Law Times

LAW TIMES • MARCH 10, 2014 PAGE 17 www.lawtimesnews.com e magnitude of these com- panies, added to an increase in claims driven by population growth, has the potential to favour specialist law fi rms with the ca- pacity to handle large volumes or that have the desire to expand. Toronto-based Reisler Frank- lin LLP has doubled in size over the past two years to 40 lawyers partly by winning work from big insurance companies. While welcoming the growth, founding partner Daniel Reisler says the consolidation trend is also leading to insurance companies exerting more pressure on law fi rms to cut costs. "It's challenging from a busi- ness perspective. It means we have to operate effi ciently and to ensure we're not wasting resources," he says. As some insurance defence boutiques continue to grow in size, it will be interesting to see whether there's a critical mass be- yond which they operate less ef- fectively, Reisler suggests. "With fewer and larger insur- ance companies, we will see fewer and larger [insurance] defence law fi rms," he says. e demands for cheaper rates and innovative billing practices could help larger boutiques but work against bigger full-service fi rms with insurance defence practices. Steven Stieber of Toronto's Stieber Berlach LLP told Law Times' sister publication Canadian Lawyer last year that the rates for insurance defence lawyers work- ing in boutiques could be "60- to 70-per-cent higher in large fi rms, which is going to create division within those fi rms, because the insurance defence partners simply can't bill nearly as much as the cor- porate guys bill," he said. Some boutiques may choose to create even more distance be- tween themselves and the bigger fi rms by moving into niche areas where there's less emphasis on vol- ume. Lee Akazaki, a partner at Gil- bertson Davis Emerson LLP, ex- presses distaste for some of the practices he has seen becoming more prevalent in recent years among insurance companies, in- cluding the increasing use of re- quests for proposals. "Instead of a long-term rela- tionship between insurance com- panies and law fi rms, we'd have a two- to three-year contract," he says. He likens the "procurement" arrangement to "a municipality employing people to fi ll in pot- hole" and says it can lead to treat- ing law fi rms like a commodity. However, he sees opportuni- ties in areas such as property dam- age that involve potentially large amounts of money and, due to their complexity, require a consid- erable level of specialist expertise. Professional liability is another specialty that may be available to experienced lawyers practising in the insurance defence arena. Larger but fewer boutique firms predicted BRIEF: INSURANCE DEFENCE BOUTIQUES No matter where you are, the McKellar Slide Rule is never out of reach. In addition to the printed version, it is always available for BlackBerry®, iPhone® and Android™. Free from McKellar, all you have to do is visit www.mckellarmobile.com and download the McKellar Slide Rule App today. McKellar. Leaders in innovation and efficiency. Scan this QR-Code with your smartphone to visit our mobile site. iPhone® is a trademark of and owned by Apple Inc. BlackBerry® is a trademark of and owned by BlackBerry Limited. Android™ is a trademark of Google Inc. McKellar Structured Settlements Inc. is not endorsed, sponsored, affiliated with or otherwise authorized by Apple Inc., BlackBerry Limited or Google Inc. McKellar's Slide Rule App... easy access with just one touch. GUELPH 1.800.265.8381 | HALIFAX 1.800.565.0695 | EDMONTON 1.780.420.0897 | USA 1.800.265.2789 | www.mckellar.com Untitled-1 1 14-01-02 11:11 AM "It's an area where, because there are so many diff erent perspectives, it's easy to fi nd fault," says Akazaki, stressing that working eff ectively with clients on these types of fi les requires a certain amount of time at the bar and a strong understanding of issues such as causation and standards of care. Another area boutiques will be keeping an eye on is the political hot potato of auto insurance. ere have been a series of attempts to reduce and speed up claims amid public pres- sure to bring down the cost of insurance policies. Last week, Ontario's Minis- try of Finance proposed changes to the dispute resolution system aimed at encouraging quick- er settlements for those injured in motor vehicle accidents. e changes include aligning the prejudg- ment interest rate on the damages for pain and suff ering due to motor vehicle collisions with market conditions in order to help reduce claims costs. Other provisions would allow for the immediate suspension of an insurance agent or ad- juster's licence if the public is at risk. Previous policy changes, such as the minor injury guideline added to Ontario's statutory accident benefi ts schedule in 2010, have "elim- inated" a lot of the smaller auto insurance claims that had been the bread and but- ter of many law fi rms in the Greater Toronto Area, says Reisler. But in a key arbitration case last March, Scarlett v. Belair Insurance Co. Inc., the Financial Services Commis- sion of Ontario ruled in favour of an automobile accident victim who claimed expenses beyond the minor injury limit. Legal commentators see the issue as a live one with no clear consensus on the long-term impact of the decision. e impact of the provincial government's commitment to reduce auto insurance rates by an average of 15 per cent over two years is an- other unknown. However, as tough or unpredictable as the insurance business is, it's ultimately a cyclical area, says Reisler. While the consolidation cur- rently underway gives insurance companies a lot of clout, "that could change," he says, adding that a couple of years of inclement weather or the breakup of key fi rms could easily change the power dynamic. Although the brutal winter weather of 2013-14 and natural disasters such as the 2013 Alberta fl oods haven't led to a deluge of claims, it can take two years for these kinds of fi les to come through the system and they can result in secondary litigation. Akazaki believes the insurance defence world is in a "transition period" that will see boutiques reaching out to new clients that are looking for a more personal law fi rm experi- ence and value the depth of experience off ered. Many fi rms will also be able to fi ll the gaps le by senior insurance litigators who have re- tired, moved into mediation or chosen the fi scal rewards of plaintiff law, he believes. Akazaki says: " ere's a tremendous oppor- tunity for lawyers . . . because clients, especially insurance clients, are getting more and more sophisticated. "I think they're getting increasingly frustrat- ed with lawyers who aren't suffi ciently trained in insurance and don't get the bigger picture." LT Continued from page 16 As insurance companies consolidate, so will the boutique law firms they retain, says Daniel Reisler.

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