Advantages and disadvantages of staff counsel

A point-counterpoint in Lit. Mgt., Spring 2012 at 56, presents the case for and against staff counsel in insurance companies. Favoring staff counsel are “predictability of fees, decreased cycle time and increased trust between claims staff and attorneys handling their suits.” The proponent of staff counsel also argues for them due to their accessibility, depth of knowledge, and cost effectiveness.

Reasons to oppose staff counsel include objections to the unauthorized practice of law – but the proponent says that “most states have rejected these arguments” – and to the ethics of an employee representing an insured – but again, “virtually all tribunals finding that the use of staff counsel is ethically permissible.”

The opponent of staff counsel basically revives the “inherent conflict of interest” between serving the employer insurance company and serving the insured premium payer. Additional arguments in favor of independent trial counsel include breadth of experience, more resources available, and more favorable perceptions by courts and opponents.

Only four posts on this blog have referred to insurance staff counsel (See my post of May 4, 2005: bad blood between carriers and insurance defense firms; Aug. 21, 2005: collusion between insurance defense and plaintiff firms; Feb. 18, 2009: State Farm had more than 500; and June 15, 2011: 50/50 whether staff counsel report to claims or to the general counsel.).

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