Parker Shaffie LLP’s Shawn Shaffie Featured in Los Angeles Times Litigation Roundtable

1. The Current Litigation Landscape & Defense Counsel Scrutiny

In his discussion on emerging trends, Shawn Shaffie highlights a significant shift in the legal relationship between insurance carriers and the defense counsel they hire. He noted a growing number of malpractice claims filed by insurance carriers against their former panel defense counsel, particularly in California.

This trend underscores an increased industry scrutiny on defense strategy and billing practices, signaling that clients—including insurers—now prioritize counsel that offers not just strong legal advocacy but also proactive risk mitigation techniques.

2. Strategic Decisions: Fight vs. Settle

Mr. Shaffie advises that the decision to litigate or settle must be an early, precise, and strategic business choice:

• Settle Early: Given the lengthy delays in the overburdened court system (often two to three years from filing to trial) and the high costs of arbitration, informal resolution is prudent for most pure cost-of-doing-business matters.
• Fight Strategically: Strategic litigation is essential when a lawsuit threatens a damaging market precedent, a core intellectual property right, or involves a “bet-the-company” exposure.

3. First Steps: Immediate Action on a Lawsuit Notice

The first 24 to 48 hours after receiving notice of a claim are critical. Mr. Shaffie outlined three mandatory first steps:

1. Tender to All Insurance Carriers: Immediately tender the claim to all potential insurance carriers to activate the broad duty to defend and secure experienced panel counsel. Do not attempt to determine coverage internally; let the carrier perform that analysis.
2. Issue Litigation Hold: Issue a mandatory written litigation hold letter to all relevant custodians to prevent spoliation of electronic and hard copy data, which can lead to severe sanctions.
3. Gather Records: Identify key filing deadlines and begin immediately gathering relevant records to aid in defense strategy development.

4. Leveraging Insurance as a Primary Defense

Mr. Shaffie stressed that insurance is a business’s primary defense against catastrophic litigation risk. Businesses must proactively assess coverage, moving beyond standard Commercial General Liability (CGL) policies, and continuously review policy language against emerging risks. If an insurer issues a denial of coverage, he advises businesses to secure a legal opinion outside of the insurer’s coverage letter to ensure the insurance they paid for actually protects their financial future when needed most.