Monday, September 24, 2018

Top Disaster-Recovery Law Firm Opens Office in Puerto Rico

By on August 17, 2018

Editor’s note: The following originally appeared in the Aug. 16-23, 2018, issue of Caribbean Business.

Nearly one year after the category-5 wind beast named Maria cut a swath of devastation across Puerto Rico, businesses and the community are slowly getting back on their feet after chaos brought the people to their knees. Although they have recovered against insurmountable odds—operating on power generators for months, unable to make payroll, the jobless taking flight—the languid comeback traces to more than the violence of inclement weather as Puerto Rico’s insurance industry (see Cover Story) has stalled and lowballed local businesses. This includes Latin Media House, the conglomerate that publishes Caribbean Business.

“The closest analogy I can give to what happened in Puerto Rico is Katrina—and I think a lot of similar dynamics are in play. The insurance industry is, at its core, very simple. Insurance companies make their money by collecting premiums and not paying claims,” explained William Copley, a founding partner at Weisbrod, Matteis & Copley (WMC), a small boutique firm specializing in disaster-recovery cases, which will be opening an office in Puerto Rico to take on the tens of thousands of unsettled claims that were left in the wake of devastation.

“When you have a catastrophic loss like you had in Katrina or like you had in Puerto Rico, the incentives for the insurance companies, on a systemic level, to implement policies and procedures designed to underpay policyholders are enormous. And, we have been litigating about those for a decade. We have a very hard-earned reputation as someone who is going to hold the industry to task when they try to take shortcuts to deprive policyholders of money they owe them,” Copley said.

The cavalry arrives

The Washington, D.C.-based firm hired Partner José Nieto to head its San Juan office. In a press release issued by WMC, Nieto is described as a “well-known and respected litigator and professor at University of Puerto Rico, who holds law degrees from both University of Puerto Rico and Harvard Law School.

“What makes this law firm different is that a majority of the cases related to disaster recovery are done on a contingency basis. That is something that was not available in Puerto Rico,” Nieto explained during a roundtable interview with the partners, which took place at the firm’s headquarters in Washington, D.C. “I can tell you from experience that in Puerto Rico only attorneys who were working medical malpractice cases, some tort cases, took on cases on a contingency basis—never an entire law, never for big cases. And the problem is that a lot of people had very valid claims, but they could not afford to litigate—so this is going to be a game changer in that sense. The fact that you will have people who have valid [claims and] will be able to have legal representation that they otherwise could not afford.”

Contrary to what many other U.S. law firms are doing in Puerto Rico, WMC is hiring attorneys admitted to practice in Puerto Rico. “I am a partner of the law firm, which is a sign of the firm’s commitment to not just go to Puerto Rico for a time, while they get a couple of cases then skip town,” Nieto emphasized. “I mean we are getting an office with a long-term lease.” The Puerto Rico offices of Weisbrod, Matteis & Copley will be in Parque Las Américas, one of the many properties belonging to Jaime Fonalledas (across the street from Best Buy).

“So, it is nice, for a change, to have a law firm coming to Puerto Rico to hire lawyers who are licensed to practice here [in Puerto Rico]. The idea is that this is going to be a law firm that has the level of expertise and support of the main office here, in Washington, D.C. and the other offices.”

Although the firm’s founding partners come from large firms—Matteis started his career at Skadden, Arps, Slate, Meagher & Flom where he worked with Puerto Rico partner Nieto when they were young legal guns in the early 1990s—the small boutique has a mission-driven aspect tracing to a kinship the partners seemingly share.

“I think it’s part of it; we are all mission-driven, we are passionate about what we do. And a lot of us, like me, made our living inside the large law-firm world, but always standing on the plaintiff side, on the policyholder side,” says Gary Thompson, who joined the firm in January 2018, after 12 years at Reed Smith LLP, where he held the post of managing partner of its insurance practice. “I was kind of an outlier in the firm as a whole, which is largely a defense-side firm. What I love about this firm is that it brings people together from different backgrounds, who share this common passion about insurance recovery. Sure, we want to do well and profit as a firm, but we are the kind of lawyers who I don’t think that is all it is about. We want to have a balanced approach to our practice, where what we are doing changes lives and helps people recover from a disaster like this. That is one home at a time, one business at a time. We understand that with each business that is restored to its previous conditions, that means jobs.”

