Law Times

Page 2 February 23, 2015 • Law Times www.lawtimesnews.com NEWS Auto insurance debate IBC wants regulation for personal injury lawyers By yamri Taddese Law Times he Insurance Bu- reau of Canada says it would like to see regu- latory oversight of how personal injury lawyers struc- ture their contingency fees due to what it calls a major gap in transparency in the auto insur- ance system. "We need to at least review this issue. Why aren't we talk- ing about this?" says Ralph Pa- lumbo, Ontario vice president for the Insurance Bureau of Canada. All key players in the auto insurance system, including insurance companies and reha- bilitation providers, must ad- here to regulations around their fee structures, says Palumbo, who notes additional players like tow-truck drivers are now subject to regulation thanks to changes under Bill 15. "It appears that the only major stakeholders in the sys- tem that really [aren't] regulated are personal injury lawyers," he says. Palumbo says trial lawyers should file their fee arrange- ments with the office of the su- perintendent of insurance or another body that will review the financial impact these fees may or may not have on insur- ance costs and premiums. "There is a sense that often providers, whether they're law- yers or rehab providers, push claims to a higher level so that the awards are higher. That's the sort of thing that we need to guard against," says Palumbo. "No one is saying the claim- ant shouldn't get what is reason- able in the circumstances, but we want to make sure there aren't outside financial pressures that will drive up those costs." Barbara Taylor, director of policy at Insurance Bureau of Canada, says the change will protect consumers while allow- ing the government to track the impact of lawyers' fees on the auto insurance system. "First off, we're asking for a consumer-friendly fee disclo- sure statement," she says. "So that's something where we want to make sure the con- sumer has clear transparency on that arrangement that they have with the lawyer. Then we're ask- ing that that information also be shared with someone like the [Financial Services Commis- sion of Ontario] superintendent, who can then use that informa- tion to assess the impact on auto insurance as well as perhaps issue an annual report." Ontario Trial Lawyers As- sociation president Steve Rastin says the Insurance Bureau of Canada is suggesting lawyers work harder in order to maxi- mize the value of the case if they have a stake in it. "You know what, that's an in- sult to lawyers," says Rastin. "It implies that I won't do my utmost for my client unless I have a piece in the action. You know what, I think lawyers ev- erywhere should be insulted by the allegation that we'll work harder for our clients when we have a stake in it." He adds: "I work to the best of my ability for every client whether I'm doing the file on a pro bono basis or an hourly rate or contingency rate. To argue that I work harder for somebody because I have a contingency fee, it would be a fundamen- tal violation of the professional code of conduct, our ethical ob- ligations, and I think there are right-thinking lawyers every- where who put their best effort in for the client no matter how they're going to be paid." Rastin also says there are already sufficient oversight mechanisms in place to guard against improper conduct by lawyers. He calls the Insurance Bureau of Canada's call for more regulation "a smokescreen" to mask the hefty profits earned by insurance companies. "I can tell you that what I bill my clients is absolutely trans- parent," says Rastin. "My client knows in the begin- ning what I'm going to bill them and at the end. For people that are under disability, minors or people in vulnerable situations, we have to get court approval for our accounts. There is already an oversight body in place. There are lawyers [who] are disciplined for not billing ac- cording to proper practices. I don't want the insurance in- dustry, which meddles in every private area of our lives already, I don't want them meddling in my personal relationship with my clients." Contingency-fee arrange- ments between lawyers and their clients aren't to blame for insur- ance companies' costs, he adds, noting there are caps in place for the damages plaintiffs can collect for several types of injuries. Plaintiffs often opt to settle for fear of cost orders that would mean losing their life savings, Rastin adds. To Rastin, the noise around the issue is a distraction from what he calls "way more serious" concerns with the auto insur- ance system. "For instance, why are there government-mandated returns on capital for the insur- ance industry that are some- thing like 11 per cent?" he asks. Palumbo, however, says it's only "natural" that lawyers are resistant to regulatory oversight around their fees. "It's pretty natural. They have a vested interest in making sure there is no regulatory oversight on their pricing schemes," he says. "We don't think that's appro- priate," he adds. Part of the issue, he says, is transparency. "At the end of the day, if the government decides not to impose a cap [on contin- gency fees], that's fair enough. But why is this a problem to talk about transparency? I don't quite understand that." The issue isn't contingency fees themselves, according to Palumbo, but whether those arrangements are always ap- propriate. "We're not suggest- ing for a moment that any of this shouldn't happen; we're not against contingency fees. All we're saying is that the last piece of the [transparency] puzzle is personal injury lawyers, really. No one is reviewing that aspect of the auto insurance system." LT Untitled-2 1 2015-01-20 1:52 PM T

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