May It Please The Court

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May It Please The Court
by Leonard Rivkin
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Insurers Lose Battle Against Customers

California insurers lost another battle in the long-running war against their customers and lawyers. The case decided last week, Casssim v. Allstate, by the California Supreme Court dealt a blow on the issue of attorneys fees.

Insurers, of course, want to pay as little as possible. Not anymore. Here's the setup:

The Cassims' house burned, and they submitted a claim to Allstate. The insurer suspected arson, and refused to pay. The only problem was that the insurer had no proof that the insureds burned their own home, although they accused the Cassims of setting it.

That accusation was just the first of a long list of Allstate's bad faith actions against their insureds. The Cassims successfully sued Allstate for bad faith and won $3.6 million in compensatories, and $5 million in punitives. Ouch.

Obviously dissatisfied with losing that big of a verdict, Allstate tried to save more money by not paying the Plaintiff's lawyers, but it didn't work.

After Plaintiffs win a bad faith case, their lawyers are entitled to recover fees and costs caused by the insurer's bad faith under a case called Brandt v. Superior Court (be careful about the information on that last link - that's the law firm that lost the Cassim case).

So, Allstate claimed that the Cassim attorneys should recover only 40% of the actual amount in dispute - some $46,000 - not the entire amount of the $8.6 million recovery. Of course, many other insurance companies submitted amicus curiae briefs, claiming that the Plaintiff's lawyers were entitled to only about $16,000.

The Supreme Court didn't buy the argument. The Court ruled that the attorneys can recover 40% of the total recovery. "Plaintiffs agreed, as is generally the case, to pay their attorney an unallocated and undifferentiated 40 percent of their total recovery, whatever that might be," Justice Kathryn Mickle Werdegar wrote. "To conclude that to obtain a $40,856.40 contract recovery, plaintiffs are out of pocket precisely $16,342.56, no more and no less, is therefore a fiction."

Of course, it's not that simple - the Court set out a complicated formula to figure out the exact apportionment. But, for people that can't afford to hire lawyers and lawyers that work on contingency, it will assure representation.

It's a victory for the regular people.

Posted by J. Craig Williams on Saturday, July 31, 2004 at 12:59 Comments (0)


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