The percentage of claims that turn into lawsuits

I have neither seen metrics on this ratio nor encountered them in my consulting practice. Even so, not one to be deterred by the lack of precedent, I advocate as a measure of effectiveness to track at how many claims – however they are defined – fester into litigation.

One trouble is that law departments often don’t handle claims, as they are the province of a claims management or customer satisfaction group. Only if a claim degenerates into litigation does the law department step in. Another problem is definitional: what constitutes a “claim?” A complaint letter from a customer? A report from a store manager after a customer slips and falls? A warranty card returned from a disgruntled owner?

Still, the more claims are resolved quickly and without litigation, the less the workload of the law department, so it behooves a department to work with others, if necessary, to decrease the percentage (as well as the absolute numbers).

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