May/June 2012 - practicePRO.ca

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May/June 2012 - practicePRO.ca

errors&omissionsMentor with less fearwith LAWPRO waiver of deductibleLAWPRO has long promoted the benefits of mentorship, whichflow not only to the mentee, but also to the mentor. Lawyers whohave access to experienced mentors benefit from practical adviceand information without having to learn “by trial and error.”While many Ontario lawyers give their time generously to morejunior members of the bar, some may be deterred by the potentialrisk of liability for a claim relating to the work of a mentee.Recognizing this, LAWPRO has special rules in place to address thisconcern as it may affect the LAWPRO primary professional liabilityprogram and to encourage mentoring relationships:LAWPRO will waive any deductible and claims levy surcharge onany claim made against a lawyer mentor arising out of a mentoringrelationship provided that:• the mentor and mentee agreed to enter into a formal mentoringrelationship, as evidenced by a written document of some kind;• the mentor had no contact with the mentee’s client that wouldcreate a solicitor/client relationship; and• the mentee understood that she/he was responsible for individuallyand independently satisfying her/himself of the soundness of anysuggestions, recommendations or advice-like comments madeby the mentor.The written document evidencing the relationship does not have tobe a formal signed mentoring agreement. It can be as simple as anexchange of e-mails acknowledging the relationship and the threeterms listed above.LAWPRO, through its practicePRO program, has created severalresources to support mentoring relationships. Among these is ourManaging a Mentoring Relationship booklet, which provides mentorsand mentees practical advice and insights on how to make the mostof a mentoring relationship. ■Looking for mentorship tips?Here are some resources:LAWPRO/practicePRO:practicePRO’s Managing a Mentoring Relationship booklet isavailable online at practicepro.ca/mentoringbooklet. It offersvaluable tips on topics such as mentor preparation, identifyinggoals, setting expectations, avoiding conflicts of interest, evaluatingresults, and drafting a mentoring agreement to guide how therelationship will work.LAWPRO has also published articles about mentoring. To viewthe list and to download specific articles, visit practicepro.ca/topiclisting and locate the “Mentoring” topical category, orreview the April 2002 issue of LAWPRO Magazine in the LAWPROMagazine archives.There are several other mentoring initiatives in Ontario offeredby various organizations. They include:• Law Society of Upper Canada: The Mentorship Programat the Law Society comprises three initiatives: an Equityand Diversity Mentorship Initiative, Articling MentorshipInitiative and a Practice Mentoring Initiative. For moredetails on these programs see the Lawyer MentorshipProgram page on the Law Society website:rc.lsuc.on.ca/jsp/mentorship/index.jsp• The Ontario Bar Association has a mentorship programthat links young lawyers with experienced ones for guidanceand practice tips to facilitate the young lawyers’ successfulintegration into the legal profession. For more details onthis program see the Mentorship Program page on theOBA website: oba.org/en/mentorship/main_en/home_en.aspx• The Advocates’ Society has a members-only mentorshipprogram that consists of two initiatives, a “roster mentorship”that provides practical advice and a “shadowing” mentorshipprogram that provides an experienced lawyer that will attendcourt and provide a critique. For more information on theseprograms see the Roster and Shadowing Mentorship pageon the Advocates’ Society’s website:advocates.ca/new/membership/mentorship.html• Several CPD providers offer “mentoring dinners” that usuallyconsist of an opening presentation highlighting differentscenarios or issues, followed by a small group discussionover dinner and then a summary discussion.4 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


practicetipReal estate lawyers:The buck stops with youLAWPRO is seeing far too many real estate claims where the lawyershandling the deals are making or not catching fairly basic errors.Often these mistakes result from errors made by clerks – all ormost of which the lawyer could’ve and should’ve caught. Commonmistakes include:• Not catching errors in legal descriptions• Missing executions• Not doing searches• Not bringing rights of way or easements to the attention ofthe clientWe also see claims involving ILA. Sometimes there was no recognitionthat ILA was appropriate on the transaction, or an allegationthat it was done in a haphazard way. In this case it is alleged thatthe lawyer giving the ILA did not take the time to understand thetransaction and properly explain the impact and implications of itto the client.Why are these errors happening?There are many possible explanations. Real estate lawyers are underintense pressure to keep their fees low. Fee pressures may result inlawyers spending less time than they should on a matter, or delegatingthings that they should be doing to a clerk. Perhaps clerks do morewhen things get busy on days near the middle and end of the monthwhen there are multiple closings. Some will suggest that titleinsurance gives lawyers a false sense of security or has made somelawyers lackadaisical about the work they are required to do on areal estate transaction.What can be done to prevent these errors?Real estate lawyers need to remind themselves that they areresponsible for all work done on a real estate deal by their firm –including work done by staff. To be effective, efficient and profitable,you have to use real estate clerks to do the legwork on real estatedeals. But take care to make sure they are doing the work that theyshould, that you are highlighting anything unusual on a particulardeal, and that you are carefully checking their work before the dealis closed.Meet with clients and make sure you are always present when theysign documents. It is also good practice to have the clients executea “waiver” prior to closing, particularly when acting in a transactionthat is out of the ordinary. The waiver explains the unusual issueand confirms that the clients understand and accept the issuebefore closing.And be especially careful if you are delegating the work to a realestate clerk outside your office. We are aware of a real estate clerkthat has gone to work for and stolen money from multiple lawyersand lenders.Lastly, never let anyone else use your PSP. It is a violation of the Rulesof Conduct and you are giving away all your responsibilities bydoing so. ■Dan Pinnington is vice-president of Claims Prevention and Stakeholder Relations,and Rosanne Manson is LAWPRO claims counsel.www.lawpro.ca LawPRO Magazine | Volume 11 Issue 2 5< PREVIOUSNEXT >


techtipIs Facebooksecretly sharingwhat you are reading and watching?During a recent phone call with one of my colleagues, we had a bit of a chuckle over a rather risqué and nSfw (notsuitable for work) article that one of our mutual friends had apparently just read online. Think clothing-optional anticsby a celebrity in Vegas. as it happened, a few minutes before our call, we had both seen a facebook update tellingus that our friend had just read this particular article.The critical fact here is not what happenedin Vegas, but rather that our friend likely hadno idea that the articles he is reading arebeing shared with the world via Facebook.And our friend is certainly not the onlyperson unknowingly embarrassing himselfin front of all his Facebook friends andacquaintances. More and more people areunknowingly sharing embarrassing informationabout what they are reading andwatching on Facebook and other socialmedia tools.Remember, some sites will automaticallyshare your online activities with yourFacebook friends. These sites may warn youabout this sharing the first time you visitthem, usually when you click through to lookat an article or video that someone you knowhas shared. A little window will pop up witha vague warning before the article you wantto read appears. You frequently consent to thesharing simply by proceeding to the article,although occasionally you will be asked toconsent by clicking a checkbox. In most cases,this will be the one and only warning you get.From that point forward, an update willautomatically be posted to your Facebookpage with a description and link to everyitem you watch or read on that site. Yikes!!This is called “frictionless” sharing. Thenumber of sites using frictionless sharingis growing very quickly. At first it wasmainstream media and sites such as Netflixand Spotify, but now there are many more,and the list is growing longer on a daily basis.There are now more than 60 including:Ticketmaster, Autotrader, Kobo, TripAdvisor,Urbanspoon, Pinterest, Branchout andFourSquare.Do any of the apps on this list look familiar?Are you using any of them?Go to your Facebook Privacy settings pageand review the list of apps you have installedand what they are sharing. Do it now. Rightnow. I am guessing you are sharing informationthat you don’t realize you are sharing.And while you’re at it, don’t stop at justchecking your Facebook settings. Check theprivacy and sharing settings on the othersocial media tools you use. MyPermissions.org is a great tool to help you do this.MyPermissions (mypermissions.org) willhelp you systematically review the permissionsyou have granted in the various socialmedia tools you use. And the simplicity ofMyPermissions is brilliant – it doesn’t requireany access to your accounts. It’s basically acollection of bookmarks that directly link tothe permissions pages for Facebook, Twitter,Google, Yahoo, LinkedIn, Dropbox, Instagram,and Flickr. If you are logged into oneof these sites, clicking on the relevant link onthe MyPermissions homepage will take youright to the permissions page for that site.I encourage you to take the time to reviewthe permissions you have given in the varioussocial media tools you use. Many of youwill be surprised at the permissions youhave granted. Revoke the ones you don’tthink are necessary or appropriate.Lastly, put a reminder on your “to do” listor calendar to review your permissionsonce a quarter, every few months or evenmonthly. Remember that checking yourpermissions helps protect your privacy. ■Dan Pinnington is vice-president of ClaimsPrevention and Stakeholder Relations. He canbe reached at dan.pinnington@lawpro.ca6 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


