Future of Legal Services in the United States, August 2016.

[47] John Kelly, Partnership Impediment to Innovation in Law “The PIIL Factor” A Future Law Perspective, Linkedin.com May 19, 2015; Eric Sigurdson, A Way Forward: Disruptive Innovation, the Legal Profession, and the Client – what is the appropriate legal services delivery model in the ‘new normal’, Sigurdson Post, November 15, 2016.

[48] Altman Weil, 2016 Chief Legal Officer Survey [http://www.altmanweil.com/dir_docs/resource/e32f33b3-eeb3-4af6-82c8-4f6f7d9824f6_document.pdf]. Also see: Mitch Kowalski, McGill study reveals the ‘illusion’ of innovation at Canadian law firms, National Post, January 26, 2017; Aly R Haji, The Illusion of Innovation at Canadian Law Firms, McGill University (Faculty of Management, Supervised by Prof. Karl Moore, mentorship support and guidance from Mike Ross and strategy consultant Juniper), jnper.com, January 2017.

[49] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[50] Beyond Excellent Legal Services: How Law Firms Can add more Value, National Law Review, January 23, 2017.

[51] Danielle Goldstone, How are US GCs responding to shrinking legal budgets?, LaurnenceSimons.com, August 12, 2016. (citing 2016 study by HBR Consulting).

[52] Eric Sigurdson, Law Practice Management, Technology, and Innovation – a practical framework for law firms and legal departments, Sigurdson Post, September 19, 2016.

[53] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[54] Eric Sigurdson, General Counsel, Chief Legal Officers & In-House Counsel: Five New Year’s Resolutions – Leadership, Operations, Metrics, Technology, and External Counsel, Sigurdson Post, December 13, 2016.

[55] Marilyn Odendahl, Trend of in-house counsel doing more internally likely to continue, Indiana Lawyer, October 19, 2016; Kristen Rasmussen, Can In-House Counsel Be Trusted with High-Stakes Litigation? Macy’s Thinks So, Corporate Counsel, November 8, 2016.

[56] Kristen Rasmussen, Can In-House Counsel Be Trusted with High-Stakes Litigation? Macy’s Thinks So, Corporate Counsel, November 8, 2016; Anthony Hilton, Why their profession’s failures mean lawyers don’t win top city jobs, Evening Standard, UK, September 22, 2016 (“allowed some of their best brains to move in-house as general counsel in the biggest companies, taking he most interesting legal advisory work with them”); Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort Trial and Insurance Practice, American Bar Association, Fall 2001; Mallen and Smith, Legal Malpractice (4^th ed): Chapter 28, “staff or house counsel”; R. Jeffrey Kelsey, Building an In-House Trial Team (Federal Express), Federation.org; IBM Watson Parks its AI Tank on Legal Compliance Lawn in New Venture, Artificial Lawyer: AI and Legal Automation News, September 30, 2016 [https://artificiallawyer.com/2016/09/30/ibm-watson-parks-its-tank-on-legal-compliance-sector-lawn-in-new-venture/]; Ron Friedmann, Automating Legal Advice: AI and Expert Systems, Bloomberg Law (bol.bna.com), January 22, 2106; Joe Mont, Rise of the machines: how artificial intelligence could revolutionize compliance, Compliance Week, August 2, 2016; Greg Wildisen, Is artificial intelligence the key to unlocking innovation in your law firm?, Legal Week, November 12, 2015.

[57] Mark A. Cohen, Corporate Counsel: Consumer Becomes Provider, Legal Mosaic, May 17, 2016.

[58] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Joseph P. Pettitta, The Way We Were, For the Defense (Defence Research Institute), November 2000; Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999; Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[59] Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98:

“Liability insurance companies began using staff attorneys to defend lawsuits against policyholders at least a century ago. [FN98] One company boasts of establishing its Los Angeles, California staff counsel office in 1947, “long before the current concern over deteriorating relationships between insurance carriers and the defense bar.” [FN99] Another reports that its operation “began back in the 1930’s.” [FN100] Many insurers also have *238 longstanding relationships with so-called captive law firms. These are nominally outside firms that devote one hundred percent of their time to handling a particular insurer’s cases.” …

[FN98]. Affidavit of Oliver B. Dickins, Jr., Deputy General Counsel of the Travelers Insurance Company (Oct. 27, 1993), submitted in In re Petition of Youngblood, 895 S.W.2d 322 (Tenn. 1995) [hereinafter Dickins Affidavit] (stating that “Travelers [Insurance Company] actually began its staff counsel program in 1892 in Metropolitan New York and has had experience in that location with staff counsel since that time”). Id. at ¶ 9. Another source suggests that Liberty Mutual also employed staff attorneys in the 1800’s. See State Farm Insurance Companies Claim Litigation Counsel 1 (unpublished manuscript, on file with author) [hereinafter State Farm].

[60] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort Trial and Insurance Practice, American Bar Association, Fall 2001. Also see, Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[61] Liberty Mutual Insurance Company opened its Canadian Staff Counsel office in Toronto in May 1998.

[62] Intact Insurance Company of Canada, Aviva Canada, TD Insurance, Desjardins General, State Farm Fire and Casualty, Chubb Insurance of Canada, Allstate Insurance Company of Canada, Travellers, Insurance Corporation of British Columbia, Axa Canada, etc. See: Arshy Mann, Canadian Lawyer’s Top 10 Insurance Defence boutiques, Canadian Lawyer Mag.com, January 5, 2015; Dawn Calleja, In-house grows up, Precedent (lawandstyle.ca), December 3, 2013.

[63] Jay Barry Harris (Fineman, Krekstein & Harris, P.C.), To Use Staff Counsel or Not to Use Staff Counsel – That is the Ethical Question, Martindale.com, December 5, 2006; Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001.

[64] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001. Also see, Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; Lawrence Borys, Ethical Dilemmas Presented to Insurers and the Defense Counsel they Hire: Use of In-house or Captive Counsel by Insurers, The Federation.org, 2003; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[65] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel – “reacting to an actual or threatened loss of business”; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001 – “one real issue is, of course, law practice economics”; Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[66] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[67] Most jurisdictions prohibit a corporation from the practice of law, except for using salaried lawyers to represent the entity itself. – Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[68] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[69] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel. Also see: William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[70] Note: Only three U.S. ‘staff counsel challenges’ have been upheld out of fifty States. Arkansas (2011), Kentucky (1996), and North Carolina (1986) have interpreted their statutes to prohibit Staff Counsel programs. See: Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; 27 LMPC 158, 2011 WL 892789 (discussion of recent Arkansas decision, with mention of the Kentucky and North Carolina decisions, disapproving the practice of having insurance company Staff Counsel represent insureds); Brown v. Kelton, 2011 WL (Ark. Mar. 03, 2011); Am. Ins. Ass n v. Kentucky Bar Assn, 917 S.W.2d 568 (Ky. 1996); Gardner v. North Carolina State Bar, 341 S.E.2d 517 (N.C. 1986). Also see, Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98.

[71] Charles Silver, Flat Fees and Staff Attorneys: Unnecessary Casualties in the Continuing Battle over the Law Governing Insurance Defense Lawyers, 4 Conn. Ins. L.J. 205, 252, 1997-1998. Also see, Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[72] American Bar Association Comm. on Ethics and Professional Responsibility, Formal Op. 282 (1950); Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001.

[73] ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1370 (1976); ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1402 (1977); Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001.

[74] ABA Standing Committee on Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; Lawrence Borys, Ethical Dilemmas Presented to Insurers and the Defense Counsel they Hire: Use of In-house or Captive Counsel by Insurers, The Federation.org, 2003; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[75] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001.

[76] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[77] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[78] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001.

[79] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel. Also see, News, Ronald E. Mallen Named “Lawyer of the Year” for Legal Malpractice Law for San Francisco, Hinshawlaw.com, August 18, 2014.

[80] Cincinnati Insurance Company v. Wills, 717 N.E. 2d 151 (Ind. Supreme Court 1999). Also see, Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[81] Ernst & Young Inc. v. Chartis Insurance Co. of Canada, 2014 ONCA 78, 118 O.R. (3d) 740 (Ont. C.A.), at para. 70;

[82] Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 3, 47-49, 83; Jay Barry Harris (Fineman, Krekstein & Harris, P.C.), To Use Staff Counsel or Not to Use Staff Counsel – That is the Ethical Question, Martindale.com, December 5, 2006; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.  See also, John Alan Appleman and Jean Appleman, Insurance Law and Practices, Section 4681 (1979); Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999; Jeffrey Thomas and Francis Mootz, The New Appleman on Insurance Law, Library Edition, #16.04 (Chapter by Paul Glad, William T. Barker, & Ronald Kent), LexisNexis, 2011.

[83] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 3, 83. Also see, Jeffrey Thomas and Francis Mootz, The New Appleman on Insurance Law, Library Edition, #16.04 (Chapter by Paul Glad, William T. Barker, & Ronald Kent), LexisNexis, 2011.

[84] Stephen Cavanah, Insurer Added as Third Party Under Insurance Act Permitted to Examine Insured for Discovery, Cavanagh.ca, November 17, 2008; Parlee v. Pembridge Insurance Co. 2005 NBCA 49 (CanLII), [2005] N.B.J. No. 174, 253 D.L.R. (4th) 182 (N.B.C.A.); Kapileshwar v. Sivarajah, 2008 CanLII 58154, para. 15 (Ont. S.C., Master)

[85] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004 – “a few markets, notably insurance for legal malpractice and directors and officers liability, commonly use contract terms that let the insured hire and direct the lawyer, at the insurer’s expense. If insureds in other markets were willing to pay the higher costs of that type of insurance, insurers would presumably compete to offer it”. Also see, Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 3, 83, 111-112, 133-138 (“Right to Select and Instruct Counsel”) – “liability insurance policies generally provide that the insurer has the exclusive right to select and instruct counsel to defend on behalf of the insured … in cases where the insurer acknowledges that the claim is covered under the policy, the insurer’s right to select and control counsel rarely presents any difficulty to the insured”; Jeffrey Thomas and Francis Mootz, The New Appleman on Insurance Law, Library Edition, #16.04 (Chapter by Paul Glad, William T. Barker, & Ronald Kent), LexisNexis, 2011.

