Insurers v. Litigators: Round One

Dec 3, 2015

Earlier this year, the Insurance Bureau of Canada suggested that personal injury lawyers be subject to regulatory oversight of contingency fees. Less than two months later the Ontario Trial Lawyers Association shot back with a study suggesting billions of dollars have been overcharged by insurance companies. When will the sparring end?

Insurers v LitigatorsIBC Calls for Greater Transparency

Back in February, the Insurance Bureau of Canada (IBC) said it would like to see regulatory oversight of personal injury lawyers’ contingency fees and greater transparency in the auto insurance system. (See Law Times, Feb. 23, 2015). A subsequent petition presented in the Ontario legislature called for a cap on personal injury (PI) lawyers’ rates, and a requirement that PI lawyers submit information on fees to the superintendent of insurance who will publish this data in an annual report.

The premise behind these moves is that, under contingency fee arrangements, PI lawyers argue for higher claims in order to increase damage awards and drive up their compensation. The IBC claims that these actions have unnecessarily pushed insurance rates higher.


OTLA Fires Back with Study of Insurance Industry

Not content to sit back and wait for the outcome of these proposals, the Ontario Trial Lawyers Association commissioned a study of insurance industry costs by two York University professors. Among other findings, the study concluded that Ontario consumers may have overpaid for auto insurance by as much as $3-4 billion between 2001 and 2013.

Some of this cost is bound up in the fees paid by insurers for independent medical exams (IMEs) which, in some years, were required by insurers of almost half of all claimants. According to the Ontario Health Claims Database, the average cost of these IMEs exceeded the average amount paid to reimburse claimants for medical and rehabilitation expenses.

Aren’t Personal Injury Lawyers Already Regulated?

In a post on Advocate Daily, Tim Boland, founding partner of BolandHowe LLC, points out that regulatory safeguards governing fees and the relationship between clients and lawyers already exist in the Solicitors Act and Rules of Civil Procedure.

The Solicitors Act enables a cap to be placed on contingency fees, although “legislators have chosen not to do so, presumably because the intense competition in the marketplace ensures relative fair market rates,” said Boland.

Boland also points to two scenarios where the court will set or approve lawyer’s fees, and a third where the insurance company is negotiating a settlement and has full visibility of the lawyer’s fee. In any case, Boland points out, “the client has the right to have his lawyer’s bill assessed if he thinks it is unfair.”

The Paper Trail

In a letter to Law Times, responding to the IBC’s call for regulation, Bert Raphael, of Raphael Barristers, suggests that if the insurance industry really wants to control costs, they should consider the reams of documents demanded by the insurer when an accident victim files a claim. These demands can mean hours of time – and cost – for the plaintiff’s lawyer.

If the matter proceeds to litigation, the insurer “will demand further productions, and often these items generate some 30 or 40 letters that have to be prepared by the plaintiff’s lawyer.” The associated disbursements charged by the lawyer drive up the client’s cost, while on the other end, insurers incur cost for the time required by the defence lawyer to collect the items, and for the adjuster review them.

Technology Can Reduce the Document Burden

While the debate over regulation and oversight rages on, firms can do something today to deal with the document portion of the cost equation. In our previous post, “Why Give Document Assembly Systems a Second Look”, we discussed how these systems can simplify the tedious task of producing court forms and letters, saving you time while improving the consistency and accuracy of your documents.

Document assembly can offset at least part of the document burden described above. So, why not give document assembly systems a second look?  You’ll spend less time chasing paper and more time providing expert advice and representation for your client, helping the one party that seems to have been left out of this insurance debate – the insured.

Michael Sauber Head Shot - smallAbout Michael Sauber
Michael Sauber leads the marketing program for Korbitec, producer of Automated Civil Litigation Software (ACL). He has worked with document production technologies and professional services for over 30 years and is a frequent blogger on these topics.