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Page 2: Settling insurance claims without a lawyer: Is it a road to riches or ruin?

Objection, your honor

While some lawyers bristle at the idea of any kind of a legal self-help Web site, Yelich points out that Americans have a constitutional right to represent themselves.

But Will Hornsby, a lawyer with the American Bar Association in Chicago, sees a practical problem with using services such as MyClaim.com and Self Settle. In making settlement offers, lawyers representing consumers likely are prepared to take cases to trial, where they could possibly win larger settlements. The insurance company's lawyer, on the other hand, might want to settle the case to avoid a costly trial and a damaging verdict.



"It seems what the consumers risk is that they can be out more money than if they went to the lawyer to start with."

Hornsby says lawyers leverage the threat of litigation to get a settlement. If the insurer's lawyer refuses to settle the case, MyClaim.com and Self Settle's customers lose any money they've invested in the self-help legal services. They can either hire lawyers or represent themselves in court — a risky prospect at best.

"It seems what the consumers risk is that they can be out more money than if they went to the lawyer to start with," Hornsby says.

Hornsby also questions Yelich's claim that attorneys would offer a reduction in fee for the legal work a consumer performed at MyClaim.com. "If someone took a case like this to a lawyer, the lawyer would have the obligation of reviewing and analyzing everything the client had done," Hornsby explains.


Duking it out in court


On March 21, 2000, Mallen filed a lawsuit on behalf of all Illinois personal-injury attorneys accusing MyClaim.com of engaging in unauthorized practice of law and unfair competition. It seeks an injuction to prevent MyClaim.com from conducting business in Illinois.

Mallen alleges MyClaim.com could mislead consumers, who are at risk of losing their entire case. For example, he says MyClaim.com is not clear about Illinois' statute of limitations. The time restrictions on filing claims vary and depend on the circumstances in which the person was injured. "There were very significant and false statements made [by MyClaim.com]," Mallen says. "The problem here is that you can damage people severely. All of the sudden, they've lost their claim because they're relying on unauthorized, inaccurate information."

However, Reinholz, MyClaim.com's CEO, contends his company has not crossed any legal or ethical lines in helping people prepare claims. "When we went into this business, we knew, obviously, we would be challenged. We spent a great deal of time and money ensuring that we are not practicing law," he says. "We feel very confident that the lawsuit in Illinois will either be dismissed on its merits or we will defend [against] it successfully."

MyClaim also has been battling in court with a former consultant and insurance company attorney, Barbara Gilbert of Irvine, Calif., alleging she breached agreements. The company retained Gilbert to assist in developing its settlement system, but Gilbert, who left in February, prior to the expiration of her contract, claims she owned the company's intellectual property and its Web site. A St. Louis Circuit Court judge issued a court order preventing Gilbert from "making any personal use of any confidential information concerning the business of MyClaim.com," according to MyClaim.com.

Gilbert says the MyClaim.com Web site is based on a legal self-help book she wrote to educate non-lawyers about how to settle their own personal injury cases. On May 1, she filed a suit in California's Orange County Superior Court, alleging, among other things, that her former employer committed fraud, conspiracy, and unlawful and unfair business practices.

"My main goal is to get them to stop using the material I created," says Gilbert, who believes employees at MyClaim.com are not qualified to be helping people settle claims.

Officials from MyClaim.com deny Gilbert's allegations. "They're all not true and we can prove they're not true," Reinholz says. "We feel she has breached both her consulting agreement and confidentiality agreement. We'll continue to pursue remedies against her."


Few others like them


So far there's little competition for MyClaim.com and Self Settle. Online negotiating sites are the most similar businesses, but there are key differences. Online dispute-resolution Web sites such as Cybersettle, clickNsettle, and SettleOnline allow customers to submit offers and demands on their claims electronically. The consumer and the insurer go through a number of rounds in an attempt to reach an out-of-court settlement on an insurance claim.

Russell says Self Settle could help people prepare for the online negotiating sites. "They're the next logical step for our program," he says.

But Yelich believes MyClaim.com offers a more valuable service than even the dispute-resolution sites. "It's just an online way for them to negotiate back and forth a number," Yelich says. "I know that's crudely stated, but that's what they're doing." MyClaim.com, on the other hand, allows customers to take a more active role in securing a fair claim, he says. "This is a self-help, online Web site that provides tools and resources to help injured people," Yelich says. "We believe [people] will be more informed and empowered with this system." Back to page 1

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