[86] Jamie Caresey, Brian Heskamp, Jennifer Wasson, Is Three Company or A Crowd? Conflicts and the Tripartite Relationship, ABA Section of Litigation Coverage Litigation Committee Seminar (Potter Anderson.com), March 4-7, 2009; Michael Runyan, Ethical Issues in Liability Defense: How Do Insurers and Defense Counsel Properly Meet their Obligations to the Insured Client?, Lane Powell.com, 2009; Jay Barry Harris (Fineman, Krekstein & Harris, P.C.), To Use Staff Counsel or Not to Use Staff Counsel – That is the Ethical Question, Martindale.com, December 5, 2006;  A Survey of State Ethics Opinions Concerning the Tripartite Relationship, DRI Ethics Task Force, DRI.org, July 2002; ABA Committee on Ethics and Professional Responsibility Formal Opinion 96-403 (obligations of a lawyer representing an insured who objects to a proposed settlement within the policy limits) (August 2, 1996), in Formal and Informal ethics opinions 1983 through 1988 at 405 (ABA 2000); Douglas Richmond, Lost in the Eternal Triangle of Insurance Defense Ethics, 9 Georgetown Journal of Legal Ethics 475, at 518-519, 1996.

[87] Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 142-143:

“The relationship of the insurer, insured and defence counsel is unique. Although to the world at large it will appear that counsel is representing only the insured in the action, the fact is that in the course of that representation counsel will give advice to and take instructions from the insurer. Thus most American courts considering the question have held that defence counsel appointed by the insurer to defend the insured has two clients, the insurer and the insured. There is a minority view, however, with a substantial number of proponents, which holds that the only client is the insured. …

In Canadian jurisdictions other than British Columbia, the courts have been strangely silent on this issue. The only thing that can be safely said is that the insured is, at least, a client of defence counsel appointed by the insurer. Except in British Columbia, whether the insurer is also a client is still an open question”.

[88] Jamie Caresey, Brian Heskamp, Jennifer Wasson, Is Three Company or A Crowd? Conflicts and the Tripartite Relationship, ABA Section of Litigation Coverage Litigation Committee Seminar (Potter Anderson.com), March 4-7, 2009.

[89] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Michael Runyan, Ethical Issues in Liability Defense: How Do Insurers and Defense Counsel Properly Meet their Obligations to the Insured Client?, Lane Powell.com, 2009.

[90] Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 142-143:

“The relationship of the insurer, insured and defence counsel is unique. Although to the world at large it will appear that counsel is representing only the insured in the action, the fact is that in the course of that representation counsel will give advice to and take instructions from the insurer. Thus most American courts considering the question have held that defence counsel appointed by the insurer to defend the insured has two clients, the insurer and the insured. There is a minority view, however, with a substantial number of proponents, which holds that the only client is the insured. …

In Canadian jurisdictions other than British Columbia, the courts have been strangely silent on this issue. The only thing that can be safely said is that the insured is, at least, a client of defence counsel appointed by the insurer. Except in British Columbia, whether the insurer is also a client is still an open question”.

Also see, Jeffrey Thomas and Francis Mootz, The New Appleman on Insurance Law, Library Edition, #16.04 (Chapter by Paul Glad, William T. Barker, & Ronald Kent), LexisNexis, 2011.

[91] Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 145 – “the [insurers] undertake the defence in the name of the insured. Their duty and the duty of the solicitors is to defend him as an independent solicitor would”. Also see, Professor Silver and William Barker, The Professional Responsibilities of Insured Defense Counsel, LexisNexis, 2012.

[92] Jay Barry Harris (Fineman, Krekstein & Harris, P.C.), To Use Staff Counsel or Not to Use Staff Counsel – That is the Ethical Question, Martindale.com, December 5, 2006; ABA Committee on Ethics and Professional Responsibility Formal Opinion 96-403 (obligations of a lawyer representing an insured who objects to a proposed settlement within the policy limits) (August 2, 1996), in Formal and Informal ethics opinions 1983 through 1988 at 405 (ABA 2000).

[93] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004 – “in the small percentage of cases where the insurer and insured have inherently inconsistent interests in how the defence is managed, the insured is entitled to independent counsel. See, e.g. San Diego Fed. Credit Union v. Cumis Ins. Soc’y, 208 Cal. Rptr. 494 (Cal. Ct. App. 1984); Tank v. State Farm Fire & Cas. Co., 715 P.2d 1133 (Wash. 1986). As a result, insurer employee lawyers are used only in cases where there is no such conflict”.  See, Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 133-138 (“Right to Select and Instruct Counsel”), pp. 141-148 (“Duty of Counsel”); and Ontario Court of Appeal decision Brockton (Municipality) v. Frank Cowan Co. (2002), 57 O.R. (3d) 447: the right of an insurer to control the defence of any claim is not absolute. If a degree of divergence exists between the interests of the insurer and the insured, the insurer can be required to surrender control of the defence and pay for counsel retained by the insured:

[41]         LeBel J.A. concluded that the potential tension which inheres in the relationship between the insurer and the insured and which is manifested by the reservation of rights by the insurer is not per se sufficient to require the insurer to surrender control of the defence. It would too quickly cost the insurer the right it contracted for. Rather, the focus must be on the mandate given by the insurer to the counsel it appoints to conduct the defence. Do the circumstances of the particular case create a reasonable apprehension of conflict of interest if that counsel were to act for both the insurer and the insured in defending the action?  If the insurer puts counsel in a position of having conflicting mandates it must surrender control of the defence to an insured who wishes to retain its own counsel paid for by the insurer. [42]         In coming to this conclusion, LeBel J.A. noted that American jurisprudence had moved towards a similar position and away from the broader basis for shifting control of the defence to the insured that was articulated in Cumis. For example, after Cumis, in Foremost Insurance Co. v. Wilks, 253 Cal. Rptr. 596, (1988), the California Court of Appeal made clear that not every case where the insurer elects to defend the insured under a reservation of rights creates a conflict of interest requiring the insurer to furnish independent counsel. If the reservation of rights arises because of coverage questions which depend upon an aspect of the insured’s own conduct that is in issue in the underlying litigation, a conflict exists. On the other hand, where the reservation of rights is based on coverage disputes which have nothing to do with the issues being litigated in the underlying action, there is no conflict of interest requiring independent counsel paid for by the insurer. [43]         I agree with the approach taken in Zurich and Foremost. The issue is the degree of divergence of interest that must exist before the insurer can be required to surrender control of the defence and pay for counsel retained by the insured. The balance is between the insured’s right to a full and fair defence of the civil action against it and the insurer’s right to control that defence because of its potential ultimate obligation to indemnify. In my view, that balance is appropriately struck by requiring that there be, in the circumstances of the particular case, a reasonable apprehension of conflict of interest on the part of counsel appointed by the insurer before the insured is entitled to independent counsel at the insurer’s expense. The question is whether counsel’s mandate from the insurer can reasonably be said to conflict with his mandate to defend the insured in the civil action. Until that point is reached, the insured’s right to a defence and the insurer’s right to control that defence can satisfactorily co-exist.

[94] William Barker, Gregory Miller, Joseph Jean, Insurer Litigation Guidelines: Ethical Litigation Guidelines: Ethical Issues for Insurer-Selected and Independent Defence Counsel, ABA Section of Litigation 2012 Insurance Coverage Litigation Committee CLE Seminar, March 1-3, 2012 (Lowenstein.com), March 2012. Also see, Professor Silver and William Barker, The Professional Responsibilities of Insured Defense Counsel, LexisNexis, 2012.

[95] Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 138, 144.

[96] Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 142. Also see: Zurich of Canada v. Renaud & Jacob, [1996] A.Q. No 2670 R.J.Q. (C.A.); Brockton (Municipality) v. Frank Cowan Co., [2002] O.J. No. 20, 57 O.R. (3d) 447 (C.A.); Parlee v. Pembridge Insurance Co., 2005 NBCA 49 (CanLII), [2005] N.B.J. No. 174, 22 C.C.L.I. (4^th) 223 (C.A.).

[97] Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 138, 144. Also see, Professor Silver and William Barker, The Professional Responsibilities of Insured Defense Counsel, LexisNexis, 2012.

[98] Zurich of Canada v. Renaud & Jacob, [1996] A.Q. No. 2670 R.J.Q. 2160 (C.A.); Brocton (Municipality) v. Frank Cowan Co., [2002] O.J. No. 20, 57 O.R. (3) 447 (C.A.), para. 40; Parlee v. Pembridge Insurance Co., 2005 NBCA 49 (CanLII), [2005] N.B.J. No. 174, 22 C.C.L.I. (4^th) 223 (C.A.); Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 142. Also see, Professor Silver and William Barker, The Professional Responsibilities of Insured Defense Counsel, LexisNexis, 2012. But see, Professor Silver and William Barker, The Professional Responsibilities of Insured Defense Counsel, LexisNexis, 2012; William Barker, Gregory Miller, Joseph Jean, Insurer Litigation Guidelines: Ethical Litigation Guidelines: Ethical Issues for Insurer-Selected and Independent Defence Counsel, ABA Section of Litigation 2012 Insurance Coverage Litigation Committee CLE Seminar, March 1-3, 2012 (Lowenstein.com), March 2012:

“[I]s the attorney employed simply to seek resolution of the matter at the least cost (as the insurer presumably desires) or is the attorney also to consider reputational and other interests of the policyholder which might be injured by what the policyholder might consider an improvident settlement. If only the monetary stakes are to be considered, that is a representation whose objectives are limited.

