It makes sense to think strategically when a lawsuit dangles over your head, which is where the City of Durham finds itself regarding false charges of rape lodged against three former Duke University lacrosse team members.

Ex-District Attorney Mike Nifong lost his law license and his job over his eyes-closed pursuit of the accusations leveled by a hired exotic dancer. But Durham police played a role in the misguided prosecution, whether by going along with Nifong's efforts, by not protesting strongly enough that the evidence did not justify charges, or by both. Because a report in May by City Manager Patrick Baker and Police Chief Steve Chalmers totally failed to explain the department's conduct, the City Council had to order an independent investigation, conducted by respected experts and headed by former state Supreme Court Justice Willis Whichard.

City administrators have put that investigation in neutral gear for the next several days because the insurance company that would face a big payout if the students sue and the city loses is having the jitters. The company says that Durham can't take any actions that might hurt the city's cause if it later has to defend itself. If the Whichard commission bores down to the truth, and if the department is shown to be at fault, that perhaps could undermine the city's position in court.

That might cause some tears to be shed for the insurers -- but actually, we thought that taking the financial risk is what the insurance business is all about. Besides, no one was crying as Durham paid its $220,000 annual premium for just this possibility. The company, by the way, is a subsidiary of American International Group, Inc., better known as AIG. It recently reported second quarter 2007 net income of $4.28 billion. If the Duke students sue and win, AIG's exposure would be $5 million, minus Durham's $500,000 deductible -- not an insignificant sum, but one the company should be able to handle. Durham has since changed its insurance carrier.

As it happens, Durham police officers were the first to express skepticism that a rape had occurred, and evidence has surfaced that detectives argued the point with Nifong. The students also have settled a legal case against Duke University, presumably for a generous amount. They lost reputation and time, from school and sports, as a result of being unfairly labeled as rapists, but they might not have the easiest time prevailing in a suit against the city.

Regardless of what the students or AIG do, Durham's leaders should instruct the Whichard commission to proceed. Accountability needs to be determined for the way police headquarters handled the case. For instance, it's still unclear whether Nifong or police brass were in charge of detectives assigned to the investigation. Critical questions remain about how photo lineups were conducted. Are lineup policies the right ones, and if so, can Durham citizens be sure they are followed -- even when the pressure is turned up? Frankly, it also would be good to know how much oversight was provided by City Manager Baker, and later, how hard he pushed for the truth when writing his unsatisfactory report in May.

The lacrosse case was a shock to Durham's justice system, but it raised questions about justice across North Carolina. The entire state therefore has a stake in the commission's work. If an insurer can shut down Durham's inquiry, what good will it do to appoint any government fact-finding commission when a law enforcement agency's conduct is at issue? Reaching the truth as to how this case went so badly awry has to trump an insurance company's bottom line.

Get $150+ in coupons in every Sunday N&O. Click here for convenient home delivery.