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Defense Digest

Message From the Executive Committee

Defense Digest, Vol. 28, No. 1, April 2022

April 1, 2022

by Craig S. Hudson

Over this past year, much has been written and said about what employees of today want from their employer, regardless of the industry. While every so-called expert and pundit has their own perspective, a few consistent themes emerge. Employees want their employer to be invested in their professional and personal development. Employees want constant feedback, affirmation and direction. Employees want to be treated with respect and dignity. Employees want their workplace to have a sense of community and to believe they are a part of a team.

To Marshall Dennehey, the aspirations of today’s employees are nothing new. What today’s employees are purportedly looking for in their workplace environment has always been found at Marshall Dennehey. A staple of our culture has been to treat each and every employee, regardless of their position, with respect and dignity. We have long believed in creating a positive workplace environment that fosters a sense of community and teamwork. We have a tradition of making and keeping our commitment to every employee’s professional development. Our culture is why so many of our professional and non-professional staff spend their entire working life at Marshall Dennehey. It is why we have a number of shareholders who have spent their entire careers at Marshall Dennehey. It is why, when lateral attorneys join us, they lament that they failed to make the jump sooner. It is why many of our administrative directors and managers, who started at an entry level position, now find themselves responsible for numerous employees and key operational functions. 

Our desire is to attract employees who we believe will thrive at Marshall Dennehey. Our process is to involve a number of employees in recruitment and interviewing to bring different perspectives and life experiences to the table. This ensures that we embrace each potential employee’s differences. The paramount reason for doing so is to identify potential employees who will be successful regardless of their background. We look for individuals who have the potential to be long-term employees and who are themselves sincerely looking for such an opportunity. 

Our commitment to the long-term success of our employees is evident immediately after a person is hired and begins working at Marshall Dennehey. Long before “on-boarding” became a catch phrase, we expended a great deal of time, energy and expense in the training of new employees. Every new employee goes through our on-board program. The initial training includes sessions by our administrative departments on our structure, systems and best practices. The training also includes presentations on our history and culture. Additionally, the on-boarding process provides every new employee the opportunity to establish a rapport with other employees at Marshall Dennehey to facilitate teamwork. 

For attorneys, the on-boarding process does not end with their initial training session. Twice a year, we hold a “New Attorney” orientation, where we bring every newly-hired attorney, regardless of their experience, back to Philadelphia for a two-day meeting and dinner. At this two-day session, hosted by Larry Schempp, our Director of Professional Development and Training, recently hired attorneys meet the members of the Executive Committee, the practice group directors, our CFO, COO and other administrative directors. There are workshops and training sessions that are incorporated to enhance their professional development, as well as sessions dedicated to explaining Marshall Dennehey’s structure, history, and culture. 

For our associates in Philadelphia, Larry Schempp hosts frequent in-house “Lunch and Learn” CLEs that not only provide training and professional development, but they also create an opportunity for the associates, regardless of their practice group, to get to know one another and to establish relationships that serve them well during their careers. For the associates in our offices outside of Philadelphia, we hold similar training sessions. In addition, we hold annual two-day conferences that bring associates from several of our offices together. The program, designed by Larry, includes presentations from shareholders, administrative directors, and at least one member of the Executive Committee, all geared to enhance their professional development and success at Marshall Dennehey. 

Every associate is assigned to one of our four Practice Departments, and they are then assigned to work in smaller practice groups within their department. Every new associate is assigned a supervising attorney. Assigning a new associate to work with a limited number of attorneys allows each associate the opportunity to specialize in a particular area and to receive one-on-one training from a more seasoned lawyer. Supervising attorneys are charged with finding opportunities for the associates to interact with claims professionals, clients, opposing counsel, judges, and, when appropriate, to handle depositions and arguments on motions. We want our associates out front, and working with senior attorneys—not confined to working behind the scenes. We believe this is how you effectively train associates. In granting these opportunities, the associate becomes part of the team, and their hard work and accomplishments are recognized. Supervising attorneys and other senior lawyers are encouraged to provide constant feedback and mentoring to the associates in their group. 

Relatedly, every associate has formal mid-year and end-of-year review meetings with their supervising attorney. This lets the associate know what they are doing right and identifies areas that need improvement. During their review, the associate is encouraged to identify their accomplishments, raise any concerns they may have and specify how the firm can assist them in their professional development.

