It is December, a time for presents and invitations to year-end parties. And nothing else says the holidays quite like the unexpected delivery of a wrapped gift, delivered straight to your door and, at times, placed directly in your hands.
Someone may be sealing the envelope right now on a special delivery to an insurance professional. But it isn't Santa, aided by his trusty elves–it's a plaintiff's lawyer, aided by his trusty process servers. Though Christmas comes but once a year, litigation in America knows and respects no season; it's pretty much a year-round event.
Let's say that you receive a wrapped surprise from a process server, and fearing the worst, you open it gingerly, half expecting it to contain a viper, or, worse, a lawsuit. But what to your wondering eyes should appear–it isn't a lawsuit; it's just a subpoena! With great relief you set the subpoena aside, and, seeing that the date for your guest appearance at a deposition isn't until mid-January, you still have plenty of time to enjoy the spiked eggnog, the New Year's Eve champagne and a couple of Alka-Seltzer tablets on January 1.
In continuing education courses for agents and brokers, I often have referred to a subpoena as "your invitation to become a defendant." That's an exaggeration, but if taken as true it can prevent even worse headaches than those January 1 hangovers.
A primer on subpoenas
For those who haven't had the dubious pleasure of being subpoenaed, here is a primer. Though subpoenas vary by state, they basically come in three flavors: documents, deposition and trial. A document (aka "records") subpoena requires that the receiving person or business produce certain of its files for inspection and copying. To verify that all of the requested documents are produced, records subpoenas often require that a senior person at your business sign a declaration under penalty of perjury, or even appear in person to testify at a deposition that those records are all there, ready for copying.
A deposition subpoena commands a witness, either by name or as the "person most knowledgeable" regarding specified subjects, to appear in person and testify regarding those subjects. A deposition subpoena can be combined with a records subpoena, requiring both the person and the documents to arrive together at the place of the deposition. For the person testifying–the "deponent"–this can be the worst of both worlds, sitting idly by while a brood of barristers pore over the documents, conjuring up questions to fill the rest of the day and possibly beyond.
A trial subpoena, as the name suggests, requires the person and/or documents to appear at trial rather than at a deposition, but the date and time stated on this "invitation" are almost never when the witness will actually raise his or her right hand and swear (or affirm) that the testimony he/she is about to give shall be the truth, the whole truth, and nothing but the truth. That is because the first day of trial is often spent having pre-trial motions heard by the judge, followed by jury selection, opening statements by counsel, and, sometimes days after trial officially began, witnesses' testimony.
In a later column we will examine the subpoena's close cousin, the administrative order, sometimes also called a subpoena, by which a state agency commands a person or business to give on-the-record testimony to aid the agency in one of its regulatory or disciplinary functions.
What to do?
Subpoenas, like termites, rarely just go away on their own. Ignoring them is not an option, and delaying action in response to them can have a similar deleterious effect on one's place of business. The time to take action is right after the subpoena is received. But what to do?
If your agency has a written procedure for what to do if you are subpoenaed, follow that process exactly to the letter. If the agency doesn't have such a process but does have an in-house legal department, get the subpoena to them right away, keeping a copy for yourself.
A smaller agency may not have a written procedure or an in-house law department, and even if yours does, you still have a role in responding to the subpoena. What should your next step be? Not all lawyers agree on the answer, but I advise you to read two documents: First, read the subpoena. If you are tempted to mark it up with a pen or highlighter as you read it, please make a copy of it first and then mark up the copy. You should be able to identify the insurance placement(s) and customer(s) involved in the case and something about the dispute that led to the lawsuit. If an insurance carrier is named as a plaintiff or defendant, it is probably a lawsuit over a denied claim. If your customer and another company in the same line of business as your client are adverse to each other, the suit may have to do with a contractual indemnity agreement between the two, especially if their contract with each other requires one of them to name the other as an additional insured on the first's insurance policy.
The purpose of reviewing the subpoena on your own is simply for you to glean what you can from it and to start thinking about any problems that occurred in the insurance placements for that customer. Did she tell you about any unpaid losses that she had expected to be covered? Did he switch from your brokerage firm to another?
