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Los Angeles law firm Castaneda, Ming & Kojikian, P.L.C. has just introduced a new service, specifically designed for insurance companies and insurance carriers operating within the State of California.

Introducing – The Castaneda Alternative

Our firm provides this new service after analyzing the current legal services provided to businesses operating in the insurance industry, and determining that unfortunately, there may well exist unethical activity in many law firm billing practices which Castaneda believes not only cost the insurance companies and carriers billions of dollars annually, but indirectly creates victims of their customers and shareholders, as well. 

The Alternative to Traditional Insurance Defense Law Firm Fee Compensation

What has Castaneda, Ming & Kojikian done in response?  In essence, the firm has implemented a new avenue of practice, where the law firm offers a service that eliminates the underlying temptation of law firms to over-litigate and over-bill the insurance company or carrier.

How is this done?  Castaneda, Ming & Kojikian offers an alternative fee structure.  In return for its legal services to the insurance company or carrier, the law firm will be paid a premium for each of its members, based in part on the same risk factors that the company uses to calculate their members’ premiums, and in part on how much was paid in legal fees to outside law firms.

Consequently, the companies and carriers receive significant savings in legal fees, and even more in settlement pay-outs.  As a starting point to show how this is accomplished, briefly consider:

A.   Costs and Expenses to the Insurance Company / Carrier

  1. Expense of maintaining an Oversight Department (Needed to oversee the billing and legal fees of provider law firms).
  2. Fees paid to provider law firms (estimated at $150 - $200 per hour);
  3. Costs incurred by the provider law firms;
  4. Expert fees; and
  5. Settlement expense.

These costs are self-explanatory; however, due to hourly fees set lower than market, oversight monitors attempts to hold back the over-litigating of cases as well as curtailing the provider law firm motivation to take every case to trial. 

B.  The Four Types of Cases

Not every case should make it to trial, and even more should not even get close.  There are four types of cases:

  1. Obvious Liability. The provider law firm knows that it is on the radar, and they will settle the obvious liability cases. However, the firm will first bill a minimum number of hours and settle closer to the trial in order to maximize their profitability.
  2. False Borderline Liability. These are cases that should be settled early, but are difficult, from the auditor’s point of view, to assess.  Consequently, these cases are always taken to at least the first day of trial.
  3. True Borderline Liability.  These cases truly sit on the fence, and the decision to settle can go in either direction.  Despite the fact that these cases could go either way, they will always be tried by the traditional provider law firm because it makes bottom-line business sense for them to do so.
  4. Non-Liability. Taken to trial and rightfully so: there should not be settlement when there is not liability.

C.    Consequences of Traditional Insurance Defense Law Firm Fee Compensation

The following consequences are obvious:

  1. Number of hours charged far exceeds the requirements.  Even in Obvious Liability cases, it is not profitable for the provider law firm to settle at the appropriate time.
  2. As the life of the case advances, so do the costs.
  3. Expert witness fees are paid.
    1. In Obvious Liability cases, they are sometimes retained (even though liability is obvious much earlier).
    2. In False and True Borderline Liability cases, the time the settlement is made, can mean the difference between thousands of dollars.  Experts’ fees increase at the time of trial, and huge daily retainers are paid to keep them on call for testimony, whether they are used that particular day or not.
  4. The longer the case unnecessarily goes, the more oversight hours are spent.
  5. In Obvious Liability cases (applies to others as well), the plaintiff is willing to accept a lower amount the earlier it is in the litigation.

Why the Castaneda Alternative Is Better Than the Traditional Fee Structure

The firm’s alternative is an optional compensation package that not only is more cost-effective but allows a peace of mind that can only come with having a law firm representing the insurance company / carrier, and their members, which is not skewing the litigation strategy to maximize the law firm’s bottom line. 

Under the Castaneda Alternative, it is not in the law firm’s best interests to drag a case along simply to rack up the bills, and bolster the total hourly fees.  It is, instead, in our best interests to litigate each and every claim in an efficient, cost effective manner that will save millions of dollars in attorney fees on an annual basis for the larger insurance carrier / company.

For more information on the Castaneda Alternative to Traditional Insurance Defense Law Firm Fee Compensation, please call:
(213) 488 – 3341.

Castaneda, Ming & Kojikian, P.L.C. is a California law firm effectively and efficiently addressing the legal needs and solving legal problems of both businesses and individuals.