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Shuttered courts led to increase in settlements

Posted On: May. 4, 2021 12:00 AM CST

court room doors

Court closures forced by the COVID-19 pandemic had an indirect effect on some insurance claims disputes by removing a major avenue of resolution, attorneys say.

With courts unable to open due to government restrictions, binding arbitration became a more compelling way to resolve disputes, said Robert Blasio, managing director of Gallagher Bassett Specialty, who is an attorney by training.

“The whole thing made us think out of the box about alternative ways” to resolve cases and disputes, he said.

Binding arbitration, which was often conducted over video, offered a “safe and expedient environment and would allow for the resolution of the case,” he said. While not all clients were amenable to arbitration, “we had many scenarios in which we were able to resolve cases.”

There was “a lot of rush to settle cases,” especially in the early days of the pandemic, due to the uncertainty brought on by the lack of access to courts, said Patrick Kennell, New York-based co-chair of the insurance coverage and litigation practice group at law firm Kaufman Dolowich & Voluck LLP. Defendants’ and plaintiffs’ “appetite to resolve them was really high,” he said.

Court closures “definitely changed the way both sides approached mediation and alternative dispute resolution negotiations because there’s a perception that with more limited access to the courts, deals should be done,” Mr. Kennell said.

The court closures also removed a bargaining chip for plaintiffs, said Joseph Miele, an insurance coverage partner at Kaufman Dolowich in Fort Lauderdale, Florida. “The fact that courthouses are closed and a plaintiff cannot pressure me with an impending trial works for the defense, in this case insurers,” he said.

The reliance on technology and remote connectivity resulting from the pandemic restrictions also laid bare any shortcomings among the courts’ capabilities.

“Even the most technologically advanced courts learned they had a lot to learn,” Mr. Kennell said.