Mentoring of associates at Marshall Dennehey has always played a key role in the development and retention of lawyers. I know that every shareholder at Marshall Dennehey recognizes that they had mentors who were instrumental in their success. Consequently, our more experienced attorneys embrace being a mentor themselves. While we have always encouraged and stressed the importance of mentorship to the success and retention of associates, our Executive Advisory Committee and our Diversity, Equity and Inclusion Committee are both actively engaged in working with our Executive Committee to identify opportunities to further enhance the mentoring process. 

Perhaps nothing demonstrates our desire to create a workplace environment that is collaborative and provides opportunities for success better than having a compensation system for attorneys that is not origination-based. This has always been the foundation of our compensation system. Every attorney’s year-over-year compensation is based on their overall contribution to the firm, not just the hours they have billed or the work they have generated. In determining each attorney’s compensation, a number of factors are considered, including how an attorney treats staff members and other attorneys, and whether they are a team player, willing to assist others. Our system encourages our associates to help one another. Because our compensation system is not origination-based, our lawyers are more apt and, in fact, are encouraged to share opportunities with each other. The lack of an origination-based compensation system is also why our senior attorneys are so receptive to having associates communicate and work directly with clients and claims professionals. A non-origination-based compensation system also serves our desire to become a more diverse and inclusive workforce. 

When I interview associates from other firms, I am surprised to hear that at some firms, associates are not permitted to communicate directly with the client or claims professional. Apparently, this grows out of some concern that the associate may establish a relationship with the client or claims professional and someday take the client away from the partner. Such a concern does not exist at Marshall Dennehey. We want our associates to have direct communications with claims professionals and clients. In doing so, we make associates part of the team and invest them in serving our clients’ best interests. 

Another part of our firm structure and culture that creates a sense of being part of a team is that every shareholder owns one share of stock. We don’t have equity and non-equity shareholders. And we do elevate associates to shareholder. In fact, we do it every year. Just this past year, we welcomed 17 new shareholders. Many of them have spent their entire legal careers at Marshall Dennehey. These 17 newly-elected shareholders have demonstrated that they possess the talent, drive, and dedication to be successful attorneys and, importantly, that they have the qualities that enhance our firm’s culture. 

Perhaps there is no better example of Marshall Dennehey’s sense of commitment to its professional and non-professional staff than the fact that, back in the early stages of the pandemic, when we went into a “lockdown” of unknown duration, we decided that we would not lay off any employees or cut compensation. This was done because we at Marshall Dennehey are a community that stands together. 

As a community, we emphasize that we talk to each other face-to-face and not through a computer screen or during a scheduled Zoom call. We need to confront issues together and share our insights and experiences. None of this happens if we are working from home. This is why we adopted a hybrid return-to-the-office policy that requires professional and non-professional staff to work a specified minimum number of days in the office. A majority of our professional and non-professional staff have elected to return to their pre-pandemic routine of working in the office every day. This is a testament to our positive and fulfilling working environment.

Marshall Dennehey’s desire to create a positive and enriching workplace environment is nothing new. We described our culture and our continued aspirations for that culture on our website well over a decade ago: 

•    It’s a culture that treats employees fairly and respectfully, be they shareholders, associates, administrative assistants, receptionists or file clerks. 
•    It’s a culture that recognizes and promotes diversity among its members. 
•    It's a culture in which lawyers like and trust one another and like and trust their leadership.
•    It's a culture that hires employees with the hope and expectation they will finish their careers at the firm. 
•    It's a culture that encourages and rewards loyalty, humility and teamwork. 

This statement of Marshall Dennehey’s culture remains just as accurate and important today as it did many years ago. It is a culture we are dedicated to preserving. 
 

