Legal Question in Civil Litigation in California
If defendant's (a company with Insurance) counsel settles a case (at the request of Plaintiff's demand), at the early pleading stages (before responding the complaint), then the Insurance carrier saves the expense of litigating the case through Summary Judgment and/or Trial.,,, So both the Plaintiff and Insurance carrier benefit because Plaintiff got paid & the Insurance saved further costs, BUT what about the defendant's counsel? Does defendant's counsel get a partial % from the defendant's insurance company/carrier or some incentives for settling a case early?,,,Because I would think that a defendant's counsel would want to defend the case as far as possible to get paid from defendant's Insurance company...I know defendant's counsel has an obligation to relay any settlement offer to his client and the insurance company, especially under CCP 998 et seq., and if the case settles early, that would mean less litigation work for the defendant's counsel down the road, in that case.
3 Answers from Attorneys
The defendant's counsel incentives to settle early includes wanting the client to be happy. But there is a conflict in insurance defense attorneys, who are paid a much lower hourly rate than others, to come up with reasons to continue the litigation.
Your question seems to imply that defendants will use what they believe they will spend on the litigation towards settlement That is simply not true.
If the defendant has insurance 99 out of 100 times the insurance company is providing the defense counsel. As long as the settlement is is within policy limits, the defendant pretty much has to agree to it or lose coverage. So it's really between the insurance company and defense counsel when and for how much to settle the case. Some insurance companies give incentives for early or favorable settlements, others just consider getting additional work in the future to be the reward for defense counsel who settle early and favorably.
Many insurance companies use in-house lawyers who are salaried employees. They have a case load and more work than they can handle so they do not have an incentive to drag out or prolong a litigation. As noted above, insurance companies do not like over-paying, whether it is the settlement amount or the amount they pay their attorneys, so lawyers who are not able to resolve cases efficiently are not likely to get repeat business from insurance companies.
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