Law Times

Page 4 August 21, 2017 • LAw times www.lawtimesnews.com NEWS NEWS NEWS Province looks to bring lawyers under CDSSA BY ALEX ROBINSON Law Times L awyers say proposed legis- lative changes to bring debt collection lawyers under the same regula- tory regime as other collectors could affect their ability to re- cover costs from debtors. The provincial government released a consultation paper recently asking for input about a number of proposed reforms to regulations in the Collection and Debt Settlement Services Act. The proposed changes would bring debt collection lawyers and their employees, who pre- viously were exempt to the act, under the same regulatory re- gime as other debt collectors. Todd Christensen, a debt col- lection lawyer with Christensen Law Firm, says he is pushing the government to harmonize an existing regulation in the prov- incial regulation with the federal Bank Act. If the CDSSA is ap- plied to lawyers without amend- ments, he says it could deny ac- cess to justice to creditors as it would put the costs of trying to collect from delinquent debtors back on the creditors. "The way the CDSSA is word- ed now is fine, but if you apply it to lawyers, it becomes directly in conf lict with the law of costs and the ability for creditors to use lawyers to hold the debtor accountable for the cost of re- covering the debt," he says. Historically, lawyers were not subject to the restrictions and regulations that govern collection agencies. The proposed chan- ges have sprung out of concerns about whether law firms should be able to have non-lawyer em- ployees carry out the function of debt collectors without having to comply with the act. Lawyers say debt settlement companies were also partnering with practitioners to get around the regulations and that the government likely introduced the changes to try to close this loophole. The proposed changes will require lawyers and their em- ployees to register under the act for any services provided that do not require a licence as a lawyer or if they advertise as a collect- or. They, however, would not be required to register for services that only a lawyer can provide or to collect a debt recognized in a court judgment. Christensen does not have any problem with making the regulations apply to lawyers, but he has concerns over a section that restricts adding collection costs to the debt. Christensen takes issue with a regulation that holds that char- ges incurred by a collector in collecting debt or by a creditor in retaining someone to do so "form part of the debt owed by the debtor. "As soon as you apply that to a legal regime, then you're say- ing we can't seek and recover costs in court or even before you commence the legal proceeding where they do it on a voluntary basis," he says. Christensen says this section needs to be harmonized with a section of the Credit Business Practices Regulation under the Bank Act, which says legal servi- ces retained to collect or attempt to collect payment is exempt from a restriction on adding any additional charges to what a debtor owes. He says amending the word- ing of this regulation would be an important but "simple fix" as lawyers need to be able to use cost rules to put pressure on intransigent debtors who have the means to pay but do not pay creditors. David Schatzker, a partner with Clark Farb Fiksel LLP, says he does not see the changes as particularly onerous for the af- fected lawyers, but practitioners will have to register as a debt collector under the act and be careful to follow the regulations going forward. "They need to send out a no- tice in a prescribed form con- taining certain information be- fore they can commence collec- tion activities; they need to make debtors aware of their rights and they need to be reasonably cau- tious in terms of what they're doing to make sure they're not unreasonably threatening legal proceedings that haven't been authorized," he says. Schatzker also questioned how a requirement in the CDSSA that debt collectors re- cord phone calls might work considering the Law Society of Upper Canada's Rules of Pro- fessional Conduct ban lawyers from using devices to record conversations with clients, "even if lawful" without first in- forming them of their intention to do so. "I don't know how that would be reconciled," he says. Schatzker says the changes will likely not have much ap- plication for most commercial litigators, but it will affect those who have practices where they serve one client for whom they pursue bad debts and overdue accounts. The proposed changes would also bring paralegals under the same regulatory framework. Christensen says his prefer- ence would be not to interfere with the regulation of lawyers and paralegals by the Law So- ciety of Upper Canada, but he is fine with bringing licensees under the act if it is the price for protecting consumers. "I think what's driving this is I'm seeing significant harm be- ing done by paralegals who are offering debt settlement services who have avoided application of the CDSSA by nominally part- nering with lawyers and con- tinuing in practices that are re- stricted that would be prohibited under the CDSSA," he says. Christensen hopes that amendments will be made to en- sure that the whole cost recovery scheme within litigation is not abrogated so that lawyers can continue to hold intransigent debtors accountable for costs. A spokesman for the Min- istry of Government and Con- sumer Services, which is con- ducting the consultation, did not provide comment before deadline. LT Todd Christensen says a section of the CDSSA needs to be harmonized with fed- eral legislation. [T]hey need to make debtors aware of their rights and they need to be reasonably cautious in terms of what they're doing to make sure they're not unreasonably threatening legal proceedings that haven't been authorized. David Schatzker www.twitter.com/lawtimes Follow on PLATINUM SPONSOR GOLD SPONSOR GOLD SPONSOR HOSTED IN PARTNERSHIP WITH BRONZE SPONSOR BRONZE SPONSOR COCKTAIL SPONSOR SILVER SPONSOR NO TRANSFORMATION WITHOUT INSPIRATION 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. Date: Sept. 19, 2017 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 To book your seats or to inquire about sponsorship, contact us at 416-649-8841 or MediaSolutions.Sales@thomsonreuters.com www.innovatio-awards.com Untitled-7 1 2017-08-16 2:54 PM

• Cover