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Vol. 6, Iss. 1
January 11, 2017


Q&A With Laura Foggan:

On Leaving Wiley Rein After 28 Years,
The ALI Restatement And How Coverage Law Has Changed

I’ll always remember where I was when I heard that Laura Foggan left Wiley Rein after 28 years. The renowned coverage lawyer joined the Washington, D.C. office of Crowell & Moring in late December. Twenty-eight years at one firm is a long time. That’s even longer than Law & Order reruns have been on television.

Laura is, of course, a dean of the coverage bar. In addition to representing individual clients, she is the unofficial lawyer for the insurance industry – on account of her significant work representing trade associations in a variety of aspects of the business of insurance as well as significant coverage cases. She has been involved in over 200 appeals nationwide.

Changing law firms is a fact of life for most lawyers. They have certainly become more transient over the years. But it is still relatively uncommon to see someone do so after nearly three decades. It took me ten years to learn how to transfer a call to someone else’s line. Just the thought of having to learn another phone system…

So I reached out to Laura to discuss her recent move. And, while I had her, I took the opportunity to ask her a few other things about the world of insurance coverage. I wish her all the best at Crowell.

I have to start with the obvious. What made you leave Wiley Rein after so many years?

Crowell & Moring has a distinguished group of lawyers, many of whom I have known and respected for years. The move presented a unique opportunity that I couldn’t resist. There are some great synergies between my work and the work of some of my new colleagues here – for instance, Paul Kalish serves as counsel for the Coalition of Litigation Justice, a group formed by insurers to address abuses and inequities in the current mass tort litigation environment. The Coalition files amicus briefs (including briefs in the United States Supreme Court and the Supreme Courts of various states), promotes judicial education through legal scholarship and educational conferences and works with counsel in key jurisdictions to promote changes in the way in which courts handle mass tort litigation. As you know, I am counsel to the Complex Insurance Claims Litigation Association, which is an insurer group that often appears as amicus curiae in complex coverage cases that may set new precedents in insurance law.

Do you see your practice differing at Crowell?

Crowell & Moring has a longstanding reputation in the insurance area and for handling complex commercial litigation. It provides an impressive platform that will permit me to continue and expand my work representing insurers across the country and even globally, given its offices in places such as New York, California and London. It also carries deep capabilities in related practice areas that I will be able to call upon and leverage for clients in the insurance space. I am excited about opportunities to team with lawyers from the firm’s other practice groups to counsel and assist clients in areas such as blockchain technology, drones, and other emerging issues.

Can you describe what it felt like to walk into a different office on that first morning?

Very exciting! Even though I have many years of experience in the legal workplace, moving to a new firm and new office has been interesting and exciting – I’ve been meeting new colleagues and sharing ideas on how to better serve our clients. Since my move took place around the New Year, it also offered a nice chance to put all those New Year’s resolutions into place and instill new, hopefully improved routines.

You have been very active in the drafting of the ALI Restatement of the Law: Liability Insurance, serving in the role of Liaison for the American Insurance Association. The projecting is nearing its completion. What are some of the most significant ways in which the Restatement could alter how claims are generally handled?

The ALI Restatement of the Law: Liability Insurance has been a controversial project and has been met with substantial insurer concern. Although a number of changes have been made in the Restatement drafts as the project has progressed, insurers are disappointed that significant issues still remain. For example, there are places where the draft Restatement departs from longstanding, core insurance rules. One notable instance is that the current draft Restatement approach would alter the plain meaning rule for interpreting insurance contracts by permitting consideration of extrinsic evidence without a finding of ambiguity in contract terms. Another example is that the draft Restatement would permit consideration of extrinsic material to establish a duty to defend, instead of strictly adhering to the four-corners or eight-corners rule. If adopted, these rules would almost certainly result in increased litigation costs, putting a greater burden on the courts and the public, as well as increasing transaction costs.

Also, the reporters have imposed extra-contractual exposures on insurers without bad faith, which is one of the most controversial aspects of the draft Restatement. This comes from the reporters’ use of a plain “reasonableness” test -- instead of the traditional bad faith standard -- to impose extra-contractual liability on insurers. For instance, the reporters propose the automatic loss of all indemnity coverage defenses if an insurer’s decision not to defend is deemed unreasonable, and extra-limits exposure if an insurer’s determination not to settle is deemed unreasonable. The better view is that negligent failure to defend results in contract damages, and negligent failure to settle results in responsibility to indemnify up to the policy limits, but that bad faith must be shown for extra-limits or other extra-contractual penalties to be imposed on the insurer. The Restatement proposals blur the bright line between negligence and bad faith – and increased exposures outside the policy limit and the coverage terms would be imposed based on a plain “reasonableness” test. That is a big change that clearly means there will be increased costs and stresses on the insurance system. There is reason for great concern because the Restatement proposals are made without any empirical evidence – and thus without knowledge -- of what the effect will be on the insurance system and, ultimately, society.

What are some ways that the practice of insurance coverage law has changed over your career?

Over the course of my career, I’d like to think there has been a greater recognition of the importance of insurance and the insurance industry to society and the economy. Insurers are not simply deep-pocket guarantors who can be called upon to pay for every loss, regardless of contract terms. Maybe one benefit of the insurance liability crisis of the late 1980’s and early 1990’s was greater awareness of the importance of insurance to the overall economy, and the adverse societal effect of expanding insurer liability without regard to policy limits and terms.

There is such a critical, beneficial role that insurers can and do play in relation to increasing risks and emerging problems such as the potential impact of technological advances, environmental changes, and even concerns about terrorism-related losses. However, it is still a challenge on a case-by-case basis to ensure that a targeted insurer is not viewed simply as a means for compensation of what may be an uninsured loss. In fact, a lot of the work I do in preparing amicus curiae briefs for insurer trade groups is necessary to guard against a tendency to view an individual insurer as a deep pocket -- and instead ensure that the implications of rulings for the insurance system as a whole are recognized.

See the Crowell & Moring website for Laura’s full bio.


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