Law Times

Law Times • March 16, 2015 Page 13 www.lawtimesnews.com insurance boutiques face continual change Legislation, market pressures among factors affecting defence firms By michaeL mcKierNaN For Law Times n 1990, just a year after Todd McCarthy was called to the bar in Ontario, the prov- ince's first legislated no-fault system revolutionized the auto insurance landscape. Since then, "change has been the only constant," says Mc- Carthy, a partner at insurance defence boutique Flaherty Mc- Carthy LLP. The trend took hold during the first six years of the scheme when no-fault insurance under- went two major revamps led by successive NDP and Progressive Conservative governments. Mc- Carthy says the pace of change has rarely slowed, with count- less legislative and regulatory amendments in the years since, and expects the trend to contin- ue for years to come due to the perennial political sensitivity around car insurance rates. "Unlike other forms of insur- ance, which are optional, auto insurance is compulsory. It's become one of those things, like death and taxes, that you've just got to just face and deal with," he says. "It's become a political hot potato, and the only way gov- ernment can get rates lower is by tweaking the system in certain areas. It's a constant struggle to find the balance between keep- ing rates affordable for consum- ers while at the same time mak- ing sure injured people are fairly compensated." The latest tweaks to the sys- tem by the current provincial government have seen disputes over insurance claims moved to a resolution process at the Licence Appeal Tribunal. The change bars parties from go- ing to court until the tribunal process runs its course, a move that has in turn run into a con- stitutional challenge from a per- sonal injury lawyer. McCarthy says the constantly shifting legal ground makes a boutique firm the perfect environment for in- surance defence lawyers. "It's an area that requires constant updates because it's been so heavily legislated and regulated in the last 25 years," he says. "You can't really do the work unless you're focused and right up to date with what's going on in the industry." Flaherty McCarthy, co- founded by late federal finance minister Jim Flaherty, has 19 lawyers working out of offices in Toronto, Ottawa, and Whitby, Ont. All of them practise insur- ance litigation with a particular focus on auto insurance defence. "When you have that many lawyers and support staff pull- ing in the same direction, it's go- ing to make you more efficient and effective at responding to those various types of change," says McCarthy. According to McCarthy, the next great shift in the insurance defence sector could come from outside the industry with the Law Society of Upper Canada currently considering proposals to allow non-lawyer ownership as part of its ongoing look at al- ternative business structures. The personal injury sector proved a target for outside in- vestment in Britain after alter- native business structures took hold there. The Ontario Trial Lawyers Association has come out strongly against the idea in Canada. McCarthy shares the skepticism of his colleagues on the plaintiff side of the bar. "I think benchers ought to take a very cautious approach and even consider rejecting ABS because I don't think it will necessarily accomplish some of the objectives that might justify changing the system, such as increasing access to justice," he says. "I think it may actually un- dermine the proud tradition of an independent bar." Roderic McLauchlan, a part- ner with Clyde & Co. Canada LLP also qualified to practise in England and Wales, says it's too early to tell how deeply al- ternative business structures would affect Ontario insurance defence boutiques but notes he "could foresee that that the in- surance industry might see con- solidation of services and verti- cal integration where the legal firm is combined in the range of services provided." However, the idea would first have to overcome significant challenges to "the profession of law, the lawyer's fundamental obligations, and to regulatory oversight," he adds. Lee Akazaki, a partner at Gilbertson Davis LLP who co- wrote a submission by Canadian Defence Lawyers on alternative business structures to the LSUC, says insurance defence boutiques have seen a small preview of what new models could bring to the le- gal profession at large. According to Akazaki, the commoditization of legal ser- vices alternative business struc- tures are likely to spur has al- ready begun in the insurance sector thanks to the consoli- dation of insurance providers in Canada. He says the small band of major players has a large enough market share to exert pressure on legal service provid- ers to cut costs and provide f lat- fee services. "The more work is treated as a commodity, the less it matters who gets put on a file. It doesn't recognize one lawyer's talents as different to another and it's almost treated as if you're buy- ing something off a shelf," says Akazaki. "To a certain extent, it con- strains corporate legal spend but to an extent it can become inhibiting of talent." He says the market domi- nance of a few insurance players has also offered insights into the problems the LSUC could have regulating alternative business structures. "It has had an impact on the way we practise law and has caused a certain amount of pro- fessional strain," he says. "The lawyer is ultimately an officer of the court and when there is an entire industry exert- ing so much market power, it is a challenge to maintain that pro- fessionalism." LT WHEN YOU HIRE ONE OF US, YOU HIRE ALL OF US TORONTO | WHITBY | OT TAWA | FML AW.CA FLAHERTY McCARTHY LLP – One of Canada's Top 10 Insurance Defence Litigation Boutique Firms 2015-16 TOP 10 Insurance Defence BOUTIQUE C A N AW A Y W E 0 E TT 0 E C A N A D I A N M A M G A A Z I N E 2015 16 OP 1 I e D e BOUTIQU 22001155--1 -1 - 6 16 TOO TOP O 110 10 I e Insurance Insura ran anc a e DDefe efence ce Defe efe efe fence n BBO BOU O T UTIIQ IQU Q E UE U A N L A L W A Y W E Y R M A M FLAHERT Y LLP McCARTHY LITIGATION COUN SE L 20 Years of Excellence We congratulate The Honourable Justice Grant R. Dow on his appointment to the Ontario Superior Court of Justice As Voted By Canadian L awyer Magazine Untitled-4 1 2015-03-12 3:25 PM BRIEF: INSURANCE DEFENCE BOUTIQUES I 'You can't really do the work unless you're focused and right up to date with what's going on in the industry,' says Todd McCarthy. A DAILY BLOG OF CANADIAN LEGAL NEWS FEEDS LEGAL LEGALFEEDS.CA POWERED BY V O T E D BEST NEWS BLOG CLAWBIES 2015

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