Model Rule 1.2(a) requires a lawyer to follow client decisions about the objectives of the representation, including acceptance of settlements. But limitations of the objectives require not only client consent, but prior “consultation,” in which the client must receive “information sufficient to permit the client to appreciate the significance of the matter in question.” …

So, “[i]f the lawyer is to proceed with the representation of the insured at the direction of the insurer, the lawyer must make appropriate disclosure sufficient to apprise the insured of the limited nature of his representation as well as the insurer’s right to control the defense . . . .” Even though the insurer’s rights to control the defense and settle at its discretion are set forth in the insurance policy, the opinion found that the lawyer cannot “assume that the insured understands or remembers, if he ever read, the insurance policy, or that the insured understands that his lawyer will be acting on his behalf, but at the direction of the insurer without further consultation with the insured.” Accordingly, these points must be covered in the lawyer’s consultation with the policyholder.

The opinion expressed the view that this disclosure need not be unduly formal, presumably because it thought that “in the vast majority of cases the insured will have no objection to proceeding in accordance with the terms of his insurance contract.” Specifically, it concluded that the necessary information could be communicated in a short letter. In its view, “[t]he insured manifests consent to the limited representation by accepting the defense offered by the insurer after being advised of the terms of the representation offered.”

The letter contemplated by the opinion would state “that the lawyer intends to proceed at the direction of the insurer in accordance with the terms of the insurance contract and what this means to the insured.” All that is necessary is “that the insured be clearly apprised of the limitations of the representation offered by the insurer and that the lawyer intends to proceed in accordance with the directions of the insurer.”

[99] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; William Barker, The Tripartite Relationship and Protection of the Insured: is there a problem?, 21 Insurance Litigation Reporter 533, 1999; Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 28-29, 111-112 (“The Scope of the Duty to Defend”), pp. 112-116 (“The Duty to Settle”), pp. 141-148 (“Duty of Counsel”) – in appropriate cases, “in both the United States and Canada … insurers have been held liable in circumstances where they have refused a settlement offer within the policy limits, and an excess judgment has gone against the insured”.

[100] Jay Barry Harris (Fineman, Krekstein & Harris, P.C.), To Use Staff Counsel or Not to Use Staff Counsel – That is the Ethical Question, Martindale.com, December 5, 2006.

[101] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001.

[102] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004. Also see: Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Jamie Caresey, Brian Heskamp, Jennifer Wasson, Is Three Company or A Crowd? Conflicts and the Tripartite Relationship, ABA Section of Litigation Coverage Litigation Committee Seminar (Potter Anderson.com), March 4-7, 2009.

[103] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004. Also see: Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Joseph P. Pettitta, The Way We Were, For the Defense (Defence Research Institute), November 2000; Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[104] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[105] Joseph P. Pettitta, The Way We Were, For the Defense (Defence Research Institute), November 2000.

[106] An insurer’s goals in the use of staff counsel are to save money over the cost of external counsel, and includes more efficient litigation handling with equally good results. One savings is the elimination of the profit margin of external counsel: see, Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[107] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[108] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[109] Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98. Also see: Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[110] Joseph P. Pettitta, The Way We Were, For the Defense (Defence Research Institute), November 2000.

[111] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[112] Note: In fairness, many defense lawyers understand that the shift to staff counsel is a matter of economics. They see expanding staff counsel operations as a sound response to higher litigation expenses. Properly managed by senior litigation management lawyers, staff counsel cost less than outside firms, partly because of lower personnel and marketing costs, as well as the absence of “partner [profits].” And staff counsel operations are typically free of economic incentives to prolong cases in order to increase billing levels. See: Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98. See for example of discussion:  Litan & Salop, More Value for the Legal Dollar: A New Look At Attorney-Client Fees and Relationships (ABA 1996) (citing Commerce Department data) (prepared for The Section of Litigation Program, Value Billing and Gaining A Competitive Advantage in the Legal Marketplace, 1992 ABA Annual Meeting, Aug. 9-12, 1992, San Francisco, CA); Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[113] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel. Also see: Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98; Ronald E. Mallen, Defense by Salaried Counsel: A Bane or a Blessing?, 61 Defence Counsel Journal 518, 518 (1994) (stating that “[m]ost critics” of staff counsel operations “are other lawyers-usually defense lawyers”); Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[114] Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98. See: Ronald E. Mallen, Defense by Salaried Counsel: A Bane or a Blessing?, 61 Defence Counsel Journal 518, 518 (1994) (stating that “[m]ost critics” of staff counsel operations “are other lawyers-usually defense lawyers”).

[115] Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[116] Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98. See: Ronald E. Mallen, Defense by Salaried Counsel: A Bane or a Blessing?, 61 Defence Counsel Journal 518, 518 (1994) (stating that “[m]ost critics” of staff counsel operations “are other lawyers-usually defense lawyers”); Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[117] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Jay Barry Harris (Fineman, Krekstein & Harris, P.C.), To Use Staff Counsel or Not to Use Staff Counsel – That is the Ethical Question, Martindale.com, December 5, 2006; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[118] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; Jamie Caresey, Brian Heskamp, Jennifer Wasson, Is Three Company or A Crowd? Conflicts and the Tripartite Relationship, ABA Section of Litigation Coverage Litigation Committee Seminar (Potter Anderson.com), March 4-7, 2009.

[119] ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003.

[120] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; Lawrence Borys, Ethical Dilemmas Presented to Insurers and the Defense Counsel they Hire: Use of In-house or Captive Counsel by Insurers, The Federation.org, 2003; ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003.

[121] Note: this requirement may not be limited to staff counsel. Outside counsel with a regular relationship with the insurer, should disclose that fact, as a regular relationship involving repeated retentions could give the insurer the ability to impact outside counsel’s professional judgment. See: William T. Barker, Gregory D. Miller, Joseph D. Jean, Insurer Litigation Guidelines: Ethical Issues for Insurer-Selected and Independent Defense Counsel, ABA Insurance Coverage Litigation Committee, CLE Seminar, March 1-3, 2012, page 12.

[122] Lawrence Borys, Ethical Dilemmas Presented to Insurers and the Defense Counsel they Hire: Use of In-house or Captive Counsel by Insurers, The Federation.org, 2003; ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003; ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1370 (1976); ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1402 (1977); American Bar Association Comm. on Ethics and Professional Responsibility, Formal Op. 282 (1950).

[123] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012. See: Gafcon Inc. v. Ponsor & Assoc., 2002, 120 Cal Rptr.2d 392, 98 Cal. App. 4^th 1388, 2002 WL 1175009, (Cal. Ct. App.); Governing Conduct of Attorneys in Florida, 220 So. 2d 6 (Fla. 1969); Coscia v. Cunningham, 250 Ga. 521, 299 S.E. 2d 880 (1983); Bowers v. State Farm Mut. Auto. Ins. Company, 403 Ill. App. 3d 173, 342 Ill. Dec. 480, 932 N.E. 2d 607 (1^st Dist. 2010), appeal denied, 238 Ill. 2d 648, 347 Ill. Dec. 249, 942 N.E. 2d 452 (2010); Kittay v. Allstate Ins. Co., 78 Ill. App. 3d 335, 33 Ill. Dec. 867, 397 N.E. 2d 200 (1^st Dist. 1979) (S.H.A. ch. 32 P 411 authorizes insurance companies to defend insureds); Cincinnati Ins. Co. v. Wills, 717 N.E. 2d 151 (Ind. 1999); Mourad v. Automobile Club Ins. Ass’n, 186 Mich. App. 715, 465 N.W. 2d 395, 6 I.E.R. Cas. (BNA) 193, 121 Lab. Cas. (CCH) P 56861 (1991) (disapproved of on unrelated grounds by, Phillips v. Butterball Farms Co., 448 Mich. 239, 531 N.W. 2d 144, 10 I.E.R. Cas (BNA) 729 (1995)); In re Allstate Ins. Co., 722 S.W. 2d 947 (Mo. 1987); Joplin v. Denver-Chicago Trucking Co., 329 F. 2d 396 (8^th Cir. 1964); Travellers Ins. Co. v. State Ins. Fund, 155 Misc. 2d 542, 588 N.Y.S. 2d 973 (Ct. Cl. 1992); Cincinnati Bar Assn. v. Allstate Ins. Co.,  100 Ohio St. 3d 1514, 2003 Ohio 6460, 800 N.E. 2d (2003), Strother v. Ohio Cas. Ins. Co., 14 Ohio Op. 139, 28 Ohio L. Abs. 550, 5 Ohio Supp. 362 (C.P. 1939); Petition of Youngblood, 895 S.W. 2d 322 (Tenn. 1995); Unauthorized Practice of Law Committee v. Nationwide Mut. Ins. Co., 155 S.W. 3d 590 (Tex. App. San Antonio 2004), reh’g overruled (Jan. 14, 2005); Unauthorized Practice of Law Committee v. American Home Assur. Co., 51 Tex Sup. Ct. J. 590, 2008 WL 821034 (Tex. 2008); Spratley v. State Farm Mut. Auto. Ins. Co., 2003 UT 39, 78 P. 3d 603 (Utah 2003).

[124] ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003; ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1370 (1976); ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1402 (1977); American Bar Association Comm. on Ethics and Professional Responsibility, Formal Op. 282 (1950). See: Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012. Also See: Alabama State Bar Disciplinary Commission, Op. 2007-01 (2007); Alabama State Bar, Ethics Opinion 81-533 (1981); Alaska Bar Association Ethics Committee, Opinion No. 99-3 (1999); Arizona State Bar Association Ethics Committee, Opinion 75-4 (1975); Cal. Standing Comm. Prof. Resp. & Conduct, Formal Opinion No. 1987-91; Maryland State Bar Association Committee on Ethics, Opinion 00-46 (2000); Michigan State Bar, Committee on Professional and Judicial Ethics, Opinion CI-1146, June 19, 1986 (as long as the attorney withdraws if the attorney is prevented from exercising independent professional judgement); State Bar of Michigan, Committee on Unauthorized Practice of Law, Op. Sept. 22, 1969; N.J. Supreme Court on Unauthorized Practice , Supp. to Opinion 23 (Aug. 26, 1996); New Jersey Supreme Court Committee on Unauthorized Practice, Opinion 23, 114 N.J.L.J. 421 (1984) (use of house counsel to defend insureds is not wrongful practice of law); New York State Bar Association, Unauthorized Practice of Law Committee, Opinion 13 (1970); New York State Bar Association Professional Ethics Committee, Opinion 109 (1969); Philadelphia Bar Association, Op. 86-108 (1987); Virginia Unauthorized Practice Op. 60 (1996); Virginia State Bar Standing Committee on Legal Ethics, Opinion 598 (1985); West Virginia State Bar Lawyer Disciplinary Board, Opinion 99-01 (1999); Ethical Propriety of Insurance Company Captive Law Firms, 1999 Sep. W. Va. Law 20.