ookreviewhere are three new additions to the practicePRO Lending Library you can read in under an hour. Two cover thegadget everyone waits in line to buy, and the other a powerful (but often underused) tool for building your onlineprofessional contact network.iPad in One Hour for Lawyersby Tom Mighell. Published in 2011, 106 pagesLawyers are jumping on the tablet bandwagon in huge numbers, andmany are opting to go with Apple’s iPad. This book is a great quickread for those who are still thinking about getting an iPad, or whobought one and are still figuring out how to get the most out of it. Theauthor – Tom Mighell, a member of the Law Practice Managementsection of the American Bar Association (ABA) – aims to have theuser configured and ready to start using the device in under an hour.After quickly familiarizing the reader with how to navigate thebuttons and controls of the iPad, Mighell explains how to set upemail, contacts and calendars (the essentials of remote lawyering).From there, it’s on to learning how to synchronize, organize andaccess your files both through the device itself and via “the cloud.”With the user now set up, the remainder of the book explores howlawyers can use the iPad in productive ways (as opposed to playingAngry Birds). Add external tools such as a keyboard, stylus, andstand to make it easier to work with the tablet. Download apps fortaking notes, reading documents and holding virtual meetings. Otherlawyer-focused apps specifically help with trial preparation andlegal research.To really dig into all the apps available, be sure to also check outthe following.iPad Apps in One Hour for Lawyersby Tom Mighell. Published in 2012, 115 pagesWith more than 200,000 apps for the iPad to choose from, findingthe best ones can be time-consuming and confusing. In this bookTom Mighell selects what he considers the best apps for lawyerslooking to get the most out of the iPad.After first explaining how to buy, install, and organize apps, theauthor then breaks down the selection into broad categories. Thereare apps for getting organized, document-editing apps, apps for thelaw office, news and reference apps, utilities that let you work withother devices (such as printers and scanners), travel-focused appsand apps to help you relax and have fun at the end of a long day.The focus is mainly on paid rather than free apps, because in theauthor’s opinion these are usually a cut above in terms of qualityand functionality (though there are still lots of great free apps outthere). Each section features must-have “recommended” apps, alongwith “runners up.”LinkedIn in One Hour for Lawyersby Dennis Kennedy and Allison C. Shields. Published in 2012, 128 pagesBy now many lawyers will have set up a LinkedIn account – but theymay not have done much more than register, create a simple profileand add new connections from time to time. Some may see it asjust another social media fad, when in fact LinkedIn can be a toolfor replicating online what lawyers strive to do in real life: buildconnections, network and gain new clients.The authors are Dennis Kennedy, an IT lawyer and technology columnistfor the ABA Journal, and Allison C. Shields, an author andconsultant on practice management and business development issues.The first portion of the book is a series of ten lessons that will takea lawyer step-by-step from creating a profile that’s active and dynamicto building a network of connections to leveraging knowledge andexperience by participating in LinkedIn’s Groups and taking part inAnswers (a type of discussion forum) and Recommendations.The remainder of the book covers more advanced topics such asethical implications lawyers need to consider, how to use LinkedInin the hiring process, and apps that can be installed to make yourprofile even more functional and interactive.If all you’ve done on LinkedIn is set up a profile and added a few colleaguesas connections, read this book. After you’re done you’ll wantto take a fresh look at how much more this tool could be doing tohelp you nurture and expand your professional network. ■Tim Lemieux is practicePRO coordinator at LAWPRO.The practicePRO Lending Library has more than 100 books on a wide variety of law practice management topics. Ontario lawyers can borrow books in person orvia e-mail. A full catalogue of books is available online (www.practicepro.ca/library). Books can be borrowed for three weeks. LAWPRO ships loaned books to you atour expense, and you return books to us at your expense.We have books on these topics:• Billing & financial management• Law firm management & administration• Marketing & client relations• Law office technologyAbout the practicePRO Lending Library• Career issues• Wellness & balance issues• Solo and small firm issuesFor full descriptions of these titles, including downloadable tables of contents, go to practicepro.ca/librarywww.lawpro.ca LawPRO Magazine | Volume 11 issue 2 7


RemARks OF The PResiDenT & CeO2011annualrevıewClaim numbers & costs reach new highs$101 millionin claims costsDo we have your attention yet?In this, the third annual review of LAWPRO operations, we’re taking a slightly differentapproach. You’ll notice that there are fewer words in many sections and more use ofgraphics to convey information.Why this change? Because a picture is worth a thousand words. And because now –more than ever – we need to get your attention.We need you to absorb the information we’re going to share onthe following pages. And we need you to act on that information,to look seriously at every aspect of your practice from a riskmanagement perspective: Who are your clients? How well do youdocument? How good are your controls, procedures and overallpractice management? And how vulnerable are you to having aclaim filed against you?Because, the BIG story in 2011 is claims. The number of claimsreported is up 11 per cent to 2,468. Based on actuaries’ projections,claims costs in the E&O program alone could top the$90 million mark for 2011.As is more fully explained on the following pages, no matter howwe slice and dice the numbers, the trend is up:• Over the last decade, the number of lawyers in practice hasincreased 28 per cent. But the number of claims reported isup 34 per cent.• The claims you’re reporting cost more to resolve: The averagecost per claim file is up 37 per cent from $31,000 in 2001 to$42,000 in 2009. Put another way, the number of claims inthe $100,000+ category has gone up 115 per cent to 275 in2009 from 132 in 2001.These are disturbing trends that raise many questions, the mostimportant of which are: What is going on and how can we rein inthis trend?what’s driving the increase in claims?As I said in my comments in the 2011 LAWPRO annual report,there’s likely no “Eureka!” explanation for this claims trend. Buta few possibilities come to mind:• It’s a more complex business environment in which you’rehandling more complex files that seem to result in morecomplex and costly claims.8 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


