ICA has a long term Client which manufactures small household products such as hairdryers, toasters, and the like. This Client had been paying ever-increasing fees to its third party administrator and felt it was receiving poorer and poorer service at the same time. The Client mentioned this concern to ICA and it was agreed that the Client would select a sampling of five claims for ICA to audit at the TPA’s offices. ICA reviewed these files in-depth and reported on the numerous examples of overbilling, double billing, poor and mismanaged litigation, and recommended many potential areas of improvement. ICA pointed out that whenever the TPA received any document of any kind, even a one-page letter from an investigator, it incurred billable time to review it, then again to file it, then again to send it to local counsel, then again to report on it to the Client. Some of the overbilling practices were so egregious that ICA felt the Client should consider alternative TPA’s and/or National Counsel relationships the Client acquired.
ICA researched the feasible alternatives and invited numerous competing national counsel law firms specializing in products liability in this specific industry and TPA’s with more restrictive billing practices to present Proposals to the Client. ICA and the Client interviewed all potential parties and after much consideration, the Client agreed with ICA’s recommendation to replace its existing TPA arrangement with a law firm who could act as National Advisory Counsel, as well as local counsel on most claims throughout the United States. This new arrangement cut down significantly on redundant billing, assuring the adequacy and professionalism of local counsel, centralizing the chain of communication, and creating a document and research database which prevented countless billable hours of repetitive research and billing for legal memoranda on recurrent legal topics. Once the national counsel arrangement was arranged, ICA remained as a periodic auditor to assure similar overbilling or expansive litigation efforts were not repeated in the future. The Client was tremendously pleased with the change in the arrangement. Even though one would presume that a national counsel firm would be more expensive than a TPA, the streamlined process and prudence of the law firm’s managing partner have managed to lower the overall litigation costs to the Client, as well as raise the bar of products liability claims handling expertise and solidarity. This presents a strong message to other would-be claimants that this manufacturer will fight its claims with professionalism and prudence and is not an easy target for litigation.