[125] Gafcon Inc. v. Ponsor & Assoc., 2002, 120 Cal Rptr.2d 392, 98 Cal. App. 4^th 1388, 2002 WL 1175009, (Cal. Ct. App.); In re Allstate Ins. Co., 722 S.W.2d 947 (Mo. 1987); Cincinnati Insurance Company v. Wills, 717 N.E.2d 151 (1999); Accord Strother v. Ohio Cas. Ins. Co., 14 Ohio Op. 139, 28 Ohio L. Abs. 550, 5 Ohio Supp. 362 (C.P. 1939); United Services Auto. Ass’n v. Zeller, 135 S.W. 2d 161 (Tex. Civ. App. San Antonio 1939), writ dismissed, judgment correct. See: 27 LMPC 158, 2011 WL (L.M.P.C.) (providing a comprehensive listing of citations supporting the use of Staff Counsel). Also see: Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[126] Charles Silver, Flat Fees and Staff Attorneys: Unnecessary Casualties in the Continuing Battle over the Law Governing Insurance Defense Lawyers, 4 Conn. Ins. L.J. 205, 252, 1997-1998 –  Re Am. Ins. Ass n v. Kentucky Bar Assn, 917 S.W.2d 568 (Ky. 1996):

“With outside defense lawyers and plaintiffs’ attorneys allied against them, it is surprising that challenges to staff counsel operations have fared as poorly as they have. The vast majority of opinions issued by courts and advisory bodies permit staff attorneys to defend liability suits against insureds. Only two states prohibit the practice. North Carolina struck first in Gardner v. North Carolina State Bar, a 1986 decision. Kentucky followed suit a decade later in AIA.

Why did the Kentucky Supreme Court embrace the minority view? The short answer is that court was not persuaded to change existing Kentucky law. In 1981, the Kentucky Unauthorized Practice of Law Committee issued Opinion U-36, prohibiting insurers from using staff attorneys to represent insureds. There had been no staff counsel offices in the state since then, and the deadline for challenging Opinion U-36 via the courts had long ago expired. The AIA opinion indicates that the court might have invalidated U-36 anyway if the insurance industry had pointed to a change in circumstances that generated a pressing need for staff counsel operations. As it was, insurers could not show that any matter of consequence had changed. The court therefore upheld Opinion U-36, saying “if it ain’t broke, don’t fix it.”

Resort to cliché is often a symptom of a failure of intellect. Such a failure clearly occurred in AIA. To say that a machine “ain’t broke” is to assert that it is operating within acceptable limits. To say that the law governing insurance defense arrangements “ain’t broke” is to say the same thing. This naturally leads one to ask how the Justices knew that insurance defense arrangements are operating acceptably in Kentucky. It is impossible to say. They asserted that everything is hunky-dory but they offered no factual basis for this assessment.

What symptoms of inadequate performance should one expect to see when insurance defense arrangements deteriorate? Riots in the streets? Headlines in the press? Gunfights, or at least lawsuits, between insurers and defense lawyers? State bar investigations? Declines in insurers’ profits? A hard liability insurance market? A shift from unlimited defense cost coverage to coverage within limits? Insurers leaving the state? Activity of some kind in the legislature or the insurance commission? None of the above? Unless one knows what symptoms to look for, how can one know whether the law is “broke”?

In my judgment, the clearest and most reliable signal that defense arrangements in Kentucky are not working well is that insurers want to change them and are willing to bear the costs of doing so. It is expensive for liability carriers to run staff counsel offices for many of the same reasons it is costly for lawyers to start up and maintain firms. It is also risky. Insurers must gamble on being able to use staff attorneys efficiently, which means, among other things, being able to keep them busy handling claims. Because some insurance companies have taken this gamble and lost, the willingness of others to set up staff counsel offices is strong evidence of their belief that large economic savings are at stake. Kentucky law is “broke,” then, because it prevents insurers from providing for their legal needs efficiently.”…

Nor do interest conflicts prevent staff attorneys from representing carriers and policyholders concurrently. Like outside defense lawyers, staff attorneys defend claims. They look for weaknesses in liability suits against insureds in an effort to minimize the amounts likely to be lost at trial or paid in settlement. This activity benefits carriers and insureds, including, in most instances, carriers and insureds who disagree about coverage, settlement, or other matters. Only conflicts concerning the manner in which claims are defended make joint representation inappropriate. Such conflicts can arise, but they are rare. And when they do arise, their implications for staff attorneys and outside defense lawyers are the same because all attorneys operate under the same conflict rules. When outside defense lawyers can concurrently represent carriers and insureds, staff attorneys can too.

Why did the Kentucky Supreme Court conclude that staff attorneys cannot be trusted to protect insureds? It did so because the Kentucky State Bar Association urged this position upon it. This simply forces one to why the Bar held this view. This is a serious question. The Kentucky Bar Association gave staff attorneys a slap in the face. It questioned their commitment to norms of professional conduct that forbid lawyers from abandoning their clients. One who would level so serious an accusation at so large a group of lawyers should have evidence to support it.

The Kentucky Bar had no evidence. It had neither statistics nor anecdotes showing that any staff attorney ever harmed an insured. The omission is striking. There are innumerable reported cases in which outside lawyers of various kinds are found to have wrongly favored one co-client over another. But the State Bar of Kentucky could not identify a single case, much less an empirical study, showing that any staff attorney ever deserted a policyholder under pressure from an insurer. Nothing brought forward by the Kentucky Bar Association would have disproved the assertion that staff attorneys favor policyholders over insurers one hundred percent of the time.”

[127] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012. See: 27 LMPC 158, 2011 WL 892789 (discussion of recent Arkansas decision, with mention of the Kentucky and North Carolina decisions, disapproving the practice of having insurance company Staff Counsel represent insureds); Brown v. Kelton, 2011 WL (Ark. Mar. 03, 2011); Am. Ins. Ass n v. Kentucky Bar Assn, 917 S.W.2d 568 (Ky. 1996); Gardner v. North Carolina State Bar, 341 S.E.2d 517 (N.C. 1986). Also see, Charles M. Silver, Flat Fees and Staff Attorneys; Unnecessary Casualties in the Continuing Battle Over the Law Governing Insurance Defense Counsel, 4 Connecticut Insurance Law Journal 205, 1997-98. Note: see analysis in footnote #126 re conclusory analysis is tantamount to no analysis.

[128] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel. Also see: William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[129] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Cincinnati Insurance Company v. Wills, 717 N.E. 2d 151 (Ind. Supreme Court 1999).

[130] Gafcon Inc. v. Ponsor & Assoc., 2002, 120 Cal Rptr.2d 392, 18 (Cal. Ct. App.); Also see: William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[131] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004. Also see, Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel. For example of external defence counsel inappropriately acting against the interest of their insured client, at instruction of insurer, see: Mallory v. Werkman Estate, 2015 ONCA 71, para. 28-33 (Ontario Court of Appeal):

“motion to remove [defence] counsel acting for [insured] defendant — Motion granted — [insured] Defendant was entitled to retain independent [defence] counsel of his own choice, with all reasonable legal fees and disbursements to be paid by [insurer] R — Removing [defence] counsel for [insured] defendant was necessary to protect integrity of administration of justice and to avoid appearance of impropriety — There was clear conflict between interests of [insured] defendant on one hand and interest of insurer on other, and inescapable conclusion that defence counsel was acting on instruction of insurer to advance ground of appeal contrary to interests of insured [defendant].”

[132] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001. Also see, William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[133] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel. See: Gafcon Inc. v. Ponsor & Assoc., 2002, 120 Cal Rptr.2d 392, 98 Cal. App. 4^th 1388, 2002 WL 1175009, (Cal. Ct. App.); Governing Conduct of Attorneys in Florida, 220 So. 2d 6 (Fla. 1969); Coscia v. Cunningham, 250 Ga. 521, 299 S.E. 2d 880 (1983); Bowers v. State Farm Mut. Auto. Ins. Company, 403 Ill. App. 3d 173, 342 Ill. Dec. 480, 932 N.E. 2d 607 (1^st Dist. 2010), appeal denied, 238 Ill. 2d 648, 347 Ill. Dec. 249, 942 N.E. 2d 452 (2010); Kittay v. Allstate Ins. Co., 78 Ill. App. 3d 335, 33 Ill. Dec. 867, 397 N.E. 2d 200 (1^st Dist. 1979) (S.H.A. ch. 32 P 411 authorizes insurance companies to defend insureds); Cincinnati Ins. Co. v. Wills, 717 N.E. 2d 151 (Ind. 1999); Mourad v. Automobile Club Ins. Ass’n, 186 Mich. App. 715, 465 N.W. 2d 395, 6 I.E.R. Cas. (BNA) 193, 121 Lab. Cas. (CCH) P 56861 (1991) (disapproved of on unrelated grounds by, Phillips v. Butterball Farms Co., 448 Mich. 239, 531 N.W. 2d 144, 10 I.E.R. Cas (BNA) 729 (1995)); In re Allstate Ins. Co., 722 S.W. 2d 947 (Mo. 1987); Joplin v. Denver-Chicago Trucking Co., 329 F. 2d 396 (8^th Cir. 1964); Travellers Ins. Co. v. State Ins. Fund, 155 Misc. 2d 542, 588 N.Y.S. 2d 973 (Ct. Cl. 1992); Cincinnati Bar Assn. v. Allstate Ins. Co.,  100 Ohio St. 3d 1514, 2003 Ohio 6460, 800 N.E. 2d (2003), Strother v. Ohio Cas. Ins. Co., 14 Ohio Op. 139, 28 Ohio L. Abs. 550, 5 Ohio Supp. 362 (C.P. 1939); Petition of Youngblood, 895 S.W. 2d 322 (Tenn. 1995); Unauthorized Practice of Law Committee v. Nationwide Mut. Ins. Co., 155 S.W. 3d 590 (Tex. App. San Antonio 2004), reh’g overruled (Jan. 14, 2005); Unauthorized Practice of Law Committee v. American Home Assur. Co., 51 Tex Sup. Ct. J. 590, 2008 WL 821034 (Tex. 2008); Spratley v. State Farm Mut. Auto. Ins. Co., 2003 UT 39, 78 P. 3d 603 (Utah 2003). See also: Desriusseaux v. Val-Roc Truck Corp., 230 A.D. 2d 704, 646 N.Y.S. 2d 161 (2d Dep’t 1996) (order upheld allowing in-house counsel to defend).