RemARks OF The PResiDenT & CeO• It’s a more litigious world in which clients have higherexpectations.• There are more claims involving self-represented (and in somecases, vexatious) litigants – a worrisome and often expensivetrend that puts tremendous pressure on our court system andon the defendant lawyer.• Disturbing practice trends – such as lawyers abandoningpractice to non-lawyers who are not supervised; or lawyerswho (perhaps unthinkingly) deal with an intermediary ratherthan with the actual client and who are surprised when theclient ends up unhappy and sues the lawyer (or worse still,the intermediary turns out to be a fraudster).• The “law of multiples” which can take many forms such asmultiple lawyers doing the same type of work (or based on thesame guidance) that leads to class action potential whenthere’s an allegation that they all did it wrong; or the samelawyer is sued over doing the same (allegedly wrong) thingmultiple times; or a lawyer undertakes many mortgagetransactions without considering that there are red flags thatneed to be brought to the attention of the lender – such asa significant increase in the value of the property in a veryshort period of time or inexplicable credits.In many of these scenarios, communication (with the client) andthe related need to pay attention to detail are common themes.And certainly both are front and center in our own concertedefforts to help you understand your claims risk and how tominimize it.what are we doing to help you manage risk?Here’s a snapshot of what we are doing: Our AvoidAClaim bloghas become the best place to go to learn about the latest fraudscams, scammers and the fake ID, cheques and communicationthey’re using. Our new series of practice-specific Webzines (sentto you by email) provide information and risk management advicespecific to your area of practice (and even though we go to greatlengths to give you only information relevant to you, only 24 percent of lawyers read the information we provide!). We took our riskmanagement message to 90 lawyer audiences at conferences,seminars, workshops and law firm presentations in 2011 –outreach at a level never seen before. We’re reaching out tonewer and emerging lawyer networks to ensure we have allbases covered in our drive to get the message out.But we cannot tackle this claims issue alone: It’s more clearthan ever that lawyers need to practise defensively more thanever before. Just like there are MORE financial challenges foreveryone trying to make a living (including lawyers), MOREcomplexity of technology and government regulation, there isMORE risk of lawyers being sued and MORE dollars are at stake.solid results despite these challengesIn this climate, we are particularly proud of our successes. On thefinancial front, we are profitable and continue to exceed solvencybenchmarks (although here too challenges continue to loom).For 2011 and 2012 we were able to hold the base insurancepremium steady at $3,350 – while also reducing REPCO premiums,and offering new calls, those practising part time andthose eligible for the restricted area of practice option a higherpremium discount.Improved underwriting and lawyer outreach has helped us bringdown TitlePLUS claims costs and our claims paid ratio has heldat just over 40 per cent. Our Excess Insurance program continuesto attract a solid 20 per cent of our target market (lawyers in firmsof 50 or fewer lawyers) and in 2011 provided excess coverageto a record 1,466 firms representing 3,711 lawyers; as well, ourretention rate on this program is high – with 97 per cent of firmschoosing to stay with LAWPRO for their excess coverage in 2012.We’re also focused on efficiency: General administration costs of$17.4 million were $1.6 million less than expected and representonly about 19 per cent of overall costs compared to industryaverages of closer to 30 per cent.Overall, LAWPRO posted net income of $8.6 million; shareholder’sequity – which represents the value of the bar’s investment inLAWPRO – has increased to $168 million. These strong resultsensured our Minimum Capital Test (220 per cent) – a key solvencymetric – stayed well within the parameters set by our board ofdirectors and above the levels that would prompt concern onthe part of our regulator. They also contributed to our 12 thconsecutive A (Excellent) rating from the A.M. Best Company, aleading rating agency. A.M. Best also gave our company a stableoutlook – an indication that it believes we will be able to continueto obtain a positive rating in the future.But we – lawyers and LAWPRO – have our work cut out for us: Thepressure that the current claims trend is putting on premiums istremendous. When claims costs account for 80 per cent of ourbudget, there’s little we at LAWPRO can do on the administrationside that will have a noticeable impact.The only way to keep premiums at relatively stable levels is toreduce claims numbers and costs. And that task is largely up toyou: What one thing are you going to do differently in 2012 thatwill significantly minimize your claims risk?Our statistics tell us that each year about 400 lawyers find themselveshaving to report a claim for the first time. Make sure you’renot among the 400 in 2013. Take the time to ask yourself thosequestions I posed at the start of my comments. Are you reallypractising in the most risk-averse way reasonable?Kathleen A. Waters.President & CEOwww.lawpro.ca LawPRO Magazine | Volume 11 issue 2 9


e&O PROgRAmhitting our stride: Fine-tuning coverage$6,0005,5005,0004,5004,0003,5003,0002,5002,0000Premium for 2011 increased by $400 to $3,350in response to record-level claims costs, continuingweak investment returns, a decline in the discountrate, impact of the hsT, and the need to maintainminimum capital ratio (mCT) at a prudent level.Premium changes for 2012announced in september 2011Base premiumsteady at$3,350/lawyerRePCOpremiumreduced to$250from $400new lawyersmax 50% discount(50% first year of practice, 40% in second; 30% in third;20% in fourth)Discountfor part-timeor restrictedpractice(criminal/immigration)increased to50%from 40 %from40%more lawyers tailoring coverage to their needsCoverageoptionFeaturenew calldiscount10 to 40% basepremium discountfor thosecalled in thelast one to fouryears (20% to50% for 2012)Discountsforpart-timepractice40% basepremiumdiscount foreligible lawyers(50% for 2012)Restrictedarea ofpracticeoption40% basepremiumdiscount forimmigration/criminal lawpractitioners(50% for 2012)innocentpartybuy-upincrease ininnocent Partysublimits up toas much as$1 million perclaim/aggregateRun-offbuy-upincrease limitsfor past servicesfrom $250,000per claim/aggregateto as muchas $1 millionper claim/$2 millionaggregateRealestatepracticecoverageRequired forall lawyerspractising realestate law inOntario. sublimitcoverage of$250,000 perclaim/$1 millionaggregateVALUEINTEGRITYNo. of lawyersparticipatingas ofJan. 31, 2011No. of lawyersparticipatingas ofJan. 31, 20123,772 1,466 1,343 3,268(based on$249/lawyer)3,975 1,463 1,383 3,309(based on$249/lawyer)867 7,171891 7,25510 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAmhitting our stride: Fine-tuning serviceCorrespondence volume:Did you know that the LAWPRO customer service departmenthandled over 23,000 individual pieces of correspondence in2011? Each of our customer service representatives is trainedto address a wide range of service issues, from accountsmanagement to coverage inquiries to the referral of claims to ourclaims department. While we received roughly the same volumeof correspondence in 2011 as we did in 2010, we are seeing ahigher percentage of that correspondence (53 per cent last year)arriving via email instead of traditional mail.98 per cent filed online:consistent with the trend toward email correspondence is theincrease, every year, in the percentage of lawyers filing their policyapplications online. We’re grateful for your support of our effortsto minimize the environmental impact of our insurance program.French forms available:We completed our French translation project in time for the2012 policy renewal season. All of the written materials thatsupport our mandatory insurance program are now available inboth official languages.You calledcustomer service about…VALUESERVICEexcess insurance: Loyal client base, claims on horizonLAwPRO's excess insurance program providesadditional coverage (above the coverage provided bythe mandatory program) required by many firms. TheLAwPRO excess program, while available to any firm,is marketed primarily to small and medium-sized firmsof 50 or fewer lawyers.97 per cent of LAwPRO’s excess insurance programsubscribers renewed their policies for 2012.As of December 31, 2011, the excess insuranceprogram had not paid any claims; however, one claimwas paid in early 2012, and the program has reservedfunds in connection with a number of other claims.www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 11


