Insurance Defense Flaws - the problem with Insurance defense lawyers


Lubell Rosen invented Pre-Paid Legal Defense because the insurance model was flawed. In the insurance defense model, when a doctor gets sued, the insurance company assigns the doctor a lawyer to defend their case. With Pre-Paid Legal Defense, the doctor hires their own lawyer directly. In many ways, Pre-Paid legal defense is a return to normalcy, when a client hired their own lawyer by themselves, just like clients do in every other area of the law.

There are three basic flaws of the insurance defense model. One, it forces the lawyer to divide their loyalty between the doctor and the insurance carrier; Two, it financially motivates insurance defense lawyers to lengthen the litigation; And Three, it tempts insurance defense lawyers to increase billable hours to overcome low hourly rates. All of these flaws are overcome with Pre-Paid Legal Defense, where the doctor gets to hire their own lawyer.

Insurance Flaw #1: Defense lawyers are more loyal to the insurance companies then the doctors they represent

There is an inherent conflict of interest when an insurance company assigns a lawyer to represent a doctor as their client. A lawyer’s ethical responsibility is to be loyal to the doctor client. However, a lawyer also owes a fiduciary duty to the insurance company employer that hired the attorney.  In some instances, this form of dual loyalty leads to tension, real or perceived. While a lawyer may try to put this tension to the side, their judgment is often influenced, consciously or unconsciously, by the pressures inherent in an employer-employee relationship. More importantly, once the client loses confidence in their lawyers’ loyalty, the lawyer is unable to provide their best and most effective counsel.

Insurance Flaw #2:  Insurance defense lawyers are motivated to lengthen cases

Medical Malpractice defense attorneys hired by insurance companies are financially motivated to lengthen and prolong litigation by the very nature of how they are compensated.   Insurance companies pay their defense lawyers by the hour. An hourly lawyer makes more money the more he or she bills. Lawyers refer to this method of compensation as “billable hours.” In fact, most insurance defense law firms award bonuses to their partners and associates based on the number of billable hours they log by the week, month and/or year. Thus, the insurance company is incentivizing their own attorneys to lengthen the litigation. This is contrary to the interests of the doctor.

Insurance Flaw #3:  Hourly rates are too low

Not only do hourly rates create an incentive to lengthen the litigation, but insurance carriers pay their attorneys low hourly rates, leading to a temptation to over-work files. Obtaining insurance defense work is highly competitive. For those lawyers that get hired, it provides a steady flow of revenue to the firm.  As a result, lawyers compete to get this business by offering below market hourly rates of $175-$225 per hour. Meanwhile other lawyers of similar experience charge between $450-$600 per hour. As a result, lawyers handling insurance defense matters are tempted to over-work files to compensate for the low hourly rate. The last thing doctors want is unnecessary work on a file.

Pre-Paid Legal Defense cures all these flaws. In Pre-Paid Legal Defense, the client hires the attorney directly. The attorney has only one client: the doctor. In fact, with Pre-Paid Legal Defense there is more accountability to the client. Our lawyers must constantly impress our doctor clients to keep their business. With the insurance model, the lawyer is accountable to the insurance company, not the client. Pre-Paid Legal Defense is thus a return to the proper attorney-client relationship, that exists in every other genre of the law. Finally, with Pre-Paid Legal Defense, lawyers are incentivized to bring litigation to a quick resolution, which is exactly what the doctors want.  When the interests of the lawyer and the client are aligned, legal representation is at its best.

With Pre-Paid Legal Defense, we are in the same boat with you.

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