BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Risk management process can help address lawsuits

Risk management process can help address lawsuits

PARK CITY, Utah — Risk managers who use the risk management process to manage litigation will save their companies time, money and considerable angst in resolving potentially devastating legal claims, according to Roger Andrews, director of risk management at E.D. Bullard Co.

During a presentation at the Risk & Insurance Management Society Inc.'s Western Regional Conference held Sept. 15-18 in Park City, Utah, Mr. Andrews described various examples of how he employed the risk management process to address lawsuits alleging wrongful death and bodily injury as a result of the use of his company's products.

In one 1997 case, Bullard, a safety equipment manufacturer, was sued along with the employer of a 27-year-old worker who mistakenly plugged a Bullard-made oxygen hood into a nitrogen line and died almost instantly.

Instead of turning the case over to legal counsel, Mr. Andrews investigated the case himself, going to the industrial accident scene and interviewing experts and witnesses. He determined that there was nothing faulty with the Bullard equipment and that the employer ultimately was responsible for instructing the worker on correct use. He then met with plaintiffs counsel to negotiate Bullard's dismissal from the litigation and succeeded.

Mr. Andrews explained that such a suit could be financially devastating for Bullard, a midsize firm with 255 employees, even if it were to win at trial, because defending such a case is expensive.

By contrast, had Mr. Andrews applied the “legal model” to resolve the claim, it might have taken significantly longer to resolve and cost him much more than his time and a plane ticket, he said.


He explained that the legal model involves the following steps: The claim is presented and turned over to legal counsel, then an answer is filed, discovery is initiated, a motion for summary judgment is filed, a judge may order mediation or arbitration or various court hearings might ensue, followed by a pretrial conference. Then either a settlement is negotiated or the case goes to trial.

The insurance process, in which an insurer gets involved, adds the additional steps of addressing potential coverage denial and negotiations and assignment of insurer-approval legal counsel before actual legal proceedings would commence, Mr. Andrews said.

But he said with the risk management model, a risk manager can effectively manage the litigation by going through the following steps: Identify the risk, evaluate the loss potential, consider risk control techniques, implement the controls selected, and then monitor and revise as needed.

Mr. Andrews also said he maintains a $100,000 self-insured retention to ensure he can retain control over how of litigation costs up to that amount are spent.

He said the reasons the legal and insurance models for litigation management fail is because lawyers and adjusters are simply doing what they are trained to do, and they are not as knowledgeable about the products involved or other pertinent facts associated with a company's operations. Moreover, they lack a proven strategy or are reluctant to abandon a strategy that isn't working, Mr. Andrews added.

But if risk managers apply their knowledge and the risk management process to litigation, they will find it can be more effective than the traditional legal or insurance models in resolving litigation quickly and at a lower cost, he said.