e&O PROgRAme&O claims numbers: going upClaims costs inprimary program may top $90million in 2011Ultimate incurred claims costs*gross incurred e&O claims costs increased 80 per centbetween 2001 and 2009. Costs for 2010 and 2011 areprojections, based on claims reported, claims already paid inthose years, claims cost trends and actuarial models used toproject how claims costs will develop. it should be noted thatbetween 30 and 50 per cent of claims reported in 2010 and2011 are still unresolved.Lawyers are reportingmore claimsnumber of claims reported & frequency*The increase in the number of claims reported can be attributedin part to an increase in the number of lawyers insuredunder the Law society e&O program – to just over 23,000 in2011 from about 18,000 in 2001, a 28 per cent increase.even when we adjust for this increase – by calculating claimsper 1,000 lawyers in practice – we see that the number ofclaims being reported is higher than it has been at any timein the last decade. Claims frequency in 2011 stood at 107,up from 99 in 2010 and higher than the previous peak of104 in 2002.12 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAmClaims are more complex and costly$100,000+ claims up 122%*Between 1999 and 2009, claims in the $100,000 to $500,000range increased 122 per cent (from 127 in 1999 to 275 in 2009):• Claims in $100,000 to $250,000 range were up 132 per cent• Claims in the $250,000 to $500,000 range were up 89 per cent• Claims over $500,000 were up 89 per cent.Average cost per claim is up 37%*Between 2001 and 2009,the average cost of a claimincreased 37 per cent:• in 2001, the average costwas $30,720• in 2005, the average costwas $36,655• in 2007, the average costwas $40,202• in 2009, the average costwas $41,971www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 13


e&O PROgRAmReal estate, litigation represent biggest riskDistribution of claims by area of practice*(% of gross claims costs)increase in real estate claims outpaces other areas of practiceReal estate 185% increase ($11.9m to $33.9m)Litigation 26% increase ($16.6m to $20.9m)Corporate, bankruptcy,iP, security, tax 38% increase ($16.6m to $22.9m)Family 51% increase ($3.3m to $5.0m)wills, estates 89% increase ($3.6m to $6.8m)Other 238% increase ($1.3m to $4.4m)Between 2001 and 2009, real estate claims costs increased 185 per cent (based on numbersavailable as of February 28, 2012). housing prices in Ontario for the same period increased90 per cent (source: CReA).14 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAme&O claims management:A track record of successIn this new world of record claims numbers and costs, our claims management expertise and experience are put tothe test: As the following summary shows, we continue to post solid claims management results on many fronts.VALUEINTEGRITY80%+ claims closed withoutindemnity paymentClaims closed2005 to 2011As these numbers show, LAwPRO’s focused claims managementphilosophy – which sees us resolve claims quickly in situationswhere there is liability, defend vigorously if the claim has nomerit and avoid economic settlements – yields solid results.A winning track record in courtOn all fronts – matters taken to trial, matters appealedand files on which we applied for summary judgment –we were successful.For a more detailed discussion of claims on which westepped in to repair an error made by a lawyer (and helpavoid a potentially costly claim) see “Repairs: Remedialaction by LAwPRO saves millions” on page 18.For more on precedent-setting claims matters handled byLAwPRO in 2011, see “LAwPRO defends lawyers on a widevariety of claims” on page 24.success at pursuingrights of recoveryAs well as managing claims costs to the extent we can, LAwPROalso actively pursues its rights to recover from other parties onfiles where this strategy is appropriate. in 2011, we recoveredapproximately $1 million on claims files. For a more detaileddiscussion on some of the more successful files, see “Recoveries:Following through to recover costs” on page 16.A vote of confidence fromlawyers with claimseach year we survey insured lawyers whose claims have closedthat year. Results of this annual survey reveal a very high levelof satisfaction with LAwPRO’s claims handling:won 15 of 19 trials; decisions reservedon 3 additional matters taken to trialwon 8 of 10 appeals (all appellants hadlost their cases also in first instance)won 22 of 30 summary judgment applications;won 2 claimants’ appeals fromsummary judgment orders. On 7 otherpending summary judgment motions,claimants capitulated prior to hearing daterecovered approximately$1mon claimsfiles98%89%88%say they are satisfied with how LAwPROhandled the claim;say they are satisfied with our selectionof counsel;say they would have the defence counselfirm represent them again; andsay LAwPRO received good value fordefence monies spent.VALUEVALUEPROFESSIONALISMSERVICEwww.lawpro.ca LawPRO Magazine | Volume 11 issue 2 15


e&O PROgRAme&O claims management:Following through to recover costsPROFESSIONALISMVALUEBy the time certain claims come to our attention,it’s either too late or uneconomic to pursue arepair. Some of these cases require that we payan indemnity to the party affected. This payment,however, is not the end of the story: To control ourclaims costs, we must take steps, where possible,to recover against the party at fault.LAWPRO actively tracks recoveries throughout theyear. In 2011 LAWPRO stepped up its recoveryefforts, a strategy that resulted in about $1 millionin recoveries. The following is a sampling of someof the recoveries realized in the past year.Post-closing change of heartIn one case closed in 2011, the claimant – a wealthy, elderlywoman – decided to give her house to a retirement home as aninter vivos gift. The insured provided advice on the transaction.The claimant then alleged she misunderstood the transaction,stating the insured did not properly explain the implications andthat she never intended to give her home as a gift. As a resultthe claimant sued both the insured and the retirement home.The evidence given by the retirement home, the insured and theclaimant’s accountant at trial proved that the claimant understoodwhat she was doing and was aware of the implications of thetransaction. The claimant had simply changed her mind. However,since the transaction had closed, it could not be reversed.The court awarded the insured $75,000 plus $3,400 in disbursements(LAWPRO defence costs). The claimant appealedand the Court of Appeal confirmed the judgment and awardedan additional $19,000. LAWPRO recovered the total $102,000,including GST and post-judgment interest.Patience and persistence pay offIn 2011, LAWPRO recovered on a claim based on litigation that wascommenced in 1987. In that year, the claimant sued two parties –an individual and a company – for damages for alleged negligencewhile managing the claimant’s investment accounts. In December1989, the claimant retained the insured to handle the litigation.In the course of pre-trial negotiations, the corporate defendantadvised the claimant that it was prepared to settle his claim,provided that the claimant secure a settlement with the individualdefendant first. The claimant undertook negotiationswith the individual defendant that resulted in a settlementoffer in April 1992.The settlement offer contained terms that purported (withoutauthority) to restrict the rights of the corporate defendant torecover against the individual defendant.The insured and claimant met in May 1992 to discuss the settlementoffer. The insured’s evidence was that at that meeting,he advised the claimant against signing the draft agreement. Theclaimant signed it anyway, and it was forwarded to the individualdefendant, who executed it a few weeks later.16 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAmAfter this settlement of the individualclaim was completed, the corporatedefendant advised the claimant that,contrary to its previous representations(and in reaction to the termspurporting to bind it), it wouldnot be offering any amount tothe claimant in settlement ofthe suit against the corporatedefendant. The corporatedefendant also advised thatshould the plaintiff be successfulin obtaining judgment against it, itwould pursue contribution from theindividual plaintiff.The claimant responded to these developmentsby abandoning the claim against thecorporate defendant and initiating an action innegligence against the insured for allegedly mishandlingthe negotiations and for facilitating the settlement with theindividual defendant without securing a settlement with thecorporate defendant.In his claim against the insured, the claimant sought $25,000 forspecial damages, $25,000 in damages for mental distress andpunitive damages in the amount of $75,000.LAWPRO defended the action on the insured’s behalf. The actionfinally went to trial in late 2003. The court found that the insured’sactions in advising against the settlement were not inconsistentwith the standard of care owed by the insured under the circumstances.The defendant was awarded $85,000 in costs (LAWPRO’scosts) and had a writ of seizure and sale filed with the court inthat amount. After many years of effort to enforce this 2004judgment, LAWPRO was able, in 2011, to locate exigible assetsand negotiated a recovery in the amount of $123,000.Recovering from a fraudulent chequeIn this file, our insured was acting for the claimant and anotherclient on real estate transactions. On the claimant’s closing dayin October 2007, the insured deposited the claimant’s certifiedcheque for closing funds along with the other client’s uncertifiedcheque into the firm trust account.The other client’s transaction closed first. Part of the fundsfrom the claimant’s certified cheque were used to close thattransaction (because the uncertified cheque had not yet cleared).Subsequently, the uncertified cheque bounced, creating a shortfallthat caused a loss for the claimant.In 2008, LAWPRO made an indemnity payment on behalf ofthe insured in the amount of $208,000. LAWPRO pursued theinsured’s other (former) client to recover the losses. We laterobtained a judgment and filed a writ of seizure and sale.When the judgment debtor decided to sell one of its propertiesin 2011, LAWPRO agreed to withdraw its writ in exchange for apayment in the amount of $240,000. This amount representsalmost 100 per cent recovery on this claim, including recoverycosts and the indemnity amount paid. ■www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 17


