At least at this firm - it's 2000 hr requirement for the firm, and hours get kicked back ALL the time! It seems really stressful since the clients are pretty sophisticated.
Wow, I don't have direct experience in insurance defense, but this is so familiar it actually is giving me chills.
I have heard that the upside of insurance defense work is that you're essentially guaranteed a nonstop stream of work.
On the flip side, I've heard that they negotiate lower rates for the hourly billing rate (totally consistent with what I see insurance companies do every day.)
Then, to add the point you made: that they kick back on the billed hours is also absolutely consistent with what I've observed with the way they do business, everywhere.
They're essentially negotiating thousands of transactions every day. They know how far they can go when pushing a relationship and they're darned sure going to do it.
Now, in the final analysis, nobody is forced to work for them. I know of one person in particular who specialized in insurance defense a long time ago and he's truly wealthy, now. Works long hours, earns every penny, but never has to wonder where his next billable hour is going to come from.
However, I can see how this could be horribly frustrating work. You're representing Goliath, trying to help him beat the snot out of David, and when you succeed, he quibbles about your bill after you already gave him a discount on the rate to begin with.
I'm really glad you guys brought this up. It would never have occurred to me how unappealing this sort of work can be if you had not.
Not saying I wouldn't do it, or that I'd rule it out, but just saying I'd examine any prospects in this line of work with my eyes wide open.