For plaintiff lawyers, the sky’s the D&O limit

Plaintiff counsel in security class action suits are increasingly using the defendant’s level of D&O insurance as a settlement negotiation point before obtaining leave by court, said Jay A.R. Cassidy, a senior vice president at Marsh in Toronto. Cassidy was a panel member during the 2010 RIMS Canada Conference session ‘Recent Trends in D&O Liability’ in Edmonton on Sept. 28.Two recent class action suits in the Ontario courts, Timminco and Orsu Metals, have had a big impact on Canadian class action trends, he said.In both cases, plaintiff counsel sought at a very early stage – after the claim had been filed, but before leave by court had been granted – the production of the defendant’s D&O policy.”Now I can tell you that [the plaintiff bar] doesn’t really care what the definition of ‘wrongful act’ or ‘insured’ is,” Cassidy said. “They want one number and one number only – the limits.” The court allowed the motion in both cases, despite the fact that counsel did not yet have standing as the plaintiff counsel.”This was the ‘Wow’ for the insurance industry,” Cassidy said. “Without getting too far offside, if you wave a steak in front of a lion, they’re probably going to eat it. So if you have a document that says the company has $100 million – and that’s not technically the company’s money, but the insurer’s money – plaintiffs are going to jump at it. “It will amaze you the number of times, over and over again, the level of D&O insurance becomes the settlement negotiation point.”