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President & CEO

Chairman, Executive Committee

Portrait of G. Mark Thompson

Defense Digest

Message From the Executive Committee

Defense Digest, Vol. 27, No. 4, September 2021

September 1, 2021

by G. Mark Thompson

Have you experienced a greater appreciation lately for the things you used to take for granted? I have. Downing a cup of coffee and leaving the house for work feels better than ever. I’m happy knowing we are all back in the office and spurred by how wonderful that feels. This past year helped me realize how much the people of Marshall Dennehey mean to me and how much better I am around them. I look forward each day to the boost I get from the folks I’m fortunate to work alongside.

Our sense of community, and all its positive energy, is back. Across the firm, hallways are louder as attorneys, paralegals, and support staff linger to talk, laugh and check in on one another. We have gone back to holding doors and sharing elevators. And in our kitchens, baked goods, pizza and all kinds of unhealthy treats have reappeared. It’s marvelous!

There really is an antidote for much of the frustration and fatigue we have come to experience in the past year. Just look up. Look up and take stock of all we have to be grateful for. Do that and you’ll find it impossible to be grateful and discouraged at the same time.

When I look around I smile, thinking of the 17 new attorneys we recently onboarded at Marshall Dennehey. I told them during an in-person orientation that they had chosen an exceptional firm that does exceptional things. I meant and declared it with conviction because I know it to be true. I am both grateful to say that and for the talented lawyers I was able to say it to.

Whether you are a client or an employee of Marshall Dennehey, I want you to feel good about what this firm stands for and know you are part of something special.

You enable us, when others falter, to step forward and lead. And we are grateful. It is because of you we press on, always striving to do the right thing, regardless of circumstance. And it is why, I believe, we are blessed to be an exceptional firm.

Think about this, last year Marshall Dennehey was able to accomplish what 95% of the Am Law 200 could not.

This prestigious group, among which we are proud to be ranked, represent the 200 largest, most successful law firms in the country. The best of the best. And yet last year, when faced with adversity, they flinched.

Ninety-five percent of these firms opted to lay off or cut the pay of their employees. The majority did both.

I am grateful we took a different path.

At Marshall Dennehey, we determined to take care of each other. We committed to keeping our entire 1,200-member family together, safe, fully employed and fully paid. It is a commitment from which we have never wavered. And it’s something we achieved without PPP, stimulus checks or bank loans.

We did it through hard work, shared sacrifice and a healthy dose of providence. Facing an uncertain future, our shareholders put the pursuit of good before the pursuit of profit. Everyone participating in our 401(K) plan gave up their employer match. We deferred employer-paid social security taxes and we saved on expenses. And together we did what our peers did not. We avoided layoffs, pay cuts, and the hardship those measures would have imposed on our employees and their families. We chose character over compromise. We did what was right and emerged grateful and intact from the largest threat to ever confront our 59-year-old firm.

Why do I think we’re exceptional? Why am I grateful to work at Marshall Dennehey? Because putting us ahead of me has always been part of our culture. Instilled by our founders, it’s a guiding principle that provides clarity, calmness and strength. And our resolve to follow that tenet makes all the difference.

Putting us ahead of me explains our distinct pay structure. Marshall Dennehey doesn’t compensate its lawyers based on origination. A recent ALM Intelligence survey found that 83% of law firms still do. This is a tired but pervasive practice in which the lawyer who first touched (or originated) the client receives credit, often in perpetuity, for all subsequent assignments. He or she might then share credit with the lawyer who grows the account and/or the attorney who performs most of the client’s legal work. The lawyers are then paid on the basis of these “originations.”

These systems encourage hoarding. They create incentives and shape behaviors that are me-focused and counter to most clients’ interest. Lawyers end up disregarding venue, subject matter expertise or experience, all in an effort to retain a file and preserve origination credit.