Defense Digest, Vol. 28, No. 1, April 2022 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2022 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

First DCA Reverses Excessive Jury Award Unsupported by the Evidence

In December 2019, the plaintiffs filed a claim with Universal for damages caused by a water and sewage back up through the plumbing system and existing through multiple fixtures including the washing machine drain, kitchen sink, dishwasher, bathtub and toilet. Universal investigated the claim, issued payment for resulting water damage totaling $7,000.00 in actual cash value ($12,000.00 in replacement cost value). The plaintiffs sought additional benefits for work needed to access the below-slab cast iron plumbing system due to the failure of the system from rust, deterioration, corrosion and breaks in the line. Universal denied any additional benefits for access. In 2021, the plaintiffs filed suit. During litigation, Universal sent a plumber to inspect the home and the plumber concluded the pipes were clogged but could be cleaned. The plaintiffs’ plumber testified that the plumbing system needed to be replaced due to holes and openings in the pipes. The plaintiffs introduced two estimates prepared by Triad Restoration services totaling $79,680.22 in replacement cost value and $50,219.97 in actual cash value and an executed contract with another company for repairs with the amounts of repair redacted. Since the insurance policy did not provide coverage for repair or replacement of the plumbing system, the jury only had to decide whether the plumbing system needed to be replaced, and if it did, Universal would owe for the access costs; the jury verdict form required the jury to determine both the replacement cost value and actual cash value amounts. The jury asked if it had to rely on the Triad estimates for their amounts. The trial court advised the amount awarded had to be based on the evidence presented at trial and the law given by the trial court. The jury awarded $335,000.00 in replacement cost value or $305,000.00 in actual cash value. Universal motioned for a new trial arguing the amount awarded was unsupported by the evidence and then moved for remittitur. The trial court denied both motions and this appeal followed. The court found that while a jury’s verdict should only be disturbed with caution and discretion, the trial court must give the properly challenged award close scrutiny and determine whether it bears a reasonable relation to the damaged provided, is supported by the evidence, and could have been reached in a logical manner by reasonable means §768.74(3), (5)(d)-(e), Fla. Stat. The court found the trial court did consider the statutory requirements at the hearing on Universal’s remittitur motion and was concerned about a reasonable relation to the amount of damages proved and injury suffered and whether the award was supported by the evidence, but ultimately denied the motion, reasoning that the jury had been properly instructed to fairly and adequately compensate the plaintiffs. The court noted the only evidence providing the basis for the jury verdict was Triad’s estimates and those valued the plaintiffs' claimed loss at $79,680.22 in replacement cost value and $50,219.97 in actual cash value; no valuation evidence reasonably supported the jury verdict. The plaintiffs argued that the jury was entitled to consider more than the estimates, but the court conveyed the evidence provided did not give the jury a way to reach the amounts they awarded. The court was also not swayed by the plaintiffs’ argument regarding inflation and later price increases, but the court noted that no evidence via the contract, nor testimony regarding increase in labor, material, fuel or construction costs were entered into the record.  The court concluded the jury may draw reasonable inferences from the evidence, but it may not supply a damages number by speculation. The court did not find any of the plaintiffs’ remaining argument persuasive either. The court reversed the denial of Universal’s remittitur motion and motion for new trial as to damaged and remanded the case. The court ended its opinion with advising the trial court must determine whether replacement cost value or actual cash value is the property measure of damages under the policy and order remittitur in an amount consistent with that determination and the evidence.

Thought Leadership

Appeals Court Reverses Trial Court Order Awarding Attorney’s Fees Due to Lack of Evidence to Support Fee Awarded

