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Change in court rules could boost claims

|Written By Michael McKiernan

LawPRO has made civil litigation its immediate priority as it seeks to avoid a flood of new claims when new automatic dismissal rules kick in at the beginning of 2017.

Susan McGrath says real estate and litigation continue to be the areas of law with the highest number of claims, but lawyers must focus on the upcoming civil litigation risk arising from the changes in the administrative dismissal rules.

Changes to Rule 48 of the Ontario Rules of Civil Procedure enacted in 2015 mean that any claim commenced before January 2012 that has not yet concluded or been set down for trial by Jan. 1, 2017 will be dismissed without notice.

Before 2015, parties had only two years to get their actions on the trial list before the court’s registrar sent out a notice of intent to dismiss the claim for abandonment, but the new rule did away with the warning in exchange for a longer deadline, making dismissal automatic after five years.

Delivering LawPRO’s annual report, Law Society of Upper Canada Bencher Susan McGrath told Convocation on April 28 that the transition could result in a significant boost in claims.

“Real estate and litigation continue to be the areas of law with the highest number of claims, but at this time, we must focus on the upcoming civil litigation risk arising from the changes in the administrative dismissal rules,” said McGrath, who also chairs the insurer’s board of directors. “LawPRO strongly urges lawyers to stay on top of their civil litigation files.”

LawPRO has already dispatched staff to all corners of the province, delivering 37 live presentations to local lawyer groups on the issue, with further events planned, but any lawyer who has “not seen a program advertised” should let them know so they can get one scheduled, McGrath added.  

Aside from the Rule 48 issue, McGrath expressed satisfaction with the insurer’s performance in 2015, explaining that “the steep trajectory of claims costs projected over the last few years has begun to plateau,” freeing up cash that had been set aside to cover future expenses. 

LawPRO reported a total of 2,532 claims in 2015, the fourth consecutive year in which the number exceeded 2,500. However, accounting for the expanding number of lawyers covered by the plan, the number of claims per 1,000 lawyers actually reduced slightly for the third straight year. In 2015, there were 99 claims per 1,000 lawyers, down from 103 in 2014, and a peak of 108 in 2012. Litigation accounted for the largest portion, at around 37 per cent of all claims last year, followed by real estate at just more than 23 per cent. 

“With a general expense ratio of 18 per cent, noticeably less than similarly sized insurance companies, and a stabilizing number of claims over the last few years, the groundwork has been laid for continued security,” McGrath said, pointing out that the base annual premium for practising lawyers has remained unchanged since 2011 at $3,350.

“Our goal is to provide as stable and predictable an environment as we can. Predictability allows our lawyer insureds to plan effectively and work strategically,” she added. 

But the Rule 48 issue must be addressed “if we want to keep the good claims trend I have been describing,” McGrath warned her fellow benchers.

James Round, a litigation partner at Toronto’s Torkin Manes LLP, says he expects to see a scramble in the courts over the next few months as lawyers seek to take action on cases filed before 2012 that will be subject to automatic dismissal.

“In some cases, lawyers will be cramming in a lot of steps. When you have cases that are nearly ready for trial, I think they’ll be looking at what they have to get in place over the next few months before they’re comfortable setting it down for trial; whether it’s discoveries, expert reports, or whatever else.

That is going to really pick up momentum in the second half of the year,” Round says. “If you’ve got a case that is nowhere near trial, then it’s going to be a case of making sure you take the steps you need to avoid falling victim to the deadline, like setting a new timetable or bringing a motion for a status hearing.”  

LawPRO has also created a Rule 48 transition toolkit to help lawyers understand and avoid the risks associated with the new rule, available at practicepro.ca. Despite the upheaval associated with the new rule, the insurer has welcomed the changes overall, noting on its web site that the old version has cost it almost $10 million in claims since 2012. 

Round says the new Rule 48 achieves a better balance than the previous incarnation, which he calls “inefficient” due to the number of inadvertent administrative dismissals and unnecessary status hearings it prompted. However, he says it had at least one upside, in that the requirement for a notice of dismissal served to alert lawyers to “phantom clients” they may otherwise have forgotten about.

“There may be certain files where a particular lawyer or law firm is still listed as the lawyer of record.

Maybe you acted many years ago, and the relationship broke down, or you were served with a notice of change of solicitor that was never filed with the court,” Round says. “If they are now self-represented and don’t know about the upcoming deadline, they may come back when their case is automatically dismissed. Those are the sorts of things that keep lawyers awake at night.”

Maia Bent, the president of the Ontario Trial Lawyers Association, says she expects fewer claims in the long run for LawPRO once the Jan. 1 deadline passes.

“The people who might have trouble are those who don’t have a proper tickler system. If they have become comfortable relying on the warning from the court that their case is about to be dismissed, that could be a problem,” says Bent, a partner with Lerners LLP in London, Ont.

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