Michael Pascoe writes:

One of the grubbier facets of what
passes for corporate morality is the belief that if you have a very
expensive contractual problem, if you’ve promised to do something
which will prove much more costly than you ever imagined, it’s
perfectly reasonable to throw a battalion of lawyers at the contract
and force your counter-party to settle for less.

It’s behaviour
some of our “best” companies happily employ, perverting the legal
system with the connivance of all the usual suspects among our top
legal firms. Draw out the process over years, make it as expensive as
possible for the claimant, reduce whatever principles might have been
involved to a “commercial settlement”. They almost make the ambulance
chasers look respectable.

I’m reminded of it by the news that various insurance companies have finally settled
a very long-running case brought by CSR over the policies it thought it
had to cover asbestos claims. After more than a decade of billable
hours, CSR has settled for just $103 million, or just $93 million after
legal costs, according to AAP.

The insurance companies’ legal
stance is in keeping with their industry’s general track record on
asbestos – fight claims every inch of the way. It would purely be a
matter of opinion whether those involved in CSR’s case fit the earlier
description of questionable ethical behaviour. All totally legal of
course, but nonetheless questionable.

I do remember an employee
of a major insurer telling me several years ago that his firm had an
entire floor of lawyers working on trying to get out of a claim
involving asbestos. He didn’t mention who had brought the claim so it
could have been one of several cases, but he was open about what was
basically involved.

The insurer had issued a policy which was supposed
to indemnify their client against damages. The damages occurred and
were much worse than the insurer’s actuaries had ever imagined. So the
insurer had its floor of lawyers (and some top outside firms as well,
no doubt) looking for any tiny cracks in the contract while generally
making it obvious to the client that many, many years would go by
before they could hope to win any payment – unless, of course, they
agreed to a “commercial” settlement.

No, it’s not nice.

Peter Fray

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