By Lawdragon News | January 4, 2023 | Lawyer Limelights
As a founding partner of insurance litigation boutique Cohen Ziffer Frenchman & McKenna, Keith McKenna primarily helps corporate policyholders obtain insurance coverage for large, complex and often bet-the-company cases. His team has recovered billions of dollars for clients and secured multiple landmark judicial rulings for Fortune 500 companies, hedge funds and private equity firms.
In his current practice, McKenna is advising clients in high-stakes matters involving all areas of insurance coverage, including coverage for securities claims, directors and officers liability, professional liability, criminal conduct, products liability, opioid-related liability, and property damage and business interruption losses, including losses stemming from the Covid-19 pandemic.
Lawdragon: Out of all the work you’ve done in your career, what would you say is the most interesting matter you’ve handled?
Keith McKenna: One of the most interesting cases I’ve handled was on behalf of a historic pump manufacturing firm, Warren Pumps. The company faced thousands of asbestos lawsuits across the country and needed to draw on its insurance coverage to defend against and settle those claims. The coverage at issue spanned decades. It belonged initially to a company that previously owned Warren’s assets – the policies were assigned when the assets were sold. The same policies additionally covered another entity that also faced asbestos claims.
This history generated a range of complex issues involving the effect of anti-assignment provisions in the insurance policies, how claims should be allocated between the two corporate policyholders, and how liability for defense costs and settlement costs should be allocated among the dozens of insurance policies implicated by the asbestos claims. The case started in 2005 and the hard-fought litigation proceeded for more than 15 years, with a value at stake in excess of $500M. After numerous precedent-setting rulings, including decisions by the Delaware Supreme Court and the New York Court of Appeals holding insurers jointly and severally liable for Warren’s defense and settlement costs, our client won on almost every issue. This was a highly satisfying outcome to what I will remember as one of the defining cases of my career.
LD: Can you describe a recent matter that you’ve handled?
KM: My team and I recently handled a securities claim case in Delaware for Verizon Communications. The dispute stemmed from a 2009 deal in which Verizon spun off landline-related assets into a business that then merged with FairPoint Communications. FairPoint went bankrupt approximately 18 months after the deal, and its bankruptcy trustee sued Verizon to recover damages. The trustee asserted claims of fraudulent conveyance against Verizon, arguing that the securities transactions involved in the spinoff and merger were fraudulent transfers that left the new merged entity unable to pay purchasers of debt securities issued to finance the transaction. The claimed damages exceeded $2.3B, and Verizon ultimately settled for $95M.
Facing this major lawsuit, Verizon turned to the insurers from which it had purchased D&O insurance. However, the insurers denied coverage, sparking nearly five years of litigation in Delaware Superior Court. Verizon ultimately prevailed on all its claims, resulting in a judgment requiring the insurers to pay 100 percent of the approximately $24M in defense costs that Verizon incurred to defend against the lawsuit, as well as the $95M settlement. With prejudgment interest, the judgment came to more than $160M.
The work we do is energizing. We regularly create new law and guide clients through cases where insurance coverage is crucial to the survival of the business.
LD: What were the key challenges of successfully representing Verizon in this case?
KM: In order to obtain coverage, Verizon had to prove that the underlying lawsuit qualified as a “securities claim” under its insurance policies. It was clear that “securities claims” encompassed derivative claims brought by a security holder. However, the case required complex analysis of whether fraudulent conveyance claims are derivative claims, whether a trustee standing in the shoes of debt securities holders qualified as a “security holder,” and whether the spun-off entity qualified as a covered organization for purposes of the claims at issue. We were able to successfully prevail on all of these issues.
LD: Did this have a broader impact on the industry?
KM: Yes, this was a major win not only for Verizon but for corporate policyholders more generally. Companies often buy insurance coverage to protect against potential claims arising out of corporate transactions of this sort, only to find that their insurers won’t cover claims that are ultimately brought. This decision sets a valuable precedent: Verizon’s policy contained standard language used in many other D&O policies, which (and I will quote Delaware Business Court Insider here) “could make the court’s decision applicable to countless other cases.”
LD: Can you share some strategic plans for your practice or firm in the coming months or years?
KM: Despite our firm being only two years old, we have already enjoyed remarkable success. We launched in January 2021, in the midst of the pandemic, as a group of four founding partners and 12 lawyers total. We have since more than doubled our headcount to 30 attorneys today. In September 2022, we moved to a new, larger home in New York, signing a 10-year lease at 1325 Avenue of the Americas for the full 31st floor. Most importantly, we have emerged as one of the most prominent insurance recovery law firms in the nation.
We aim to build on our early achievements by continuing to distinguish ourselves as the go-to firm on the most valuable, emerging issues affecting insurance policyholders. Today that includes D&O insurance, opioid-related liabilities, as well as business interruption insurance for companies affected by pandemic shutdowns. Tomorrow it is sure to be something else, which is part of what makes our field so rewarding.
LD: There are many high-quality firms out there. What do you try to “sell” about your firm to potential recruits – how is it unique?
KM: Attorneys who join our firm will hit the ground running from day one. Our young lawyers are involved in every step of litigation on leanly staffed cases where they benefit from mentorship from senior associates and partners. We have found that experience is the best teacher: many of our associates have already taken depositions, prepared for hearings and trials, and delivered oral arguments. We have created an environment where everyone is invested in the firm and the work, which involves giving young lawyers exposure not only to the nuts and bolts of litigation, but also to clients and the business side of running a law firm.
Moreover, the work we do is energizing. We regularly create new law and guide clients through cases where insurance coverage is crucial to the survival of the business. We have a deep bench of subject matter experts, and we achieve results quickly. We pride ourselves on our proactive approach and our sophisticated knowledge of current market conditions. Whether it is trying a case, navigating alternative dispute resolution, or avoiding a lawsuit, our team has been working for decades to maximize insurance coverage results for our clients. This razor-sharp focus and deep experience means we know the other players in this space and which levers to push to achieve the best results. And the industry knows us, too, which helps maximize leverage and cut through issues quickly.
LD: If you weren’t a lawyer, what would you be doing now?
KM: I would probably be teaching. I’m the father of two boys, one in college and one in high school. Helping my sons with homework over the years gave me some insight into the satisfaction that teaching provides. Part of why I am passionate about litigation is the need to figure out puzzles, putting together all the disparate pieces. I think I would enjoy teaching kids how to solve problems and figure out life’s challenges.