e&O PROgRAme&O claims management:how remedial action by LAwPROsaves the bar millionsTimely efforts by LAWPRO to “repair” errors committed by lawyerssave the Ontario bar millions of dollars every year.1setting aside Registrars’ administrativedismissal orders (Rule 48)Defended actions (Rule 48.14): Judicial discretionto set aside dismissal is unpredictableRegistrars’ orders dismissing actions under Rule 48 have becomecommon. In some cases, we were successful in having theseorders set aside. In other cases, we could not overcome the“inexcusable delay” and prejudice to the defendants, which werefound to justify the dismissal orders. The court’s view about whatis or is not “inexcusable delay” has become increasingly strict.Another difficulty is that the court’s power to aside Registrars’dismissals is discretionary. When considering whether to move toset aside a dismissal, it can be hard to predict how this discretionmight be exercised. The following cases illustrate these points.The plaintiff in Aguas v. Rivard 1 was injured in a motor vehicleaccident on October 5, 2001. The statement of claim was issuedtwo years later. Liability was disputed.The plaintiff was involved in a second motor vehicle accidentin March, 2005. She started action #2. In August, 2005, theplaintiff was examined for discovery in action #1. The plaintiffthen changed counsel. Her discovery was continued in April, 2007.In May, 2007, a status notice for action #1 was sent by the courtoffice to the plaintiff’s former counsel and to defendants’ counsel.In August 2007, the Registrar’s order dismissing action #1 wassent to plaintiff’s former counsel and to defendants’ counsel.In May, 2008, counsel for the defendant in action #2 wroteto counsel for the plaintiff and for the defendants in action#1, advising that action #1 had been dismissed. In June 2008and April 2009, discoveries of the plaintiff in action #2 tookplace; counsel for defendants in action #1 attended on a“watching brief.”In September 2009, the plaintiff retained anew counsel, who discovered the May 2008letter, and learned for the first time that action#1 had been dismissed. The motion to set asidethe dismissal was brought shortly thereafter.Seppi, J. declined to set aside the dismissal order.The plaintiff gave no reason whatsoever for theslow progress of the matter up to the date of thestatus hearing notice. And, even though theplaintiff’s second counsel did not receive thestatus notice and the dismissal order, this secondcounsel should have known that failure to setdown the action within the time provided in Rule48.14 would lead to dismissal of the action.Seppi, J. accepted that counsel’s failure torespond immediately to the status hearingnotice and the order dismissing the action was“inadvertent,” because this failure to respondwas the result of the court’s error in sending thenotice and order to the former lawyers. However,the plaintiff did not explain why her secondcounsel failed to act on the letter of May 2008.While the plaintiff could not be held responsiblefor the eight-month delay from August 2007(second discovery date) to May 2008 (date ofletter advising of dismissal) because the dismissalorder was sent to the wrong lawyer, the17-month delay from receipt of the letter until themotion to set aside the dismissal was broughtwas not adequately explained. These facts didnot support a finding of inadvertence.As to prejudice, trial fairness would be affectedshould the memory of the defendants’ onlywitness to the accident be impaired. Prejudicecould be inferred in this type of case. There wasalso a presumption of prejudice because of theVALUESERVICE1(2011), 107 O.R. (3d) 142, 2011 ONCA 494, allowing appeal from 2010 Carswell 10849 (Seppi, J.)18 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAmpassage of time since the limitationperiod expired. Seppi, J. held thatweighing all four of the Reid v. DowCorning 2 , factors, as explained inMarché D’Alimentation DenisTheriault Ltée v. Giant Tiger StoresLimited. 3 supported dismissal ofthe motion. The defendants wereentitled to rely on the finality of theRegistrar’s order.On behalf of our insured, LAWPRO counsel appealed the SuperiorCourt decision. On appeal, Rosenberg, J.A., with whom FeldmanJ.A. concurred, held that the Registrar’s order should have beenset aside. The most important factors were: (1) the plaintiffparticipated in five examinations for discovery with respect to thetwo actions, before and after the first action was dismissed;(2) the Registrar’s notice and order dismissing the first actionwere not sent to the plaintiff’s current counsel by the court; and(3) actions of defendants’ counsel’s did not support actualprejudice or reliance on finality. Marché and Wellwood v. Ontario 4were distinguished on the basis that in Marché, plaintiff’s lawyerput the file into abeyance, and in Wellwood, the plaintiff’slawyer’s delay was intentional.Juriansz, J.A. wrote in his dissenting judgment that unlike the“traditional” approach to litigation, Rule 48.14 gives the Courtthe right and duty to manage its own docket. When the Courtof Appeal disturbs a motion judge’s exercise of discretion notto set aside a Registrar’s dismissal order, it undermines thescheme of active case management of sluggish cases forwhich Rule 48 provides.While we try to be discriminating in choosing which administrativedismissals to appeal, outcomes are difficult to predict in advance,as the Court of Appeal’s split decision in this case illustrates. Wetherefore invest considerable preventative efforts in remindingthe Bar of the danger that administrative dismissals represent.Machacek v. Ontario Cycling Association 5The Court of Appeal declined to set aside the dismissal of theplaintiffs’ action by the local Registrar pursuant to Rule 48.14. Theaccident occurred in June, 2002. The statement of claim wasissued in February, 2003. In August 2007, the action wasdismissed for delay in setting the action down for trial. Betweenthe time of the commencement of the action and September2006, pleadings were exchanged, some discovery sessions wereheld, a defence medical examination was completed and variousdocuments were produced.While we try to be discriminating inchoosing which administrative dismissalsto appeal, outcomes are difficult to predictin advance, as the Court of Appeal’s splitdecision in this case illustrates.The plaintiff’s lawyer never receivedthe status notice or notice of thedismissal because he left his previousfirm, and failed to file a noticeof change of lawyer. He learned ofthe dismissal in February 2008. Theplaintiff urged his lawyer to deal withthe dismissal. He did not do so.Plaintiff’s lawyer finally reportedthe matter to LAWPRO in August2009. The motion to set aside thedismissal was launched in March 2010, and heard in December2010. Ricchetti, J. dismissed the application.The Court of Appeal dismissed the plaintiffs’ appeal. Virtuallyall of the delay between September 2006 and March 2010was attributable to the failure of plaintiff’s counsel to move theaction along and take the appropriate steps to set aside theRegistrar’s order. The Court concluded that the delay and theconduct of the lawyer “tipped the balance” toward the finalityprinciple. Reinstating the action at this point would underminethe finality principle while refusing to reinstate the action doesnot interfere with the need to ensure adequate remedies. TheCourt noted that the plaintiffs were not left without a remedyas they had recourse to a lawyer’s negligence action.LAWPRO repair counsel often find themselves in a dilemma. Thefacts of a particular case may suggest that a motion to set asidean administrative dismissal will be hotly contested, with noguarantee of success. They may feel that the success or failureof the motion will ultimately depend on what evidence they canget from the defendants on cross-examination, and what masteror judge or appeal panel they may ultimately draw on the applicationor on the appeal. The panel that heard the Machacekappeal chose to focus on the delay rather than on the issue ofprejudice; a different panel may well have decided differently.None of this can be predicted in advance. Should counselrecommend a motion to set aside the administrative dismissal,knowing that LAWPRO may be throwing good money after bad?Or should they recommend that no such motion be undertaken,knowing that a negligence claim arising from the loss of theplaintiff’s action will inevitably follow? To compound counsel’sdifficulty, the information needed to make a proper assessmentof the value of the plaintiff’s claim may be unavailable, or onlypartially available. There is little time to obtain such information –motions to set aside dismissal must be brought “forthwith.”Sometimes it is possible to set aside the dismissal order;sometimes it is not. Unfortunately, Machacek v. Ontario Cyclingis a “failed” repair.2[2001] O.J. No. 236853(2006), 87 O.R. (3d) 660 (C.A.)42010 ONCA 38652011 ONCA 410, dismissing appeal from 2010 ONSC 7065www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 19