The Fourth District Court of Appeal reversed the trial court’s order awarding appellate fees to People’s Trust Insurance Company based upon a lack of evidence to support the attorney’s fee award in RM & Assocs. Consulting, Inc. v. People's Trust Ins. Co., 2026 Fla. App. LEXIS 4654 (Fla. 4th DCA 2026). People’s Trust was the insurer of a residential property that had sustained water damage. RM & Associates Consulting was hired by the homeowner to perform mitigation services at the property. The homeowner assigned post-loss benefits to RM and RM subsequently filed suit against People’s Trust alleging that it had not been paid the money it was owed for the mitigation services. People’s Trust defended the lawsuit on the ground that the policy required the insured to notify the insurer before authorizing repairs so People's Trust could elect to use its preferred contractor. Because the owner did not comply with that provision, People's Trust asserted its liability was limited to the amount that its preferred contractor would have charged for the work, which People's Trust contended was $2,000. People's Trust paid that amount to RM before RM filed suit. People’s Trust filed a motion for summary judgment which was granted. RM appealed the summary judgment ruling and the ruling was upheld by the Fourth District Court of Appeal. The appellate court also granted People’s Trust’s entitlement to appellate attorney’s fees, subject to the trial court’s determination of the amount of fees, based upon an offer of judgment made by People's Trust. On remand, the trial court held an evidentiary hearing to determine the amount of attorney’s fees People’s Trust was entitled to. At the hearing, People’s Trust presented testimony from it’s fee expert, supervising trial counsel and appellate counsel. People’s Trust sought recovery of $24,866.17 for work performed by appellate counsel. The request primarily consisted of work performed in preparation of the answer brief. The fee expert testified that more than ninety hours spent preparing the answer brief was reasonable given the complexity and significance of the underlying issue. The appellate court found that the fee expert’s testimony fell short of meeting the necessary standard of demonstrating that the hours expended were necessary. The appellate court found that the billing records did not serve to cure the deficient testimony, as the billing records did not contain adequate details regarding the specific tasks performed. Rather the records contained entries such as “answer brief” which the appellate court found to be insufficient. The appellate court noted that neither the fee expert or counsel addressed how the prior research and briefing in the parallel litigation informed the work in the instant matter. The appellate court noted this was significant in that a court's attorney's fees award must exclude excessive, redundant, or otherwise unnecessary hours, citing Florida Patient's Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985). Based upon the record failing to support the finding of the trial court, the 4th DCA remanded the case to the trial court for a reconsideration and redetermination of reasonable appellate attorney’s fees supported by competent substantial evidence. The 4th DCA reiterated that the fee expert’s focus on the quality of the work and the importance of the work to People’s Trust did not make up for the perceived deficiencies in the position that spending over ninety hours on a single answer brief was reasonable. Whether moving for attorney’s fees or challenging the amount of fees being sought by an opposing party, practitioners should be mindful of the evidence being used to support the claims being made. Parties should pay close attention to whether the hours being sought may be impacted by prior litigation either party may have engaged in. A party must be prepared to address how prior litigation efforts did or did not impact the amount of hours being claimed in current litigation. Lastly, billing records must be sufficiently detailed so as to support any potential future fee claim.

Thought Leadership

United State District Court for the Middle District of Florida finds Evidence of Replacement Cost Value is Admissible and Recoverable Even When Repairs Have Not Been Made

The plaintiff filed a claim for damage as a result of Hurricane Ian. It claimed damages were over $24 million, but the carrier accepted partial coverage and paid $8,307.49 for secondary components. The carrier found hurricane damage to the building, but it was below the insurance policy’s $3.6 million deductible. The plaintiff sued for breach of the insurance policy. The carrier argued in a motion for summary judgment that plaintiff could not recover replacement cost value (RCV) because the property repairs had not been effectuated. The policy provided for RCV, but only after the repairs were completed. The carrier argued that because the repairs were not completed, the plaintiff was not entitled to RCV damages. The plaintiff argued the carrier could not withhold the actual cost value (ACV) due, which was the main allegation of the lawsuit, then fault it for not making the repairs to unlock the RCV. The United States District Court for the Middle District of Florida rejected the carrier’s argument, finding that when an insurer allegedly breached the policy by withholding coverage, it could not hide behind a repair-contingent provision to block the insured from RCV damages at trial. The court found the issue to be whether the contractual language designed to preclude certain coverage until after repairs are completed barred an insured from seeking those damages at trial when repairs were not complete. The court noted the Eleventh Circuit had not resolved this issue and neither side pointed to a definitive answer from the Florida Supreme Court. The court reasoned that it must look to the Sixth District Court of Appeal (6th DCA), which is the court which would have heard this case if it was in state court. The court noted the 6th DCA recently addressed this issue in Universal Prop. & Cas. Ins. Co. v. Rodriguez, 427 So. 3d 676 (Fla. 6th DCA 2026). The Rodriguez Court found that a breach of contract action is designed to adjudicate not only whether the contract was breached, but also evaluate the damages incurred had the breach not occurred, which the Rodriguez court found to be recovery of the RCV. This court also noted basic Florida contract principles compelled the same result, as a material breach frees the nonbreaching party to suspend its own performance and can demand the full benefit of its bargain, including RCV damages. Finally, the court found the distinction between a full denial and partial denial did not compel a different result. It found the policy required the carrier to acknowledge coverage and pay ACV for all covered damages, and the failure to do that is a material breach, entitling the insured to all of the damages available under the contract, which included the RCV.