[134] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[135] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel. See: ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003; Oklahoma Legal Ethics Opinion No. 309 (March 27, 1998) (need to disclose any limitations on scope of representation); Pennsylvania Bar Association Committee of Legal Ethics and Professional Responsibility, Formal Opinion 96-196; Cal. Standing Comm. Prof. Resp. & Conduct, Formal Opinion No. 1987-91; Virginia State Bar Standing Committee on Legal Ethics, Opinion 598 (1985); Alabama State Bar, Ethics Opinion 81-533 (1981); New York State Bar Association, Unlawful Practice of Law Committee, Opinion 13 (1970); Arizona State Bar Association Ethics Committee, Opinion 75-4 (1975); New York State Bar Association Professional Ethics Committee, Opinion 109 (1969); American Bar Association Committee on Professional Ethics and Grievances, Formal Opinion 282 (1950).

[136] In re Rules Governing Conduct of Attorneys in Florida, 220 So. 2d 6 (Fla. 1969); ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003; American Home Assur. Co. v. Unauthorized Practice of Law Committee, 121 S.W. 3d 831, 2 A.L.R. 6^th 783 (Tex. App. Eastland 2003), review granted (April 8, 2005); Unauthorized Practice of Law Committee v. Nationwide Mut. Ins. Co., 155 S.W. 3d 590 (Tex. App. San Antonio 2004), reh’g overruled (Jan. 14, 2005); Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[137] Unauthorized Practice of Law Committee v. American Home Assurance. Co., 51 Tex. Sup. Ct. J. 590, 2008 WL 821034 (Tex. 2008); Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[138] In re Allstate Insurance Co., 722 S.W. 2d 947, 953 (Mo. 1987). Also see, Cincinnati Ins. Co. v. Wills, 717 N.E. 2d 162; In re Youngblood, 895 S.W. 2d 322 (Tenn. 1995).

[139] ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003. Also see: Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[140] Lawrence Borys, Ethical Dilemmas Presented to Insurers and the Defense Counsel they Hire: Use of In-house or Captive Counsel by Insurers, The Federation.org, 2003; ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003; ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1370 (1976); ABA Comm. on Ethics and Professional Responsibility, Informal Op. 1402 (1977); American Bar Association Comm. on Ethics and Professional Responsibility, Formal Op. 282 (1950).

[141] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[142] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[143] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Mourad v. Automobile Club Insurance Association, 186 Mich. App. 715, 465 N.W. 2d 395, 6 I.E.R. Cas. (BNA) 193, 121 Lab. Cas. (CCH) P 56861 (Michigan Court of Appeal, 1991) (disapproved of on other grounds by, Pillips v. Butterball Farms Co., 448 Mich. 239, 531 N.W. 2d 144, 10 I.E.R. Cas. (BNA) 729 (1995)).

[144] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[145] Staff counsel should be operating in their own identifiable office space, even if on company premises, with their own set of files and administrative staff and support system. — ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003; Lawrence Borys, Ethical Dilemmas Presented to Insurers and the Defense Counsel they Hire: Use of In-house or Captive Counsel by Insurers, The Federation.org, 2003; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004; Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[146] Staff counsel should be supervised by a lawyer whose sole responsibility is the staff counsel operation and is independent of the insurer’s claims operation: Michael Runyan, Ethical Issues in Liability Defense: How Do Insurers and Defense Counsel Properly Meet their Obligations to the Insured Client?, Lane Powell.com, 2009; Douglas Richmond, Lost in the Eternal Triangle of Insurance Defense Ethics, 9 Georgetown Journal of Legal Ethics 475, at 518-519, 1996.

[147] Staff counsel should be supervised by a lawyer whose sole responsibility is the staff counsel operation and is independent of the insurer’s claims operation: Michael Runyan, Ethical Issues in Liability Defense: How Do Insurers and Defense Counsel Properly Meet their Obligations to the Insured Client?, Lane Powell.com, 2009; Douglas Richmond, Lost in the Eternal Triangle of Insurance Defense Ethics, 9 Georgetown Journal of Legal Ethics 475, at 518-519, 1996. Also see, Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[148] ABA Standing Committee On Ethics & Professional Responsibility, Formal Opinion 03-430, Propriety of Insurance Staff Counsel Representing the Insurance Company and Its Insureds; Permissible Names for an Association of Insurance Staff Counsel, July 9, 2003; Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel; Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[149] Note: with respect to a “clear delineation of the scope of the retainer”, this is a reference to defence counsel representing the insured as their lawyer on the issues of liability and damages –  issues as to coverage, for example, must be considered to be outside the scope of defence counsel’s retainer. For a discussion on this topic, see Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 144-145 (“Avoiding Conflicts”).

[150] Gordon Hilliker, Liability Law in Canada, Fourth Edition, 2006, pp. 144 (“Avoiding Conflicts”); Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel. Also see, endnote # 102: William Barker, Gregory Miller, Joseph Jean, Insurer Litigation Guidelines: Ethical Litigation Guidelines: Ethical Issues for Insurer-Selected and Independent Defence Counsel, ABA Section of Litigation 2012 Insurance Coverage Litigation Committee CLE Seminar, March 1-3, 2012 (Lowenstein.com), March 2012; and, Professor Silver and William Barker, The Professional Responsibilities of Insured Defense Counsel, LexisNexis, 2012.

[151] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[152] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.

[153] Charles Silver, Flat Fees and Staff Attorneys: Unnecessary Casualties in the Continuing Battle over the Law Governing Insurance Defense Lawyers, 4 Conn. Ins. L.J. 205, 252, 1997-1998. Also See, William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004. For discussion of principles of professional responsibilities of defence counsel, see: Professor Silver and William Barker, The Professional Responsibilities of Insured Defense Counsel, LexisNexis, 2012.

[154] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[155] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel: “These developments, coupled with the increased ethical responsibilities imposed on defense counsel, generally, require that insurers structure the staff counsel operations comparable to law firms. In fact, the larger staff counsel operations are more analogous to the large, interstate law firms both in management, and in the ethical and professional problems that need to be anticipated and solved”.

[156] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[157] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004. See: Ron Carucci, Why Ethical People Make Unethical Choices, Harvard Business Review, December 16, 2016; Nick Hilborne, Major Study: Some in-house lawyers find their ethics ‘under pressure’, Legal Futures.co.uk, June 2, 2016; Lucinda, The ethics of lawyers – what makes them lose their moral compass?, The Attic (London), January 31, 2017; Professor Richard Moorhead, Mapping the Moral Compass: The relationship between in-house lawyers’ role, professional orientations, team cultures, organisational pressures, ethical infrastructure and ethical inclination, UCL Centre for Ethics and Law (ucl.ac.uk), June 2, 2016. Also see, for example only: Sessions once asked Yates about AG’s responsibility to say ‘no’ to a president, Fox News.com, January 31, 2017.

[158] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001.

[159] Debra Baker, A Grab for the Ball – Insurers are setting up their own lawyers to handle claims, leaving defense firms with nothing to show, ABA Journal, April 1999.

[160] Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel. Also see, News, Ronald E. Mallen Named “Lawyer of the Year” for Legal Malpractice Law for San Francisco, Hinshawlaw.com, August 18, 2014.

[161] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[162] Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001.

[163] Beverley McLachlin, Legal Profession in the 21^st Century: Remarks of the Right Honourable Beverley McLachlin, P.C. Chief Justice of Canada (2015 Canadian Bar Association Plenary), Supreme Court of Canada, August 14, 2015.

[164] John Kelly, Partnership Impediment to Innovation in Law “The PIIL Factor” A Future Law Perspective, Linkedin.com May 19, 2015

[165] Canadian Bar Association, Futures: Transforming the Delivery of Legal Services in Canada, August 2014. Also see: In re Op. No. 26 of the Comm. on the Unauthorized Practice of Law, 654 A.2d 1344, 1360–61 (N.J. 1995); Laurel A. Rigertas, The Legal Profession’s Monopoly: Failing to Protect Consumers, 82 Fordham Law Review 2683, 2014:

“There is a point at which an institution [regulator] attempting to provide protection to a public that seems clearly, over a long period, not to want it, and perhaps not to need it—there is a point when that institution must wonder whether it is providing protection or imposing its will. It must wonder whether it is helping or hurting the public.”

[166] Joseph P. Pettitta, The Way We Were, For the Defense (Defence Research Institute), November 2000.