e&O PROgRAmUndefended actions (Rule 48.15): Rebuttal ofpresumption of prejudice wins the dayIn his lengthy judgment in Vaccaro v. Unifund Insurance Co. 6 ,Master Dash discusses the test for setting aside the dismissalof an action by the Registrar under Rule 48.15 – that is, whereno defence has been filed within 180 days after the issuanceof the statement of claim.The plaintiff was injured in a motor vehicle accident in March,2005. She received substantial benefits from Unifund Insurance,her accidents benefits insurer, but she claimed to be entitled toadditional benefits on the basis that she was catastrophicallyimpaired. Her solicitor issued a statement of claim againstUnifund in February, 2010. No effort was made to serve thedefendant until November 8, 2010. Service was therefore outof time.The plaintiff’s lawyer failedto get an order extendingtime for service. The Registrardismissed the actionon November 19, 2010, onthe basis that no defencehad been served within sixmonths of the issuance ofthe statement of claim.Plaintiff’s counsel notifiedLAWPRO on December 15, 2010 that his client’s action had beendismissed. LAWPRO retained counsel, who told the defendantthat a motion would be brought to set aside the dismissal. Themotion was ultimately served on May 30, 2011.Master Dash concluded that the test is the same as for settingaside dismissals of defended actions: The court must take thecontextual approach set out in Scaini v. Prochnicki 7 , weigh allrelevant factors including the four Reid 8 factors, and balancethe interests of the parties to determine the order that is justin the circumstances of the case, considering also the public’sinterest in the timely disposition of disputes.Although he set aside the dismissal, Master Dashtook a strict view of the plaintiff’s “inexcusable delay” …The saving grace for the plaintiff was that she clearlyand convincingly rebutted the presumption of prejudiceMaster Dash also pointed out that Rule 37.14(1) requires thatthe “notice of motion” must be “served” forthwith. In this case, sixmonths elapsed between when plaintiff’s lawyer learned of thedismissal, and service of the motion to set aside the dismissal.The defendant was told that the motion would be brought severalmonths before the notice of motion was actually served. Evenso, Master Dash held that a notice of motion should have beenserved immediately, returnable on a “date to be fixed,” if necessary.Master Dash recognized that “extensive investigations”were required on the prejudice issue, but suggested that asupplementary motions record could have been served at alater date.The saving grace for the plaintiff was that she clearly andconvincingly rebutted the presumption of prejudice, which arosebecause of the passage ofthe limitation period bythe time the action wasdismissed. At the returnof the motion, counsel onbehalf of the plaintiff presentedextensive evidenceof lack of prejudice. Theplaintiff was treated orassessed by 21 differenthealth care practitioners,and all medical reports andrecords were preserved. The assessments included rehabilitationneeds, functional abilities and catastrophic impairment from anumber of different specialties. All healthcare providers whoassessed and/or treated the plaintiff were alive, still practised inOntario and were available for trial. Most clinical notes and recordshad already been received and were preserved. OHIP summarieswere available. The plaintiff’s education records, employmentpayroll records and income tax returns were preserved.The onus then shifted to the defendant to adduce any evidenceof actual prejudice. The defendant provided no evidence whatsoeverof actual prejudice.Although he set aside the dismissal, Master Dash took a strictview of the plaintiff’s “inexcusable delay” in prosecuting the action.The action was dismissed only nine months after the statementof claim was issued, without the statement of claim having beenserved. Given the purpose of Rule 48.15 – to prevent delay atthe “front end” – such delay is unacceptable. Plaintiffs’ lawyerscannot wait until the end of the six-month period for serving thestatement of claim. The statement of claim should be servedwell within the six-month period, so that the defendant willhave time to serve and file its statement of defence within thesix-month period stipulated by Rule 48.15.Master Dash set aside the dismissal order. This was an accidentbenefits claim where the insurer had been assessing the plaintiff’smedical condition and claims for benefits almost continuouslysince shortly after the accident. The complete absence of prejudiceand the plaintiff’s personal “innocence” in the delay carriedgreater weight than the nine-month delay in the litigation causedby her lawyer, even combined with the six-month delay in servingthe motion. LAWPRO’s counsel successfully argued that thiswas not a case where the plaintiff should be forced to seekcompensation against her lawyers, rather than the accidentsbenefits insurer. Had the dismissal not been set aside, and62011 ONSC 5318 (CanLII)72007 ONCA 63 (CanLII), 86 O.R. (3d) 1798Supra note 220 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAmhad the Court accepted that theplaintiff was catastrophically impaired,the negligence claim wouldhave been substantial.Resort to motions to correct “misnomers” has become increasingly commonsince the Limitations Act, 2002 abolished “special circumstances” as abasis for adding parties after the limitation period has expired.2 Refuting limitations defencesIn Valesco v. North York Chevrolet Oldsmobile Ltd. 9 , The Courtof Appeal found that plaintiffs’ counsel’s failure to immediatelyreview a Crown brief was not a failure to exercise reasonablediligence. Counsel was entitled to rely on the vehicle ownershipinformation contained in the police report, until the contraryinformation contained in the Crown Brief actually came tocounsel’s attention.The Court of Appeal allowed the plaintiffs’ appeal from the judgmentof McEwen, J., who dismissed the action as statute barred.The plaintiff Elizabeth Valesco was seriously injured in 2005when her car was struck by two other vehicles which may havebeen racing. The police report indicated that one of the vehicleswas owned by Denyer. Denyer’s insurer had itself added as a thirdparty, but pleaded that Denyer did indeed own the vehicle.In 2007, the plaintiffs’ lawyer received a Crown brief arising fromcharges against the two drivers. A law clerk reviewed the brief, butdid not notice that it contained a licence plate search disclosingthat North York Chevrolet Oldsmobile and North York Chevroletwere in fact the owners of the vehicle. In January, 2009, plaintiffs’lawyer reviewed the Crown brief in preparation for discoveries,and noticed the licence plate search. He issued a statement ofclaim against North York Chevrolet Oldsmobile and North YorkChevrolet four months later. It was not disputed that plaintiffs’lawyer did not actually learn of the true ownership until January,2009. Once plaintiffs’ counsel learned of the true identities ofthe owners, he spoke with their legal representatives, and wastold that should he commence an action against them, they wouldmove to have the action dismissed as statute barred. Plaintiffs’counsel then reported the matter to LAWPRO.North York Chevrolet Oldsmobile and North York Chevrolet successfullymoved before McEwen, J. to have the action dismissedas statute barred. While the plaintiffs’ lawyer used reasonablediligence up until the time he received the Crown brief, the courtheld that he should not have closed his mind to the ownershipissue, and should have reviewed the Crown brief promptly uponits receipt with a view to determining ownership.The Court of Appeal allowed the plaintiffs’ appeal. Having regardto the information plaintiff’s counsel had indicating that Denyerwas the owner of the vehicle (namely, references in the policereport and in the third party pleadings), it was unreasonablefor McEwen, J. to conclude that plaintiffs’ counsel should havetreated the ownership issue as a live issue upon receiving theCrown Brief. Plaintiffs’ counsel acted with reasonable diligence incontinuing to rely on that information until contrary informationactually came to his attention.Had the Court of Appeal NOT allowed the plaintiffs’ appeal, thenegligence claim against their lawyer would have been huge,since one of the plaintiffs was rendered a complete paraplegicby the accident.3 Correcting misnomersResort to motions to correct “misnomers” has become increasinglycommon since the Limitations Act, 2002 abolished “specialcircumstances” as a basis for adding parties after the limitationperiod has expired. The decision in Ortisi v. Doe 10 followed sucha motion. The decision also illustrates the danger in issuing aclaim at the last minute as a favour to a client, without doingproper “due diligence.”The plaintiff was allowed to correct a “misnomer” in his statementof claim from “John Doe” to the name of the tortfeasor driver, eventhough five years had passed since the date of the accident. Justas the action was about to become statute barred, the lawyeracting on the plaintiff’s accident benefits claim was persuaded toissue the statement of claim for tort damages. The plaintiff didnot provide an accident report, and professed not to rememberthe name of the other motorist. The lawyer simply issued astatement of claim naming “John Doe” as defendant.Later, the plaintiff retained new counsel who moved to correctthe misnomer. The application was allowed. The insurer receiveda copy of the police report very soon after the accident. The“litigating” finger pointed to the defendant, since the details inthe statement of claim coincided closely with those in the police9(2011), 106 O.R. (3d) 522, 2011 ONCA 522 (CanLII), allowing appeal from 2011 ONSC 85102011 ONSC 5354 (CanLII)www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 21


