Quinn Emanuel Urquhart & Sullivan, referred to as Quinn Emanuel, has spent years in a legal clash over a $185 million fee they earned after securing a victory in an enormous lawsuit for health insurers. However, the recent release of a litigation insurance policy associated with the fee has sparked additional queries regarding how much money is truly at risk and if the law firm’s motivations have been influenced by this arrangement.
A part of the insurance policy became publicly available after Judge Kathryn Davis ordered Quinn Emanuel to reveal it to the plaintiffs contesting the fee. The essential concept of judgment preservation insurance is somewhat straightforward: if the requested fee is reduced, the insurer will make up for the loss. However, it is unclear how much of the fee in this case was covered by insurance.
The recently revealed portion of the policy sent ripples through the litigation financing and insurance industry, with the policy appearing to deliver only $25 million in protection once the fee’s reduction reached nearly $10 million. Initially, it looked like Quinn Emanuel could still be on the hook for the first $10 million in cuts. Then the insurance policy would compensate $25 million of any further reduction. This lead to some suggesting that the firm was ‘completely underinsured’.
However, this may be a case of not having the full picture. The released document is referred to as the ‘primary’ insurance policy, with other ‘excess policies’ presumed to follow the form of the primary policy. These excess policies, by sharing risk amongst a wider group of insurers, could potentially cover the entire reward after the initial $10 million in cuts.
According to the litigation insurance experts, the policy requires Quinn Emanuel to litigate the case with the highest level of dedication, even as if no insurance policy were in effect. This suggests that Quinn Emanuel is likely doing exactly what they would under normal circumstances, namely pursuing the fee they believe they rightfully earned.
Very interesting and unexplored queries about how insurance could modify the motivations of litigants arise from this case.
As explained by Tom Baker, an insurance expert and professor at the University of Pennsylvania, litigation insurance was initially believed to motivate individuals to make judgements or appeal more cases. Therefore, the insured would be confident to take the case all the way. However, he found it is more likely to deviate settlements around the levels that are protected by insurance.
Presently, both the parties in the Quinn Emanuel case are significantly apart. The objecting class members have requested to court to cut the award by 87% to 93%, whereas Quinn Emanuel desires the full amount. This suggests that a settlement is unlikely. Finally, a judge will determine a fair fee for the class members. However, it is highly probable that Quinn Emanuel has insured the vast majority of the award.
For further reading on the Quinn Emanuel case and other industry-leading news, refer to the original article on Bloomberg Law.