[167] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[168] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[169] Frank Strong, Litigation Costs Study: How P&C Shops are Keeping a Lid, Business of Law Blog.com (LexisNexis), September 15, 2015; Dan Ruderman, US Property and Casualty Litigation Management and Cost Control Strategies, Lexis Nexis Counsel Link, September 2015.

[170] Frank Strong, Insurance: Legal and Claims Rate Metrics with Most Value, Business of Law Blog.com (LexisNexis), December 9, 2015 – “40% plan to expand Staff Counsel”; 2015 LexisNexis Property & Casualty ALAE Cost Containment Survey (U.S. P&C Law Departments Rate the Metrics they use to Manage Costs and Performance). Also see: Frank Strong, Litigation Costs Study: How P&C Shops are Keeping a Lid, Business of Law Blog.com (LexisNexis), September 15, 2015 “39% plan to increase staffing”; Dan Ruderman, US Property and Casualty Litigation Management and Cost Control Strategies, Lexis Nexis Counsel Link, September 2015.

[171] Frank Strong, Litigation Costs Study: How P&C Shops are Keeping a Lid, Business of Law Blog.com (LexisNexis), September 15, 2015; Dan Ruderman, US Property and Casualty Litigation Management and Cost Control Strategies, Lexis Nexis Counsel Link, September 2015.

[172] Frank Strong, Insurance: Legal and Claims Rate Metrics with Most Value, Business of Law Blog.com (LexisNexis), December 9, 2015 – “40% plan to expand Staff Counsel”; 2015 LexisNexis Property & Casualty ALAE Cost Containment Survey (U.S. P&C Law Departments Rate the Metrics they use to Manage Costs and Performance). – “What metrics are P&C legal and claims shops using to manage costs and performance? The data shows carriers tracks costs closely by case.  The total cost of an average case, legal expense per case and the number of days-to-resolution were all identified by more than 80% of respondents.  Here’s how the numbers break down:

• Average total cost of case (loss + legal costs): 84%
• Legal expense per case: 82%
• Cycle time (days to resolution): 82%
• Loss per litigated case: 77%
• Allocated loss adjustment expense (ALAE) as % loss ratio: 71%
• Allocated legal loss adjustment expense (ALLAE) as a % of loss ratio: 63%
• Average or median bill rate by claim type: 62%
• Staff vs. outside counsel outcomes: 51%
• AFA outcomes by fee type: 44%

“More than 60 percent of the claims departments surveyed report that they also track average or median bill rate by claim type,” according to the report, which suggested this measure is especially noteworthy. – “This metric cuts across both hourly rate discounts and staffing practices to provide an average rate”.

[173] William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[174] Cincinnati Insurance Company v. Wills, 717 N.E. 2d 151 (Ind. Supreme Court 1999). Also see, Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; William Barker, Laying the Foundations for Staff Counsel Representation of Insureds, Tort Trial & Insurance Practice Law Journal, Vol. 39, No. 3, pp. 897-946, Spring 2004.

[175] Note: Liberty Mutual Insurance Company included the role of Operations Managers in its Staff Counsel operations (home office and individual field offices) as far back as the 1990s. Also see: 2016 Legal Department In-Sourcing and Efficiency Report: The Keys to a More Effective Legal Department, Thomson Reuters – second annual survey of 429 attorneys and operational professionals working in corporate legal departments, examined their ongoing efforts to improve efficiency and productivity across their in-house teams; Blickstein Group’s 9^th Annual Law Department Survey, Findings from the Ninth Annual Law Department Operations Survey, December 2016.

[176] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; In re Weiss, Healy & Rea, 109 N.J. 246, 536 A.2d 266 (1988).

[177] Danielle Goldstone, How are US GCs responding to shrinking legal budgets?, LaurnenceSimons.com, August 12, 2016. (citing 2016 study by HBR Consulting)

[178] See, Eric Sigurdson, General Counsel, Chief Legal Offices & In-House Counsel: Five New Year’s Resolutions – Leadership, Operations, Metrics, Technology, and External Counsel, Sigurdson Post, December 13, 2016.

[179] CBA Legal Futures Initiative, Futures: Transforming the Delivery of Legal Services in Canada, Canadian Bar Association, 2014, page 6.

[180] International Bar Association, ‘Times are a-changin’: disruptive innovation and the legal profession, IBA Legal Policy & Research Unit, May 2016; Beverley McLachlin, Legal Profession in the 21^st Century: Remarks of the Right Honourable Beverley McLachlin, P.C. Chief Justice of Canada (2015 Canadian Bar Association Plenary), Supreme Court of Canada, August 14, 2015; George Beaton and Imme Kaschner, Remaking Law Firms: Why and How, June 7, 2016; Richard Susskind, Tomorrow’s Lawyers: An Introduction to Your Future, 2013; Canadian Bar Association, Futures: Transforming the Delivery of Legal Services in Canada, August 2014; Law Society of England and Wales, The Future of Legal Services, January 2016; ABA Commission on the Future of Legal Services, Report on the Future of Legal Services in the United States, August 2016.

[181] CBA Legal Futures Initiative, Futures: Transforming the Delivery of Legal Services in Canada, Canadian Bar Association, 2014, page 7. Note: pre Call to the Bar there are opportunities for training and education in the articling process, and the Law Practice Program (LPP) in Ontario. Post Call, there are opportunities for training and education within the Continuing Legal Education programs.

[182] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[183] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[184] Richard S. Granat and Stephanie Kimbro, The Teaching of Law Practice Management and Technology in Law Schools: A New Paradigm, Chicago-Kent Law Review, Vol. 88:3, page 757, 2013; CBA Legal Futures Initiative, Futures: Transforming the Delivery of Legal Services in Canada, Canadian Bar Association, 2014, page 7.

[185] Richard S. Granat and Stephanie Kimbro, The Teaching of Law Practice Management and Technology in Law Schools: A New Paradigm, Chicago-Kent Law Review, Vol. 88:3, page 757, 2013; CBA Legal Futures Initiative, Futures: Transforming the Delivery of Legal Services in Canada, Canadian Bar Association, 2014, page 7; Sandee Magliozzi, How Moving from ‘Best’ to ‘Next’ Practices Can Fuel Innovation, Santa Clara Law Faculty Publications, November 2015 –  “We need to develop the competencies lawyers and law students will need to anticipate and respond to an increasingly rapidly changing legal landscape”.

[186] Faisal Hoque, Why Innovation Matters in Politics and The Public Sector, Linkedin.com, October 30, 2016. Also see, Emma Sheard, 3 Steps to Achieve Successful Insurance Claims Automation, LinkedIn, February 6, 2017: – 1. Envisage the future of insurance with automation; 2. Identify automation opportunities; 3. Implement the necessary tools.

[187] See: 2016 Legal Department In-Sourcing and Efficiency Report: The Keys to a More Effective Legal Department, Thomson Reuters; Julie Sobowale, How artificial intelligence is transforming the legal profession, ABA Journal, April 1, 2016; Lenore Adkins, Study: Corporate Law Departments’ Spend on Software Set to Explode, Bloomberg Law (bol.bna.com), February 25, 2016. — Compiled by the legal software company Mitratech, the report is called “Catching the Wave: Legal Technology Spend at $3 billion and Growing.” It was based on a survey of 353 law firm and legal department “decision makers,” interviews with 15 leading industry experts and secondary research on legal industry software trends.

[188] A coherent and disciplined management approach is important for several reasons:

• To properly identify and exploit strategic opportunities in which technology or processes can actually enable innovation and ensure they are executed with the highest outcome at the lowest cost.
• Management of technology may be more important than the technology itself. The value in productivity improvements must converge investments in technology and processes with innovations in business practices. Within law firms, a program of continuing synergistic improvement initiatives may well outpace any single investment in technology, or any innovation in process or practice. A firm-wide perspective is required to ensure that specific technology and change initiatives are being managed as part of an overall program of productivity enhancement.
• Maximizing return on capital investment requires oversight of how well the new technology and/or processes are deployed to generate stakeholder value. For law firms and in-house legal departments, this refers to the design and execution of technology and process implementations that produce a cost savings or improved service delivery. Proper governance protects limited budget resources from being expended on technology or processes that are not implemented or utilized properly, and/or may lead nowhere.
• The strategic importance of information and the nature of current technologies have raised the stakes regarding privacy, security, and confidentiality. It’s vital that organizational leadership appreciate the material risks inherent in the creation and use of technology. Governance through management policies and procedures ensures that risk is accepted, assigned or deferred.

[189] Frank Strong, Benchmarking Corporate Legal Department Maturity, Business of Law Blog.com (LexisNexis), March 12, 2015; Frank Strong, 3 Drivers of Corporate Legal Operational Maturity, Business of Law Blog.com (LexisNexis), February 17, 2015 (citing a LexisNexis White Paper entitled Leveraging a Maturity Model to Achieve Operational Excellence). Also see, Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[190] Frank Strong, Insurance: Legal and Claims Rate Metrics with Most Value, Business of Law Blog.com (LexisNexis), December 9, 2015; 2015 LexisNexis Property & Casualty ALAE Cost Containment Survey (U.S. P&C Law Departments Rate the Metrics they use to Manage Costs and Performance). – “What metrics are P&C legal and claims shops using to manage costs and performance? The data shows carriers tracks costs closely by case.  The total cost of an average case, legal expense per case and the number of days-to-resolution were all identified by more than 80% of respondents.  Here’s how the numbers break down:

• Average total cost of case (loss + legal costs): 84%
• Legal expense per case: 82%
• Cycle time (days to resolution): 82%
• Loss per litigated case: 77%
• Allocated loss adjustment expense (ALAE) as % loss ratio: 71%
• Allocated legal loss adjustment expense (ALLAE) as a % of loss ratio: 63%
• Average or median bill rate by claim type: 62%
• Staff vs. outside counsel outcomes: 51%
• AFA outcomes by fee type: 44%

“More than 60 percent of the claims departments surveyed report that they also track average or median bill rate by claim type,” according to the report, which suggested this measure is especially noteworthy. – “This metric cuts across both hourly rate discounts and staffing practices to provide an average rate”.