At Marshall Dennehey, we’d rather focus on client-oriented performance. Spurning origination credit allows us to easily assign the right matter to the right lawyer in the right location. Our lawyers are also able to specialize in distinct areas of law such as ride sharing, employment, insurance coverage or appellate advocacy. By contrast, where compensation is based on origination, lawyers tend to juggle multiple disciplines in an effort to keep matters under their own name.

Our unique approach puts our clients’ interest first but also fosters sharing, team work and trust among our lawyers, putting us ahead of me and strengthening the firm.

This past year, as the world staggered from order to disorder, it was putting us ahead of me that galvanized and drove our firm to recalibrate, remain ahead of the curve and continue providing clients superior legal services. I’m still in awe of what our people, working together, were able to accomplish.

The firm’s IT department scaled our remote work capacity almost overnight to serve more than 1,100 employees working from home—including nearly 500 administrative staff who had never before worked remotely. Our finance department got immediately to work bringing innovation, digitization and greater efficiency to invoicing while our lawyers learned to market, litigate and resolve cases virtually, successfully and as never before. In fact, it was Marshall Dennehey attorneys who led the way when first virtual and then socially distanced, in-person civil jury trials resumed.

Here in Philadelphia, putting us ahead of me meant a legal aid clinic, founded and continuously staffed by our firm since 2015, pushed through a pandemic and continued operating virtually with a dedicated team of volunteer attorneys spanning associates to senior management.

Putting us ahead of me accounts for why Marshall Dennehey was one of only a few firms in the country to honor its commitment to law students and run a fully intact, multi-state Summer Associate program last year, something it’s doing again this summer.

Putting us ahead of me explains why we continued to provide opportunity when other firms were laying people off, onboarding 67 new attorneys in the past year and a half.

And when asked what we were doing returning to the office while others sat at home—putting us ahead of me - became our proud reply.

It is something we did with a sense of urgency, balancing risk with obligation to our employees, our clients and our future. Working together, we brought back 20 offices across six different states safely, methodically and without any incidence of outbreak. These offices have now been up and running for months.

Which brings me back to where I started—looking up and seeing the value of community. To say it’s important is a gross understatement. To Marshall Dennehey, community is everything. It is what enlightens and protects us as an organization. It is what holds us accountable, teaches, refines, motivates and encourages us. It is in community that we are informed, that we collaborate, improve as a law firm and better serve our clients.

It’s a notion we have always grasped and one that’s catching on. It was reported earlier this month that Morgan Stanley’s CLO, Eric Gross, recently delivered a message to outside counsel, declaring the legal industry’s apprenticeship model vital to the development of young lawyers. He noted “individual lawyers learn and perform best and collectively deliver the best results when they are together -actually together.” He went on to opine that “...firms that return to the office will have a significant performance advantage over those that do not, and will see that advantage reflected in their client service and ability to deliver successful outcomes...”

We agree and have always known we’re better together.

That being said, we also see the value of flexibility and are trying to strike the right balance. Long before the pandemic, Marshall Dennehey had developed and implemented a remote work program for attorneys. Inspired by its success and our experience last year, we have now expanded the program to include paralegals and administrative staff. At present, we are operating under a hybrid model and seeking the right mix. Our attorneys and paralegals are required to come into the office at least three days a week and our administrative staff four. Everyone can otherwise work remotely. It’s a popular arrangement that emphasizes community while still affording some flexibility.

It appears to be working well.

Which can also be said of our firm.

I hope after reading this you have a better understanding of what we stand for, what makes Marshall Dennehey special and why I am so grateful to be its CEO. Our story is a powerful proof of concept: no matter what we face, we can do the right thing and still succeed.