Please note that I used the phrase "start thinking about any problems," not "start talking." Whether or not you smell a potential claim against your agency lurking in the underbrush of legalese in the subpoena, you do not want to be making statements to your staff (other than in-house counsel) that they might have to later testify about, as in the following (fictitious) nightmarish exchange:
Plaintiff's lawyer, Anna Conda: Tell us, Mr. Veritas, how long have you been the administrative assistant to Mr. Wroth?
Veritas: About 6 years.
Conda: Were you present in the office on the day when my subpoena in this case was served on Mr. Wroth?
Veritas: Yes.
Conda: How it was that you learned that Mr. Wroth had been served with that subpoena?
Veritas: He started yelling very near my desk, about his former customer, Vin Dictive.
Conda: As best as you can, please tell the court exactly what you heard Mr. Wroth say.
Veritas: Well, fortunately, I have a photographic memory. His exact words were, "Can you believe that Vin Dictive! Can you believe this? He has the audacity to fire me as his broker over a simple mistake that anyone could have made, and now he wants me to waste my valuable time talking to some sleazy lawyer of his. Well, he can shove this subpoena up his . . .'"
Conda: I think we have the gist of it, Mr. Veritas. No further questions.
Loose lips sink lawsuits, and that applies to loose e-mails, too.
It needn't be quite so dramatic as in the above script. A serious gaffe can be made simply by not objecting to a subpoena within the time allowed by law. Agents and brokers often have very confidential information about their customers' businesses. Producing the entire file regarding the placement at issue, which might be the easy thing to do, does not give the customer a chance to identify trade secrets or other proprietary information in the broker's file, and to make a timely objection to its production.
The second document that you should read or re-read is your professional liability (E&O) insurance policy, even though the subpoena does not make a claim against you. Some E&O policies afford coverage with little or no deductible to provide legal help to policyholders who have been subpoenaed. Other E&O policies provide free hotlines that an insured broker can call for simple legal advice. If your agency has that type of coverage, you don't have to go it alone or, perhaps worse, turn the matter over to your brother-in-law who does estate planning and has never defended anyone against an E&O claim.
How does this prevent claims?
Smart plaintiffs' lawyers believe in the adage made famous during the Watergate scandal, "Follow the money." That sounds more cynical than it's meant to–they are simply gauging the risks and rewards that their clients face if they bring another defendant into the case. If the chance of reward is slight and the existing defendants have sufficient assets and insurance to satisfy a verdict for the plaintiff, there is little incentive to bring a new adversary into the case.
But what if an insurance agent or broker, during a deposition as a non-party witness, commits a tremendous gaffe? What if he or she, completely unprepared and without having reviewed the documents regarding a years-earlier insurance placement, makes a seemingly innocuous statement that has an unforeseen impact on the case? It could be as simple as a "No" rather than an "I don't recall" in response to a question about whether he or she told the then-customer about a particular risk and the availability of insurance to cover it.
Another reason to be well prepared: lawyers don't use the word "document" the way most people do. A document, in subpoena-ese, includes e-mails, drafts, nearly-identical copies of the same original that have different handwritten markings on them and just about any other method of physically or electronically recording information. Your deposition can be stretched from a one-day inconvenience to a week-long (or more) marathon if you need to repeatedly go back to your documents and produce more of them, having believed that your inch-thick manila folder was the entire file.
Thorough preparation will not mask a professional's poor work, but it often helps good, substantive work to appear exactly as it is. Many an agent and broker has seen subpoenas come and go, with nary a lawsuit being amended to name them in the case.
Take-away points
Subpoenas are part of the legal process and need to be taken very seriously, right from the moment of their unwelcome arrival.
If your agency or firm has a process in place to deal with subpoenas and other legal matters, following that process is your first and best strategy. If there is no stated process but you have a legal department, they will know what to do.
Even flawless professional work can turn into a claim if the response to a subpoena gives rise to new, unanticipated vulnerabilities. These can happen through inopportune statements, violation of a customer's rights to confidentiality or neglect.
Don't accept the invitation to become a defendant. And here's hoping that Santa is the only visitor who leaves you a surprise package this year.
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