e&O PROgRAmreport. Therefore, the plaintiff was NOT seeking to add a newparty. The defendant suffered no non-compensable prejudice.The police had investigated the accident, and a police report wasavailable. The plaintiff’s medical information had been preserved.The plaintiff’s health care providers were still alive and practisingin Ontario. OHIP records and tax returns were available. Therewere no independent witnesses to the accident in any event.Ortisi had intermittent contact with the insurer over the years.Counsel stepped in, at the 11 th hour, to draft the claim for theplaintiff. He should have taken steps to properly inform himself –not only for the plaintiff’s good but for his own. He ought to havebeen more thorough, though his was a well-intentioned effortto satisfy a client’s last-minute demand. Counsel could have madeappropriate inquiries and brought this motion long before itwas brought. The plaintiff ought to have properly informed hiscounsel and, if he received communications from the insurer,he ought to have consideredthose communications andresponded to them. Whenconsidered in the contextof the whole, though, theirfailings were not so egregious LAWPROas to justify the dismissal of theplaintiff’s motion.4Obtaining relieffrom non-complianceCourts are still willing to grant relief from minor non-compliancewith court orders, even though the cumulative delays by theplaintiff’s lawyers’ were described as “disgraceful.”In successfully having the case reinstated,avoided a substantial potentialindemnity payment, since the accident in thiscase led to an amputation.had recently been amputated due to the accident, and JusticeMacKinnon wished to give the plaintiffs another chance. Hetherefore ordered that the trial record be served and filed, andthat the plaintiffs pay to the defendant $8,500 in costs bynoon on November 24, 2010.By November 24, 2010, at noon, the costs order of JusticeMacKinnon had not been paid, nor had the trial record beenserved. Justice MacKinnon dismissed the action the following day.In fact, the plaintiffs had delivered a cheque to defendants’counsel on the afternoon of November 24, 2010, in the amountof $8,660 representing the costs order and interest on theprevious costs order. This was several hours after the noondeadline. A trial record was served on December 13, 2010,but could not be filed with the court, because the action hadbeen dismissed.The dismissal was reported toLAWPRO, which retained counselto act on behalf of the plaintiffson the appeal from JusticeMacKinnon’s order.On appeal, Justice Mulligan wassatisfied that the plaintiff hadsubstantially complied withJustice MacKinnon’s costs order(which preceded and ultimatelytriggered the dismissal order). There was no evidence of prejudiceto the defendant that could not be compensated for in costs.The delay was not intentional, nor was the file abandoned bythe plaintiff or his lawyers.In Macaulay v. Mckee 11 the plaintiffs – a motorcycle accidentvictim and two dependent claimants – successfully moved for anorder setting aside the dismissal of their action and extendingthe time for compliance with a costs order where they had beena few hours late in satisfying that costs order.The principal plaintiff was involved in a serious motor vehicleaccident in 1999. The action was not prosecuted expeditiously.In April 2009 Justice Stong ordered that the plaintiffs serveand file the trial record within 60 days. For various reasons, thiswas not done.The matter came before Justice MacKinnon on October 29, 2010.The trial record had still not been served and filed. The defendantbrought a motion to dismiss for delay. Justice MacKinnonobserved that the delay by the plaintiffs’ various lawyers wascollectively disgraceful. But the principal plaintiff’s right legRelying on Findlay v. Paassen 12 , Justice Mulligan ruled that thefact that the plaintiff might have a remedy against some or all ofthe lawyers who had acted for him was not a reason to refuserelief. Costs were awarded to the defendant.In successfully having the case reinstated, LAWPRO avoided asubstantial potential indemnity payment, since the accident inthis case led to an amputation.5Action against underinsured motoristinsurer allowed to proceedIn Maccaroni v. Kelly and ING 13 , the plaintiff was rear-ended bya car insured by Co-operators. Co-operators alleged that thedriver’s licence was suspended, and the owner of the vehicleknew or should have known this. Co-operators also alleged thatthe driver and owner refused to co-operate in the investigation112011 ONSC 6710 (CanLII); 2011 Carswell Ont 14047122010 ONCA 204 at paras 32-3313(2011), 106 O.R. (3d) 116, 2011 ONCA 411, allowing appeal from 2010 ONSC 444722 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAmof the claim. Co-operators therefore denied coverage to the tortdefendants, and had itself added as a third party under s. 258of the Insurance Act. The Co-operators’ policy limits were$1,000,000. Co-operators offered to settle with the plaintifffor $200,000 – representing the statutory minimum limits.The plaintiff’s own OPCF 44R insurer, ING, objected to this settlement.The plaintiff settled with Co-operators anyway, and releasedCo-operators and the defendant tortfeasors. The plaintiff thoughtit unfair that she should be required to sue the tortfeasors,and if she got judgment in excess of $200,000, to then sueCo-operators, with ING bearing none of the risk or expense.ING moved for summary dismissal of the action against it.Plaintiff’s solicitor then reported to LAWPRO. LAWPRO appointedcounsel, who, with the plaintiff’s consent, resisted ING’s motion.ING was successful before Justice Flynn, who held that it could notbe said that Co-operator’s limits had been reduced to $200,000by “operation of law” within the meaning of the OPCF 44Rendorsement. There had been no adjudication of whether thetortfeasors were in breach of the Co-operator’s policy, nor wasthere an adjudication of the quantum of the plaintiff’s damages.Since Co-operators and the tortfeasor defendants were released,no such adjudication was possible.The Court of Appeal allowed the plaintiff’s appeal. However, theplaintiff must demonstrate in that suit that Co-operators wasjustified in denying coverage to the tortfeasors, and that hersettlement with the tortfeasor’s insurer for the minimum policylimits was therefore appropriate. The tortfeasors and Co-operatorscould be examined as non-party witnesses under the Rules. If thedenial of coverage was not justified, the plaintiff cannot recoveragainst ING.6mortgagors’ lawyer acts against themin power of sale proceedingsNot all “repairs” are undertaken on behalf of personal injurylawyers. In Duffin v. Norina Holdings 14 , a lawyer acted for themortgagors in arranging four mortgages with Norina Holdings,and against them in enforcing the mortgages.The mortgages were in default almost from the beginning. Whenthe plaintiffs moved for an interlocutory judgment staying enforcementof the mortgages, the matter was reported to LAWPRO.LAWPRO retained counsel to defend the lawyer, because hadthe court held that the mortgages were unenforceable due tothe lawyer’s acceptance of the enforcement retainer, the lawyerwould have faced an action by the mortgage lender.One of the bases for the plaintiffs’ pursuit of a stay of enforcementof the mortgages was the fact that the lawyer who had actedRemember, however, that the courts are becomingincreasingly strict about plaintiffs’ obligations to moveactions forward… It is far better to carefully complywith the Rules of Civil Procedure than to find yourselfinvolved in a “repair” motion.for them in obtaining the mortgages had acted against them,on behalf of the mortgagee, to enforce these mortgages afterthe plaintiffs defaulted.The plaintiffs’ motion was dismissed. Justice Ramsay held thatthe lawyer should not have accepted Norina’s retainer to enforcethe mortgages, nor should he, after getting judgment on themortgages, have conducted an examination in aid of executionon one of the plaintiffs, his former client. However, Justice Ramsayheld that the lawyer did not act fraudulently or oppressively, nordid he use confidential information that he had obtained duringthe previous lawyer-client relationship.Norina had not been fraudulent in any way, the plaintiffs owedthe money, and they had not paid the money owing into court.While the lawyer should not have acted against the plaintiffs,nothing he did affected the validity of the mortgages. Theplaintiffs could have moved to have him removed from therecord; they did not do so.ConclusionLawyers make mistakes. However, prompt remedial action cansometimes eliminate, or at least mitigate, the damage done. Butas several of these cases illustrate, it is important that dismissalorders be reported to LAWPRO promptly. Depending on the circumstances,LAWPRO’s in-house counsel may simply give yousome guidance and in some instances may agree that youpersonally handle the motion to set aside the dismissal. Onmore difficult cases, expert counsel may be called on to assist.As the foregoing summaries will attest, LAWPRO internal andexternal counsel have a strong track record of success in havingdismissed actions reinstated.Remember, however, that the courts are becoming increasinglystrict about plaintiffs’ obligations to move actions forward. Evenwhen successful, remedial motions are expensive. While millionsof potential indemnity dollars were saved through the repairsdescribed above, these eight motions cost $425,000. It is farbetter to carefully comply with the Rules of Civil Procedure thanto find yourself involved in a “repair” motion. ■Debra Rolph is director of research at LAWPRO.142011 ONSC 6431 (CanLII); as to costs 2011 ONSC 6431www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 23