Firm Highlights

Thought Leadership

The Tolling Trap: Filing Alone Will Not Toll the Statute Without Good-Faith Service

The Eastern District of Pennsylvania recently reinforced a critical limitation on bad faith claims, holding that a timely filing alone will not preserve a cause of action absent a good-faith effort to serve the original process. The plaintiff had presented a claim for underinsured motorist benefits to his auto insurer. The insurer evaluated the claim and determined that the plaintiff’s accident-related damages did not exceed the bodily injury liability insurance limits of the at-fault driver and denied his claim. Among other claims, the plaintiff sought to present a claim for insurance bad faith under 42 Pa. C.S.A. § 8371, to which a two year statute of limitation applies. He first filed a praecipe for writ of summons before the expiration of the statute of limitation. However, the plaintiff did not attempt to serve the praecipe or writ until after the statute of limitations had expired. Additionally, the service failed as the plaintiff had mailed the original process to an incorrect address. Despite receipt of the Postal Service’s failure to deliver the original process, the plaintiff did not attempt to re-serve the writ. Two months later, the plaintiff filed a complaint and then successfully served that complaint. The insurer sought to dismiss the plaintiff’s bad faith claim as time-barred by the statute of limitations. The district court agreed. Though the plaintiff had filed a praecipe for a writ of summons prior to the expiration of the statute of limitations, the statute is only tolled if there is a good faith effort to serve that original process. In this case, the court determined that the plaintiff had failed to perform a “good faith effort to serve the original process”. Additionally, though the filing and service of a complaint can serve as alternative original process when the lawsuit is commenced by the filing of a praecipe for a writ of summons, the plaintiff filed his complaint after the statute of limitations had expired. The plaintiff’s bad faith claim was therefore determined to be barred by the statute of limitations and dismissed by the court, with prejudice. A key takeaway for the defense is not to assume that the statute of limitations has been successfully tolled by a plaintiff merely because a praecipe for a writ of summons or complaint has been filed prior to the expiration of the statute. A filed complaint or writ is only part of the equation. The defense should carefully review the docket and filings to confirm that the plaintiff also performed the requisite good faith effort to serve that original process. A thorough review of the docket may reveal that the plaintiff failed to make the good-faith service efforts necessary to toll the statute of limitations.

Thought Leadership

Florida Supreme Court Rules Florida Statute §627.70152 Does not Apply Retroactively

