Celebrating 10 years! 2007-2017

At what point would are insurance claims adjusters considered to be practicing law?

**sorry for the grammar error in thread title Note that i superttthero05/08/17
At my firm, all the lawsuits are routed directly to the Clai associatex05/08/17
Some states do license their adjusters, but I think the more mrtor05/08/17
"I think adjusters also avoid UPL since they are working und superttthero05/08/17
Agreed. However, the more important point is that adjusters mrtor05/08/17
Couple of thoughts - lots of plaintiff's firms I know have i jd4hire05/09/17
"I've definitely seen adjusters engage in arguments/ discuss onehell05/09/17
superttthero (May 8, 2017 - 4:45 pm)

**sorry for the grammar error in thread title

Note that insurance liability is an area of law I know absolutely nothing about.

I assume when a suit is filed, the adjuster is out of the picture and the insurance company has its in-house counsel or outside counsel handle the communications with the injured and his/her counsel, but before that point, it seems a lot of the adjusters' work is a lot of the same pre-filing work an attorney would do.

I feel like if I employed a non-attorney to work opposite an adjuster on my behalf if I am injured, that person would be slapped with unauthorized practice of law, but adjusters are no big deal?

Am I asking a question that has been discussed ad nauseum in PI circles? Am I missing something (like is there an adjuster license that lets them do this)? Or am I wrong about the level of work they do (I only dealt with one once in college when a friend borrowed my car and totalled it, but I got everything I wanted since the other guy ran a red-light and it was caught on the camera of a nearby gas station).

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associatex (May 8, 2017 - 5:02 pm)

At my firm, all the lawsuits are routed directly to the Claims Dep't who assigns it to a claim rep/adjuster for an initial review. They will confirm coverage, liability exposure, and whether they should settle it internally or refer it to Staff Counsel (my firm). Once the claim rep determines there was coverage, the claim was handled timely and properly (ie we paid what was owed, we denied payment based on legitimate reasons) - then it goes to legal where we would handle the rest (put in response pleadings, discovery requests, depositions, etc).

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mrtor (May 8, 2017 - 5:18 pm)

Some states do license their adjusters, but I think the more important distinction is the clear line between their work and legal work. The bulk of adjusters' work is pre-litigation (investigation, negotiation, etc.). The parties are free to do as they please at this stage since it is, practically speaking, outside the legal realm. Everyone understands they are insurance professionals who are simply working to resolve claims before litigation occurs. Once a lawsuit is filed, most insurers kick it to counsel immediately and the adjuster assumes a more passive role.

I think adjusters also avoid UPL since they are working under the banner of the insurer rather than a law firm. Law firms usually only run into UPL charges where non-attorney employees caused some detriment, often to individual clients. You don't see sophisticated institutional clients falling victim to UPL.

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superttthero (May 8, 2017 - 5:42 pm)

"I think adjusters also avoid UPL since they are working under the banner of the insurer rather than a law firm. Law firms usually only run into UPL charges where non-attorney employees caused some detriment, often to individual clients. You don't see sophisticated institutional clients falling victim to UPL."

I can understand that someone not suing or "pressing charges" based on faulty advice is the biggest reason this may not be a bigger issue, but it doesn't make it the correct legal outcome.

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mrtor (May 8, 2017 - 5:49 pm)

Agreed. However, the more important point is that adjusters are usually more active before a lawsuit and thus they do not offer legal advice. Their work is limited to insurance claims negotiations, even though lawsuits could follow if the claims remain unresolved. There is no practice of law outside of the legal realm.

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jd4hire (May 9, 2017 - 11:55 am)

Couple of thoughts - lots of plaintiff's firms I know have investigators or former adjusters on staff. I don't think this comes close to practicing law - they don't sign pleadings, but they can take photos, statements, etc.

Some carriers operate much differently than others. I was staff counsel at a very large carrier and I was blown away by how much the adjusters do - they communicate with plaintiff's attorneys regularly, they attend mediations/ arbitrations, they come to certain depositions, and they would often settle cases without speaking to me first (part of the reason I got sick of running around like a chicken with my head cutoff).

Other carriers that I have served as outside counsel have taken the path of once an attorney is involved, their role is extremely limited. With one carrier they asked me to seek legal recourse for a plaintiff's attorney still calling the adjuster after an attorney was retained (which is against the rules in my jurisdiction), but other carriers want and encourage that.

And I've taken a look at the adjuster course work required in my state, they are taught rudimentary principles on torts - duty, breach, causation, damages, intervening cause, contributory negligence, etc. I've definitely seen adjusters engage in arguments/ discussions with plaintiff attorneys as to weaknesses in the case and justifying an offer they just provided - "well our guy didn't owe a duty to your client and his contributory negligence was the sole cause of the accident, that's why I discounted my offer to $5.00."

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onehell (May 9, 2017 - 1:52 pm)

"I've definitely seen adjusters engage in arguments/ discussions with plaintiff attorneys as to weaknesses in the case and justifying an offer they just provided."

Yup, and IMHO that is an example of where theory and practice part ways.

In my state, the published definition of "practice of law" includes "Negotiating legal rights or responsibilities for a specific person or entity."

But of course, we all know that all kinds of nonlawyers "negotiate legal rights or responsibilities." Contract specialists, compliance people, adjusters, HR people, and even just random employees picking up random side-duties at companies that don't have a legal budget. The bar won't actually come after anyone for UPL unless there's a complaint, and even then only if it is an absolutely clear-cut case handed to them on a silver platter. It's part typical cop-style laziness, part limited resources, and partially a public policy issue that sees UPL primarily as being to protect unsophisticated individual consumers)

So we have a theoretical definition of UPL that is very broad that is only relevant in an academic sense, and then we have a really narrow definition of UPL, as in the kind it is actually possible to get in trouble for. At least in my state, the REAL meaning of practicing law is "holding yourself out as an attorney or appearing/filing a document in court on someone else's behalf." Anything less clear and the bar will exercise its discretion not to prosecute, and you'd look like an ass for complaining about something that is so commonplace.

So the narrow definition has become the real one for all intents and purposes, and I for one have long ago given up on trying to get others to adhere to the theoretical one.

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