Landmark litigation

Thompson brings considerable expertise to the team. Besides his work helping resolve unsettled claims after the 9-11 terror attacks, where he had the largest caseload of hotel owners, he had tremendous success in recovery cases after Katrina. Together with Meghan Moore, who now heads the WMC Florida offices after nearly 15 years at Ver Ploeg & Lumpkin, the legal tandem obtained a $28 million jury verdict for a hurricane-damaged hotel in Broward County and have litigated cases for tourism-industry properties from small inns to large resorts in the range of $40 million.

Moore sees the devastation in Puerto Rico on an unprecedented level although she sees jurisprudence that conjures the legal evolution of cases in Florida. “I have not seen anything ever on the level of the devastation in Puerto Rico,” Moore explained. “And the insurance in both the law and on the books is very similar to Florida law—it really hasn’t been developed through case law yet because they hadn’t had this type of event ever. So, being able to help with that, especially given our level of success in Florida and other areas of the country, is really important.”

“That was in Florida, that was the same law and we basically had to develop the case law by taking those cases to court. I think what you are going to see from our firm is a commitment to go to court, to see the cases all the way through, and we just won’t compromise.”

The firm built a reputation for doggedness on landmark cases that drew national attention. “For example, WMC became the first firm in history to prove that one of FEMA’s [Federal Emergency Management Agency] flood insurance companies—State Farm—had committed intentional fraud in its claims-handling practices after Katrina. In the months following the storm, questions arose about whether some insurance companies were mischaracterizing wind damage as flood damage. The characterization of damage was critical because most homeowner insurance policies covered wind damage and excluded flood damage, while FEMA’s government-backed flood-insurance policies covered flood losses but excluded wind damage,” explained a press release issued by WMC.

The law firm obtained testimony by State Farm claims managers Cori and Kerri Rigsby, who blew the whistle on the company’s scheme to characterize damages caused by wind as flood damage to avoid paying policyowners. The case went all the way to the Supreme Court where the plaintiffs won. The firm’s Supreme Court performance led to its hiring as lead counsel for the Attorney General in other cases engaging in similar practices in Mississippi.

Just say ‘no’

The spate of Katrina victories was followed by discovery of fraud in the aftermath of Hurricane Sandy, which led FEMA to reopen the Sandy Claims Review Process. “WMC conducted 1,100 separate arbitration hearings against FEMA,” during which the firm’s clients collected three times the average of claimants who were not represented by WMC.

“In Sandy, instead of giving up, we received a lowball offer—said ‘no’; we took a higher offer and said ‘no’; then we asked for a neutral, a third party—a retired judge—to mediate the disputes. We did 1,100 of those in total,” explains Partner Joshua Katz. “We presented, we put on our case, we brought in experts, we brought in evidence. And those calls lasted, on average one to two hours—where we literally sat there and gave an overall presentation, the other side gave their presentation. We rebutted and took on significant questioning from the judge with our experts. And I think it is that diligence and that level of sophistication that allowed us to get those results for our clients.”

There is no question that the number of firms descending upon Puerto Rico to help in the recovery of claims is at an unprecedented level—it is not a dynamic exclusive to legal firms confronting wayward insurance. Disaster capital ripe for the plucking in Puerto Rico is in the tens of billions. Thus, there are other legal firms setting up practices in San Juan that claim to do the same work. WMC claims to be different.

“The main difference between those other firms in San Juan and our firm is that in addition to representing more Sandy homeowners than any other firm, we are also one of the country’s leading firms representing major corporate policyholders,” asserts founding partner Weisbrod. “Various lawyers at the firm, from the Florida office to the D.C. office, have collected many decades, representing some very sophisticated policyowners on corporate insurance-recovery work. And we are the only firm in America, let alone San Juan, both representing homeowners and major corporate policyholders.”

At this writing, the firm has taken on more than 200 cases that range from some of the island’s blue-chip companies including hotels, resorts, condominium complexes, schools, churches, restaurants, media companies (including Latin Media House), as well as a number of homeowners. The firm’s involvement on the island underscores the claim that it intends to be in Puerto Rico for the long haul.

Nieto, who is well-acquainted with the island’s enormous caseload, put it like this: “My experience in Puerto Rico has been that, even though it may seem obvious to lawyers, insurance is contracts. So, when you are asking for compensation under an insurance company, you are asking for something that you have a contractual right to receive. In Puerto Rico, for some reason, people treat this as though this were something that the insurance companies are doing out of the kindness of their hearts…. And it is really heartbreaking to see people being afraid of standing up and asking for what they have every right to receive. And, even worse, seeing people being taken advantage of. You see it in Puerto Rico with people who have become our clients and with other people who are trying to come in contact with someone at the insurance company and they receive no answer whatsoever.”

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