Law Times

Page 10 July 23, 2018 • law Times www.lawtimesnews.com Lawyers advise against treatment loans BY DALE SMITH For Law Times A s governments have scaled back the insur- ance coverage avail- able for medical treat- ments available to those who have been injured in accidents, treatment loans are becoming available to clients as a means of keeping treatments going until a trial or settlement. Many law- yers, however, are wary of these loans and will try to avoid them if possible. Deanna Gilbert, partner with Thomson Rogers Lawyers in Toronto, says she person- ally doesn't like litigation loans and almost never recommends them, and if the client insists on one, she warns them of what to expect. "If they are going to proceed with one, there are a couple of things that we as personal injury lawyers should explain to them," says Gilbert. "Number one is that litigation is not a quick pro- cess. An average personal injury case takes about three years." Gilbert advises lawyers to sit down with their clients to ex- plain how the loans charge inter- est rates and how that amount can accrue over time. "If this goes to trial, and this is a Toronto action where there's a delay and it takes up to five years, do the math," she says. Gilbert says it's important that lawyers also need to explain to their clients that the fact that there is a loan does not impact the assessment of the value of the case, which is something with which clients can struggle. "Often, they have in their mind that they want to pay back the loan and still get money [from the settlement] for them- selves," says Gilbert. "It's important to explain to them that the value of the case is based solely upon the injury, your income loss, future care — the usual headings of damages, none of which includes whether you have to pay money to some- one else." Ted Bergeron, founding part- ner with Bergeron Clifford LLP in Kingston, Ont., says that due to the rates and the state of the law around recovering the inter- est on treatment loans, his firm avoids them. "Our practice is to press for an advance payment from tort- feasors or pay for care ourselves on an interim basis, where ap- propriate," says Bergeron. "Tort insurers seldom agree to advance payments, so, typi- cally, we end up carrying cost ourselves." This is an option that is often not available to smaller firms, he says, which can limit the options for lawyers to help their clients avoid the loans. Bergeron says he will insist that clients try traditional lend- ers, such as a line of credit from a bank, before a litigation or treat- ment loan — along with proof that they made the effort, so long as the law remains unsettled on the recovery of interest on litiga- tion loans. Bergeron says another tactic he has started using is to forgo examination for discovery of the defendant, particularly in in- stances where liability is relative- ly clear, preferring to get their as- sessments completed and set the matter down for trial. "Court calendars have be- come so tilted against civil personal injury matters that to waste a year scheduling exami- nations that do no more than confirm what everyone already knows is prejudicial to disabled litigants," says Bergeron. He adds that while litigation financing can cover the costs of properly marshalling the evi- dence for a trial, it doesn't put food on the plaintiff 's table or pay for their mortgage or utility bills while they wait. "Setting actions down for trial at the first opportunity, sometimes at the close of plead- ings, is going to become a com- mon feature of the personal in- jury litigation landscape," says Bergeron. Gilbert says it can make it difficult for lawyers to get in- structions from clients at the end of a file if they haven't had the discussion early on and that the client is aware that the inter- est on these loans will absolutely reduce the amount of recovery at the end of the day. "That's money that otherwise would be paid to them," says Gil- bert. She says it makes it incum- bent on lawyers to find alter- natives in order to ensure that treatment loans are the option of last resort. In some cases, Gilbert says, treatment providers will be willing to work on the basis of a protected account without in- terest, particularly if they have a good relationship with a law firm. That can become a cheaper alternative, she says, if the client signs a direction that instructs the lawyer to protect that ac- count. Gilbert says that in a motor vehicle case to which the Insur- ance Act applies, there is a spe- cific section in the law regarding advanced payments, but that only deals with loss of income claims. "If a client has been off work for a period of time and the in- come loss claim is not expected to be controversial, one strategy to avoid the client from having to take out a loan is to request an advance payment or a partial settlement of the past income loss claim," says Gilbert. "The advance or partial set- tlement would be for an amount meant to ref lect the past income loss owed to the point of the ad- vance or partial settlement," says Gilbert. Gilbert says that if they don't agree to the advance, a lawyer could bring a summary judg- ment motion in cases of admit- ted liability, but she hasn't need- ed to do so to date. Lynn Turnbull, senior part- ner with Black Sutherland LLP in Toronto, says that, from a de- fence perspective, so long as the jurisprudence around recovery of interest remains unsettled, she will take the position that it's not recoverable as a disburse- ment. "A lot of times, a litigation loan might be threatened as a way to get an advance payment, and insurance companies don't like to give advance payments so long as there's no issue around liability and no issue regarding the threshold," says Turnbull. "In those circumstances, if we're at fault and it's clearly going to meet threshold, advance pay- ments can certainly be consid- ered to avoid getting caught up in a thorny issue around whether a litigation loan is or is not some- thing that can be included as a disbursement at the end of the day," says Turnbull. LT FOCUS The Canadian Lawyer InHouse Innovatio Awards celebrate in-house counsel, both individuals and teams, who have found ways to show leadership by becoming more efficient, innovative and creative in meeting the needs of their organizations within the Canadian legal market. To book your seats or to inquire about sponsorship, contact us at 416-649-8841 or MediaSolutions.Sales@thomsonreuters.com Date: Sept. 20, 2018 Location: Arcadian Court, Toronto 5:30 p.m. Cocktail Reception 7 p.m. Gala Dinner and Awards Presentation Emcee: Jennifer Brown, Managing Editor, Canadian Lawyer InHouse/Law Times Dress: Business Attire Keynote Speaker: The Right Honourable David Johnston, C.C. Governor General of Canada (2010 - 2017) Chair, Rideau Hall Foundation Executive Advisor, Deloitte FORGING A STRONGER FUTURE www.innovatio-awards.com Signature Sponsor Cocktail Sponsor Untitled-1 1 2018-07-17 2:55 PM Deanna Gilbert says she advises lawyers to sit down with their clients to explain how the loans charge interest rates and how that amount can accrue over time. Setting actions down for trial at the first opportunity, sometimes at the close of pleadings, is going to become a common feature of the personal injury litigation landscape. Ted Bergeron CanadianLawyerMag.com Fresh Canadian legal news and analysis available on any device. Get More Online

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