[191] Dr. Tara Chittenden, Capturing Technological Innovation in Legal Services, Law Society of England and Wales, LawSociety.org.uk, January 2017.

[192] Mohanbir Sawhney, Putting Products into Services, Harvard Business Review, September 2016.

[193] Mohanbir Sawhney, Putting Products into Services, Harvard Business Review, September 2016.

[194] Ben DiPietro, Financial Firms Turn to Artificial Intelligence to Handle Compliance Overload, Wall Street Journal, May 19, 2016.

[195] CBA Legal Futures Initiative, Futures: Transforming the Delivery of Legal Services in Canada, Canadian Bar Association, 2014, page 29.

[196] Practice management systems are a hub not just for practice management, but all functions within a law firm or legal department). The days of handling practice management (also referred to as case management or matter management) manually are past. We live in a fast-paced digital age where automated efficiency is the rule, not the exception. Legal case management software is a priority, and a good system is a must to be utilized firm-wide / office wide / country wide depending on size of legal organization. The benefits of such a system seem obvious, and yet usage of practice management software remains surprisingly low. According to the 2014 ABA Legal Technology Survey Report, just 49% of respondents reported having practice management software available: Joshua Poje, Practice Management, ABA Tech Report, 2014. However, there is improvement as the annual ILTA/Inside Technology Purchasing Survey for 2016 – for members of law firms of all sizes – states that “no matter the size of the law firm, one of the top priorities for 2016 is choosing and implementing legal technology and software into law firms, with 53% of respondents indicating that their law firms would be increasing their technology spend in 2016”: Nicole Black, Survey Results: How Solo and Small Firm Lawyers are Using Technology, MyCase.com, September 13, 2016.

[197] Annual ILTA/Inside Technology Purchasing Survey summary for 2016 – for members of firms of all sizes –  states that “Cloud computing continues to be one of the hottest topics in legal IT. Law firms of all sizes are embracing the cloud, some on an application-by-application basis others with a ‘cloud first’ approach…More firms are moving to a ‘cloud-first’ approach and investing in technologies such as analytics, AI, virtualization, mobility solutions and other SaaS applications, turning increased productivity, efficiency and automation into profits.”: Nicole Black, Survey Results: How Solo and Small Firm Lawyers are Using Technology, MyCase.com, September 13, 2016.

[198] Gene Turner, Does you law firm use precedents?, Law Hawk.nz, February 5, 2017.

[199] David Ruiz, Clients Turning to Encryption to Combat Law Firm Data Breaches, American Lawyer, February 14, 2017; ABA Law Practice Division, FYI: Playing it Safe with Encryption, American Bar.org; Technology Practice Tips: Five Questions about Encryption, Law Society of Upper Canada (lsuc.on.ca); David Ries, Safeguarding Confidential Data: Your Ethical and Legal Obligations, Law Practice (American Bar Association), July/August 2010; David Ruiz, Some In-House Departments Start Encrypting Emails, Corporate Counsel, February 13, 2017.

[200] Nicole Black, Speech-To-Text Dictation For Lawyers: What You Need to Know, Above the Law, January 26, 2017.

[201] Susan Beck, Inside ROSS: What Artificial Intelligence Means for Your Firm, Law.com, September 28, 2016; Brian Baxter, ROSS Intelligence Lands Another Law Firm Client, American Lawyer, October 6, 2016; Karen Turner, Meet ‘Ross’, the newly hired legal robot, Washington Post, May 16, 2016; Julie Sobowale, How artificial intelligence is transforming the legal profession, ABA Journal, April 1, 2016; How to replace lawyers with legal artificial intelligence, 31december2099.com Futurist Hub, April 20, 2016; Jennifer Brown, Don’t fear artificial intelligence: experts, Law Times, February 13, 2017.

[202] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[203] Dr. Tara Chittenden, Capturing Technological Innovation in Legal Services, Law Society of England and Wales, LawSociety.org.uk, January 2017.

[204] Ben Kepes, eBrevia Applies Machine Learning to Contract Review, Forbes, February 20, 2015; Zach Abramowitz, Free Contract Review Could Be A Gamechanger, Above the Law, April 21, 2016; Nicole Black, How AI Will Change the Practice of Law, Law Technology Today, November 1, 2016. (eBrevia; LawGeex); Seal Version (contract discovery and analytics platform); Michael Mills, Artificial Intelligence in Law: The State of Play 2016, Thomson Reuters (neotalogic.com), 2016 – Electronic discovery (Recommind, Equivio, Content Analyst), Outcome Prediction (Lex Machina, LexPredict), Self-service compliance (Neota Logic, ComplianceHR, Global Risk Solutions), Contract Analysis (Kira Systems, KM Standards, RAVN, Seal Software).

[205] Michael Mills, Artificial Intelligence in Law: The State of Play 2016, Thomson Reuters (neotalogic.com), 2016 – Electronic discovery (Recommind, Equivio, Content Analyst), Outcome Prediction (Lex Machina, LexPredict), Self-service compliance (Neota Logic, ComplianceHR, Global Risk Solutions), Contract Analysis (Kira Systems, KM Standards, RAVN, Seal Software); Julie Sobowale, How artificial intelligence is transforming the legal profession, ABA Journal, April 1, 2016.

[206] Maura Grossman and Gordon Cormack, Technology Assisted Review in E-Discovery Can be more Effective and More Efficient than Exhaustive Manual Review, 17 Richmond Journal of Law and Technology 3, 2011; William D. Henderson, More Complex than Greed, The American Lawyer (AxiomLaw.com), May 29, 2012 – for example: Novus Law, a legal services firm that specializes in electronic discovery, which is the fact-gathering phase that precedes trial in every litigation matter. The primary product of Novus Law, which was founded by two MBA non-lawyers, is work process that has engineered or taken out much of the time and drudgery that would otherwise fall to law firm associates. Novus Law prices e-discovery exclusively on a fixed-fee basis. And on every dimension—cost, quality, and time delivery—appears to be objectively better than Big Law.

[207] Anthony Sills, ROSS and Watson tackle the law, IBM.com, January 14, 2016; Drew Hasselback, Meet ‘ROSS’, the bankruptcy robo-lawyer employed by some of the world’s largest firms, National Post, August 9, 2016.

[208] Debra Cassens Weiss, Artificial intelligence predicted case outcomes with 79% accuracy by analyzing fact portrayal, ABA Journal, October 25, 2016; Danny Crichton, With Judge Analytics, Ravel Law Starts to Judge the Judges, Tech Crunch, April 16, 2016; Brian Benton, Lex Machina: ‘law machine’ helps lawyers predict case outcomes, Palo Alto Patch, July 30, 2012; Rich Steeves, Lex Machina uses big data, legal analytics tools to help IP attorneys, Inside Counsel, October 29, 2013; Nicole Black, How AI Will Change the Practice of Law, Law Technology Today, November 1, 2016. Also see, Peter Nowak, This Toronto startup uses A.I. to help lawyers predict trial outcomes, Canadian Business, February 7, 2017.

[209] Lenore Adkins, Study: Corporate Law Departments’ Spend on Software Set to Explode, Bloomberg Law (bol.bna.com), February 25, 2016. — Compiled by the legal software company Mitratech, the report is called “Catching the Wave: Legal Technology Spend at $3 billion and Growing.” It was based on a survey of 353 law firm and legal department “decision makers,” interviews with 15 leading industry experts and secondary research on legal industry software trends.

[210] Michael Mills, Artificial Intelligence in Law: The State of Play 2016, Thomson Reuters Legal Executive Institute, Legal Technology.com, November 3, 2015.

[211] Joanna Goodman, Firms must embrace AI or risk being left behind, Raconteur.net, June 29, 2016.

[212] Dan Bindman, Law Society: technological innovation “will determine law firms’ success”, Legal Futures.co.uk, January 25, 2017; Dr. Tara Chittenden, Capturing Technological Innovation in Legal Services, Law Society of England and Wales, LawSociety.org.uk, January 2017. Also see, Eric Sigurdson, A Way Forward: Disruptive Innovation, the Legal Profession, and the Client – what is the appropriate legal services delivery model in the ‘new normal’, Sigurdson Post, November 15, 2016; John O. McGinnis, Machines v. Lawyers: As information technology advances, the legal profession faces a great disruption, City Journal, Spring 2014 – e-discovery, legal research / precedents, legal forms (automate simple and/or rough briefs and memos), legal analytics / big data to guide decision making.

[213] Dan Bindman, Law Society: technological innovation “will determine law firms’ success”, Legal Futures.co.uk, January 25, 2017; Dr. Tara Chittenden, Capturing Technological Innovation in Legal Services, Law Society of England and Wales, LawSociety.org.uk, January 2017. Also see, Marc Lauritsen, Marketing Real Lawyers in the Age of AI, Law Practice.org (mazdigital.com), January/February 2017.

[214] Marek  Handzel (editor), Artificial Intelligence: Rise of the Machines – artificial intelligence is slowing changing how law firms work, Leeds & Yorkshire Lawyer (Official Journal of Leeds Law Society), December 20, 2016. [republished by Chrissie Lightfoot: AI Lawyer Martini: law law land shaken, Linkedin.com, January 25, 2017]. Also see, Marc Lauritsen, Marketing Real Lawyers in the Age of AI, Law Practice.org (mazdigital.com), January/February 2017.

[215] Marek  Handzel (editor), Artificial Intelligence: Rise of the Machines – artificial intelligence is slowing changing how law firms work, Leeds & Yorkshire Lawyer (Official Journal of Leeds Law Society), December 20, 2016; [republished by Chrissie Lightfoot: AI Lawyer Martini: law law land shaken, Linkedin.com, January 25, 2017]. See, James Parker, Artificial Intelligence trends and their impact on the legal sector, Blogs.lexisnexis.co.uk, October 20, 2016.

