With increasing pressure to reduce claims costs, law firms and insurers are looking at ways of reducing legal costs Michael Faulkner reports.
With claims costs spiralling and investors demanding profitable underwriting, the need for insurers to remove every penny of wasted costs from the claims system has never been greater.
Initiatives to speed up the settlement process and reduce the legal and administrative costs of claims are being pushed forward in ever growing numbers. No aspect of the process remains untouched as insurers strive for greater and greater efficiency.
Insurers' panel solicitors have not escaped. The operation of the traditional panel system is coming under the microscope, with insurers seeking ever more competitive fees and streamlined working practices: if a law firm is to maintain its panel status it will need to offer a sleek, cost effective service for its insurer clients.
Hugh Price, a partner at Welsh law firm Hugh James, argues that technology can assist lawyers stay one step ahead of the competition. "Lawyers who ignore the advance of technology do so at their peril," he says.
"The development of case management technology has been a catalyst in the supply of legal services for volume providers. The handling of claims, whether in litigation or not, involves a process which is eminently suitable for modern technology to assist."
Last year, Hugh James launched StreamLine 21, a volume claims handling solution for personal injury work. The system is designed to address the problem of burgeoning legal costs by cutting the lifespan of claims and providing accurate, real time management information.
Nearly six months after its launch, Hugh James is turning its attentions to developing alternative uses for the software, including costs negotiations and professional indemnity claims.
"There are a number of areas where case management can help in the claims process regardless of the complexity and size of the claim. These include the early identification of issues, document production and process automation," says Price.
He rejects the argument that technology supported case management for the legal services is only appropriate to straightforward low value work.
"The StreamLine 21 system has allowed us to reduce the role of the experienced solicitor to a minimum, so we can control large numbers of claims without a reduction in the quality of service. We have also established inbuilt training and supervision procedures so we can agree fixed fees with insurance clients."
Price also points to the risk management potential of case management technology. "Understanding underlying trends - where, how and why claims occur - is vital," he says. "Technology enables the storage and retrieval of information, enabling insurers and insureds to identify areas where risk assessment is needed."
Case management in complex cases
Case management technology has a place in the streamlining of complex cases. Hugh James partner Hugh Price identifies a number of areas where technology can assist:
- Issue identification. The system can set out all the procedures and enquiries that have to be taken. It is important to ensure that IT supports the legal process and does not control it.
- Producing pre-prepared documents such as letters, reports and statements of case that are accurate and correctly drafted. Experienced lawyers can put the legal input into the system - in this way the quality of service is guaranteed, particularly as to the timing and content of correspondence, documents and reports to clients.
- Process automation. Costs can be contained by automating the process wherever possible, and reducing the time spent on the case by an experienced lawyer.
- Report creation. The workflow can be designed to include the creation of update reports for clients in the prescribed format and at intervals set by the client.
- Provision of management information. This can be tailored to the needs of the client, whether on a single claim basis or on a complete portfolio. It is particularly relevant for hard-pressed claims managers and finance directors who may want the information at different times and in different formats.
- Claims progress. The days of telephoning the lawyer to find out how a claim is progressing are long past. Matter tracking is now readily available via a secure website link.
