Bill 103: let’s take a closer look
The Liberals’ proposed Bill 103 warrants a closer look, to consider the effects of the legislation. The title of Bill 103, “The Personal Injury and Accident Victims Protection Act,” is misleading. According to recent press releases, the IBAO (the Insurance Brokers of Ontario) are suggesting that auto insurance premiums are somehow related to “zealous litigation incented by contingency and referral fees.”[1] And furthermore, this litigation is an impediment to insurers delivering “affordable automobile insurance balanced with the benefits and protection of consumer needs.”[2] This assertion requires further scrutiny.
No rational explanation is provided, whatsoever, to explain how contingency fee agreements are in any way related to consumer needs, or affordable insurance premiums. Moreover, no rational explanation is provided regarding how contingency fee agreements are adverse to consumer needs, or affordable premiums. While the IBAO is a non-profit organization, the organization is clearly aligned with the interests of the insurers; the IBAO does not represent accident victims, hence the problem with the Bill’s title. The logic presented by the IBAO, similar to the title of the legislation, contains a twisted rhetoric advocated by the insurer, which has become all too common in legislation affecting personal injury claims. Just like the proposed legislation, this rhetoric does not help the injured party, and it definitely does not help the public.
Suggesting that litigation contributes to higher insurance premiums ignores a painstakingly obvious detail, which any counsel involved in personal injury litigation is well aware. To put it simply, insurers do not like to pay compensation to injured victims. An article from the National Post, from January 2017, draws attention to a significant problem in litigation related to motor vehicle accidents. Insurers often prefer to pay doctors to write a report, which is heavily biased to favour the insurer. The report will essentially state that the plaintiff is not injured. This has arguably become a severe problem, to the point that even judges are criticizing doctors for their favourable bias towards insurers (who pay the doctors handsomely).[3] The same article, from the National Post, also notes that insurers in Ontario can actually spend more money on medical exams, than on accident compensation. Once a claim goes to litigation, the other added expense of course is defence counsel’s legal bill (if counsel is in private practice, rather than in-house). Of course, defence counsel’s role is vital in the litigation process, in assessing the merits and weaknesses of the claim. As well as assessing the risks of proceeding forward in litigation. Yet these costs are not mentioned in the IBAO’s brief discussion of factors influencing auto insurance premiums. But contingency fee arrangements are conveniently addressed, just as they are targeted in Bill 103.
There is a good reason to maintain the practice of contingency fee agreements: when an injured party’s life has been suddenly turned upside down, because of their injury, the industry standard recognizes that it is not appropriate to ask for a monetary retainer from such an individual. An injured client, who has suddenly been put into a very vulnerable position, needs advocacy without the added stress of paying a lawyer’s hourly fee. Insurance companies like to play hard-ball when it comes to litigation, and given the present state of personal injury litigation in Ontario, insurers will always take advantage of an unrepresented plaintiff. Professional advocacy is essential to try and obtain an amount of compensation which might seem fair, under the circumstances. Personal injury litigation can go on for several years, sometimes resulting in no payment for the plaintiff’s lawyer at all – if the case does not settle, or if the court’s decision is not favourable for the plaintiff. Other times plaintiff counsel must wait for several years, after putting in dozens of hours of service for their client, in order to be compensated. The proposed 15% cap on fees completely ignores the extensive effort & time required for the litigation process. The proposed 15% cap essentially tries to reduce, if not eliminate, the lawyer’s incentive for acting for an injured plaintiff. Without the benefit of counsel, an injured plaintiff would go unrepresented against a sophisticated party, highly experienced in managing personal injury claims.
Upon examining the proposed Bill itself, there is another problem. The Explanatory Note, connected to the Bill, provides the following: “In any new contingency fee agreement, the total amount to be paid to the solicitor as compensation for representing the client in the proceeding is limited to no more than 15 per cent of the award.”[4] There is a glaring ambiguity: personal injury lawyers must essentially fund the litigation themselves. They must pay for disbursements out of their own pocket. This requires a significant investment for plaintiff counsel. Documentary productions are routinely requested in personal injury litigation. Such documents (included in disbursements) commonly include expert reports, employment files, doctors’ records, and government records like Employment Insurance and ODSP records – among others. If expert reports are included, disbursement costs can routinely (easily) range from $7,000 – $12,000. Depending on how far litigation proceeds, disbursements can cost tens-of-thousands of dollars. The cost of these disbursements initially comes out of the lawyer’s pocket. If the case settles, then the lawyer is (theoretically) compensated for these expenses. But there is always the risk that the lawyer will not be compensated for incurring these expenses. And that does occur sometimes; ie the lawyer is not compensated, and they can lose money out of their own pocket.
Given the expense of disbursements, which a lawyer must incur in order to advance litigation for an injured plaintiff, capping all fees charged by the lawyer at 15% is unreasonable. A larger concern is that merely proposing a 15% cap on all fees that a lawyer can charge, does not reflect a consultation with the personal injury bar (the plaintiff-side, which represents the injured party). The insurer definitely does not represent the injured party. And Bill 103 is no-doubt influenced by the insurer’s perspective in personal injury litigation. Asking for the insurer to advocate for the injured party is comparable to asking an oil company to take the initiative and leadership in safeguarding environmental interests. It doesn’t work. This legislation needs to be quashed.
[1] See “IBAO Supports Bill to Protect Consumers by Limiting Referral Fees,” dated March 10, 2017. http://www.insurance-canada.ca/consinfoauto/infonews/2017/ibao-bill-limit-referral-fees-1703.php
[2] Ibid.
[3] See “Hired gun in a labcoat: How medical experts help car insurers fight accident claims,” dated January 5, 2017. http://news.nationalpost.com/news/hired-gun-in-a-lab-coat-how-medical-experts-help-car-insurers-fight-accident-claims
[4] See “Bill 103, Personal Injury and Accident Victims Protection Act, 2017.” http://www.ontla.on.ca/web/bills/bills_detail.do?locale=en&Intranet=&BillID=4614; my emphasis
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