[216] For current law on expert opinions, see: Mouvement Laique Quebecois v. Saguenay, 2015 SCC 16 (Canada); White Burgess Langille Inman v. Abbott, 2015 SCC 23 (Canada); R v. Mohan, [1994] 2 SCR 9 (Canada); Barbara Grossman and Christina Porretta, SCC rules on expert witness independence and impartiality, Dentons (Canada), June 2, 2015; Derek Bell, Jason Woycheshyn, Gannon Beaulne, Supreme Court clarifies that expert’s duty to the court is a threshold requirement for admissibility, Lexology.com, April 30, 2015. United Kingdom: see for example, National Justice Compania Naviera SA v. Prudential Assurance Co Ltd (The “Ikarian Reefer”), [1995] 1 Lloyd’s Rep 455; Civil Litigation Review Working Group, Concurrent Expert Evidence and ‘Hot-Tubbing’ in English Litigation Since the ‘Jackson Reforms: A Legal and Empirical Study, Civil Justice Council, Judiciary.gov.uk, July 25, 2016; Rachel Rothwell, ‘Hot tubbing’: is concurrent expert evidence working?, The Law Society Gazette, August 16, 2016; Steve Huyghe and Adrian Chan, The evolution of expert witness law under UK and US jurisdictions, 8 Construction Law International 4 (FTI Consulting.com), December 2013; Gexall, The Dangers of Relying on Expert Evidence: Beware Ye the Partisan Expert: “Unbalance and Highly Misleading”, Civil Litigation Brief, November 10, 2016; Watts v. The Secretary of State of Health, [2016] EWHC 2835 (QB); Mark Friston, Roles and Responsibilities of medical expert witnesses, NCBI.nim.nig.gov, August 6, 2005. Australia:  Justice Steven Rares, Using the ‘Hot Tub”: How Concurrent Expert Evidence Aids understanding Issues, Federal Court of Australia, October 12, 2103. USA: Bruce Kaufman, Can Adversarial Legal Culture Accept Neutral Experts?, Bloomberg, December 2, 2016; Annie Dike, Concurrent Expert Evidence: Hot Tubbing in America? Experts Jump in, National Law Review, August 31, 2016.

[217] Marek  Handzel (editor), Artificial Intelligence: Rise of the Machines – artificial intelligence is slowing changing how law firms work, Leeds & Yorkshire Lawyer (Official Journal of Leeds Law Society), December 20, 2016. [republished by Chrissie Lightfoot: AI Lawyer Martini: law law land shaken, Linkedin.com, January 25, 2017]; James Parker, Artificial Intelligence trends and their impact on the legal sector, LexisNexis.co.uk, October 20, 2016; Julie Sobowale, How artificial intelligence is transforming the legal profession, ABA Journal, April 1, 2016.

[218] Dr. Tara Chittenden, Capturing Technological Innovation in Legal Services, Law Society of England and Wales, LawSociety.org.uk, January 2017.

[219] James Parker, Artificial Intelligence trends and their impact on the legal sector, LexisNexis.co.uk, October 20, 2016; Hodge Jones & Allen Embraces Predictive Modelling for PI Work, HJA.net (Hodge Jones & Allen UK law firm); How to replace lawyers with legal artificial intelligence, 31december2099.com Futurist Hub, April 20, 2016; Julie Sobowale, How artificial intelligence is transforming the legal profession, ABA Journal, April 1, 2016.

With most law firms yet to get to grips with the possibilities of big data, HJA said it wanted the ability to make more informed decisions at the initial assessment stage of the 1,200-plus PI cases it handles each year.

The firm provided Andrew Chesher, professor of economics and economic measurement at University College London, with information about the outcomes of 600 cases concluded over a year. He used a combination of statistical techniques to examine the factors contributing to which cases were won or lost, the damages that were received by claimants in successful cases, and the costs received by HJA. …

Professor Chesher said: “There are complex interactions between many of the variables we analysed and, as with many markets where human judgement is involved, there is always an element of unpredictability. However, particularly with the model predicting the likelihood of a case being won or lost, we were able to produce robust models that will improve over time as further data is collected.” …

It also highlighted that although witnesses and reliable evidence were not particularly instrumental in predicting a win or loss, they were important in achieving higher damages.

HJA senior partner Patrick Allen said: “These models will not replace [our enquiry handling team’s] experience and judgement, but will provide an additional aid to them in a world where it is no longer good enough to take a case on with a 50% chance of success and where fees are restricted to a few hundred pounds. …

The firm is currently looking at other areas of the business undertaking high-volume work that might benefit from predictive modelling of this kind.

[220] Marek  Handzel (editor), Artificial Intelligence: Rise of the Machines – artificial intelligence is slowing changing how law firms work, Leeds & Yorkshire Lawyer (Official Journal of Leeds Law Society), December 20, 2016. [republished by Chrissie Lightfoot: AI Lawyer Martini: law law land shaken, Linkedin.com, January 25, 2017]; Julie Sobowale, How artificial intelligence is transforming the legal profession, ABA Journal, April 1, 2016:

Another potential use for data is predicting legal outcomes. In 2014, Chicago-Kent College of Law professor Daniel Martin Katz, then at Michigan State University law school, and his colleagues created an algorithm to predict the outcomes of U.S. Supreme Court cases. It attained 70 percent accuracy for 7,700 rulings from 1953 to 2013. Leib’s company wants to take this idea one step further, working with analyzed information to predict future litigation.

“As companies develop better metrics around things like litigation and compliance spend, the barriers to entry that analytics tools used to face are quickly falling by the wayside,” says Leib. “Once companies get their arms around case flow and spend, the ROI and economics around using analytics to streamline legal workflows and reduce or eliminate risk becomes much more attractive.”

[221] James Parker, Artificial Intelligence trends and their impact on the legal sector, LexisNexis.co.uk, October 20, 2016.

[222] Julie Sobowale, How artificial intelligence is transforming the legal profession, ABA Journal, April 1, 2016. Also see, Marc Lauritsen, Marketing Real Lawyers in the Age of AI, Law Practice.org (mazdigital.com), January/February 2017.

[223] Dr. Tara Chittenden, Capturing Technological Innovation in Legal Services, Law Society of England and Wales, LawSociety.org.uk, January 2017.

[224] Dr. Tara Chittenden, Capturing Technological Innovation in Legal Services, Law Society of England and Wales, LawSociety.org.uk, January 2017; International Bar Association, ‘Times are a-changin’: disruptive innovation and the legal profession, IBA Legal Policy & Research Unit, May 2016; Aebra Coe, Artificial Intelligence Has BigLaw Rethinking Associate Hiring, Law360, November 2, 2016; Mark Cohen, How Artificial Intelligence Will Transform The Delivery of Legal Services, Forbes, September 6, 2016; Greg Wildisen, Is artificial intelligence the key to unlocking innovation in your law firm?, Legal Voice, November 12, 2015; Sean Captain, How AI and Crowdsourcing Are Remaking the Legal Profession, May 11, 2016; Gwynne Monahan, 5 Questions on Artificial Intelligence, Law Technology Today, August 6, 2015; Zach Abramowitz, Do Robots Make Better Lawyers? A Conversation About Law and Artificial Intelligence, Above the Law, June 13, 2016; Technology for Law Firm Leaders: Services as Products, Neota Logic; Julie Sobowale, How artificial intelligence is transforming the legal profession, ABA Journal, April 1, 2016.

[225] Note: History tells us what happens to companies and people that miss paradigm shifts in technology. See, Christine Heckart, The growing network divide: What it means for your company and your career, Community.brocade.com, October 21, 2016:

• Approximately 60 percent of the companies on Fortune’s list of the 500 largest companies in the mid-1990s are no longer on that list today, just 20 years later. These were some of the largest companies in the world, yet many couldn’t retain their status because they missed the transition to the internet. For many, their systems proved to be the silent killer of their business, while several of the companies that filled the open openings—such as Google, Amazon, Facebook—were born from the internet movement.
• In 1995, Sears was #9 and Kmart #15 on the Fortune 500, with combined revenue of almost $89 billion. Today, they’re a single company, #111 on the list, with revenue of $25 billion. In 1995, Amazon had just launched. Today, they’re #18 with revenues of $107 billion.

 [227] Opportunities await: How InsurTech is reshaping insurance, Global FinTech Survey, PWC (pwc.com), June 2016; Dennis Ferenzy, Kristen Silverberg, Conan French, Bart van Liebergen, Innovation in Insurance: How Technology is Changing the Industry, Institute of International Finance, September 2016; Sreedhar Alavalapati and Krishna Prasad, Here are 5 insurance tech trends you’ll see this year, Property Casualty 360, January 18, 2016; 2016 EY Canadian property and casualty insurance outlook, EY (ey.com), 2016; A New World of Opportunity: The insurance innovation imperative, KPMG (assets.kpmg.com), 2015; Emma Sheard, 3 Steps to Achieve Successful Insurance Claims Automation, LinkedIn, February 6, 2017 (citing The Humans Fight Back: The Hunan Touch in Insurance Claims Automation, Insurance Nexus, 2017); Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[228] Note: Insurance policies providing coverage to corporate and other commercial insureds for professional liability, directors and officers liability, etc., generally contain a choice of counsel provision that permit the insured to designate or at minimum recommend defence counsel of their choice to represent their interests in event of a claim or litigation. (Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012).

[229] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[230] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012.

[231] Thomas M. McNally, The Continuing Evolution of Insurance Company Staff Counsel Programs: Well Positioned to Thrive in Today’s Competitive Legal Marketplace, ABA Tort, Trial and Insurance Practice, Winter 2012; Richard P. Campbell, Welcoming Insurance Staff Counsel, Tort and Insurance Practice Section (TIPS), American Bar Association, The Brief, Fall 2001; Mallen and Smith, Legal Malpractice, 4^th ed. 2012, chapter 30.10: Standards of Competence – Salaried (“staff” or “house”) counsel.