In a decision that resolves years of appellate uncertainty and confirms that insurers and insureds alike can rely on the legal framework in place when a policy is issued, the Supreme Court of Florida last week found that Florida Statute §627.70152, which involves an insured’s requirement to provide an insurer with pre-suit notice before filing a suit, cannot be applied retroactively. In Universal Property & Casualty Insurance Company v. Hughes, the Court was presented with the issue of whether the statutory pre-suit notice requirement applied retroactively and whether it would apply to a breach of contract of an insurance policy that was issued before the statute went into effect. Before the Court was an appeal from a homeowner, Ms. Hughes, who sued her insurance carrier, Universal Property & Casualty Insurance Company (Universal) for breach of contract under an insurance policy that was in effect from April 24, 2019 through April 24, 2020. During the policy period, Ms. Hughes suffered a loss and, on May 29, 2019, made a claim for water damage. The carrier investigated the loss and issued payment; Ms. Hughes disputed the payment, finding the amount insufficient for repairs. On July 1, 2021, Florida Statute §627.70152 went into effect, which required insureds to provide notice of intent to initiate litigation against the carrier prior to filing a lawsuit; if an insured filed the lawsuit without complying with §627.70152, a court must dismiss the case without prejudice. On August 4, 2021, Ms. Hughes filed her lawsuit against Universal for breach of contract. Universal moved to dismiss based on her failure to comply with §627.70152. Ms. Hughes contended the notice requirement could not be applied retroactively. The trial court disagreed and dismissed the lawsuit without prejudice, and Ms. Hughes appealed. During the appeal, the Fourth District Court of Appeal, in Cole v. Universal Property & Casualty, 363 So. 3d 1089 (Fla. 4th DCA 2023), ruled that Florida Statute §627.70152 did apply retroactively to policies issued before the effective date of §627.70152. However, the Sixth District Court agreed with Ms. Hughes and overturned the trial court’s ruling, finding the statute could not retroactively apply to policies issued prior to the statute effective date. Thereafter, the other district courts weighed in, with the Third District Court agreeing with the Fourth District Court, and the First, Second and Fifth District Courts agreeing with the Sixth District Court. In resolving the conflict amongst the district courts, the Supreme Court advised “as a general rule, ‘the statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract.’ Hassen v. State Farm Mut. Auto. Ins. Co., 674 So. 2d 106, 108 (Fla. 1996). The Court applied the two-step test when deciding whether a statute has retroactive application: “First, the Court must ascertain whether the Legislature intended for the statute to apply retroactively. Second, if such an intent is clearly expressed, the Court must determine whether retroactive application would violate any constitutional principles.” Menendez v. Progressive Exp. Ins. Co., 35 So. 3d 873, 877 (Fla. 2010). In analyzing the Legislature’s intent, the Court must determine whether the Legislature has manifested a clear command for retroactivity in the statutory text.  In review of the statutory text, the Court found nothing in the language of the statute to indicate that the phrase “all suits” was serving another purpose of expanding its reach to suits based on policies that both predate and postdate the enactment of the statute. Buis v. Universal Prop. & Cas. Ins. Co., 394 So. 3d 738, 741 (Fla. 2d DCA 2024). Further, the Court noted the statute has an effective date, which has long been considered to be evidence against retroactive application of a statute. The Court concluded that, on its face, no provision of §627.70152 speaks to application of the statute to insurance policies issued before the statute’s effective date and therefore, the Legislature did not clearly command retroactivity of the statute to include insurance policies issued prior to the enactment of the statute. The Court briefly reviewed Universal’s argument that the presuit notice requirement was procedural, not substantive, and therefore should be applied retroactively; however, the Court agreed with the Sixth District Court’s finding that, in its entirety, §627.70152 transformed an insured’s ability to sue an insurance company under a property insurance policy and an insurer’s obligations to respond to and pay insurance claims, thus making the requirement a substantive change. The Court thereby upheld the decision of the Sixth District and disapproved the decision of the Fourth District in Cole.

Thought Leadership

Commonwealth Court Reaffirms the Constitutionality of Act 111's IRE Provisions

In this case, the claimant sustained a work injury of January 6, 1994, which was acknowledged by Notice of Compensation Payable (NCP). After the claimant’s receipt of 104 weeks of temporary total disability benefits, the employer filed a Request for an Impairment Rating Examination (IRE). The IRE was performed in May 2023 and the IRE physician found that the claimant had a 5% whole person impairment, under the AMA Guides. The employer filed a Petition based on the IRE results, and the Petition was granted by the WCJ. During litigation, the claimant argued that the IRE provisions of Act 111 (Section 306(a.3) of the Act) were not applicable to her injury, since it predated June 24, 1996, the date Act 57 went into effect, and that the IRE provisions were unconstitutional. The Workers’ Compensation Judge (WCJ)) granted the Petition and the Board affirmed. On appeal to the Commonwealth Court, the claimant argued that Act 111 violated the nondelegation doctrine and that its retroactive application to the claimant’s injury was unconstitutional. The court rejected the arguments on the basis that they had already found the same arguments without merit in multiple, prior cases. The court also addressed an argument made by the claimant that Act 111 was procedurally defective under the Pennsylvania Constitution because it was only considered on two days in each House after having undergone amendments and reassignments. The court noted that the Pennsylvania Constitution requires every bill to be considered on three different days in each House. The claimant maintained that, according to the legislative history, the bill did not receive three separate days of consideration from each House when it was assigned a new bill number. The court pointed out, however, that the bill number, H.B. 1840 remained constant and was considered on three occasions by the House. Further, the court concluded that minor amendments to the bill were germane to its original subject, which was to modify the Act’s IRE process, in accordance with Protz II.