e&O PROgRAme&O claims management:LAwPRO defends lawyersin diverse areas of practiceINTEGRITYVALUEwhile it may seem that a large number of LAwPROclaims arise from real estate transactions androutine personal injury litigation, we actuallydefend claims against a broad spectrum ofOntario lawyers – and in courts ranging fromthe small claims court to the Court of Appeal.Regardless of the forum or area of law, a keyfocus for our defence counsel is principledresistance to the unjustified expansion of thestandard of care applied to the delivery ofprofessional legal services.in some of the cases we defended in 2011, wewere fortunate that the plaintiff arrived at trialwithout the necessary expert evidence on thestandard of practice and/or appropriate evidenceas to damages (although we would have preferrednot to go to trial at all). in other cases, the scopeof the standard of care was subject to morerigorous challenge. in defending these matters,we focused our efforts on keeping the floodgatesclosed. success in defending the standard of carerequires more effort than ever in the challengingeconomy since the 2007-2008 market collapse,because some former clients are hurting financiallyand can make sympathetic plaintiffs.summaries of a sampling of LAwPRO casesdecided in 2011 follow below. As you’ll learn,these decisions cover the full range of areas ofpractice and many different issues pertaining tolawyer liability.Commercial lawyersWhen transactions go badly for clients, they sometimes lookfor scapegoats. They minutely scrutinize the transaction afterthe fact, looking for advice the lawyer allegedly should havegiven, which the clients then allege would have preventedtheir losses.Simmons v. Hamber 1Lawyer H was the corporate lawyer for Simmons Group Realty. Hewas instructed by the managing director to prepare documentswhereby the president of the company, the plaintiff, would surrenderhis common shares for cancellation. H was also instructedthat a debt allegedly owing to the plaintiff’s holding company,Anchordale, would be converted into non-retractable preferenceshares in Simmons Group.The plaintiff was on the verge of bankruptcy, and he and the othershareholders were concerned that his creditors would target thecompany’s shares and interfere with the corporation. Thecompany rarely made a profit, so the shares being surrenderedwere of no value. The indebtedness owing by the realty companyto the holding company made it difficult to obtain financing for therealty company. There was also doubt as towhether the loan was bona fide.H prepared the documents as instructed, andexplained them in detail to all parties beforethey were signed. The plaintiff admitted thathe read them and understood them.Six years later, the plaintiff and the otherpartners had a falling out. He sued them for1 2011 ONCA 7, dismissing appeal from 2008 CanLII 67908 (ON S.C.)24 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAmreinstatement of his shares and the indebtedness previouslyowed to him, and for wrongful dismissal. He also sued H on thebasis that H failed to offer advice that the plaintiff should notsurrender his position, but rather find someone to hold hisshares and debt until his discharge from bankruptcy.Pomerance, J. found that the action against H was entirelywithout merit. To have offered the advice the plaintiff claimedhe should have given would have been illegal and unethical,as such a course of action would have been contrary to theFraudulent Conveyances Act and the Bankruptcy and InsolvencyAct. Even assuming that H owed his client a duty of care, hedischarged it by preparing the documentation in accordance withthe instructions of the responsible corporate officer, ensuringthat the transaction breached no statute in view of the plaintiff’simpending bankruptcy, and ensuring that all signatories to theagreement understood it. H could not have done more.The Court of Appeal dismissed the plaintiffs’ appeal. H wasentitled to rely on information presented to him by the corporation’smanaging director and its accountant that the shares hadno value and the debt had no substance. There was nothing tosuggest that the plaintiff was giving up anything of value, or thathe did not appreciate what he was doing. There was no agreementthat his shares would be restored after his discharge frombankruptcy. Had there been such an agreement, serious legaland ethical issues may have arisen. The realty group’s shares hadno value at the time of the transactions. There was no evidencethat the shares had value at the time of trial. While it might havebeen preferable had H recommended ILA to the plaintiff out of anabundance of caution, his failure to do so in these circumstancesdid not constitute a breach of fiduciary duty or negligence.Royal Laser v. Rivas 2Law firm A acted for Royal Laser Corp. in its purchase of Rivas’sinterest in Venture Steel. Law firm B acted for Rivas. No oneacted for Venture Steel. Before the share purchase transactionclosed, all parties were aware that Mr. L had sued Venture Steelon the basis that he had been dismissed without cause, andthat his nine per cent shareholding in Venture Steel had beenwrongfully cancelled.Royal Laser obtained an indemnity from Rivas to the extent of$1.4 million to cover any liability on the part of Venture Steel toMr L. After the closing of the transaction, Mr. L obtained judgmentagainst Venture Steel for a sum in excess of $5 million. Rivas paidthe first $1.4 million, as agreed. Venture Steel (and thereforeRoyal Laser) was responsible for the balance of L’s judgment.Royal Laser Corp sued Law firm A in negligence with respect toits advice on the transaction. Law firm A successfully moved forsummary judgment dismissing the action against it. Newbould, J.accepted that law firm A expressly refused to opine that $1.4million was an adequate indemnity and holdback. The directorsof Royal Laser were well aware that Mr. L might obtain a judgmentin excess of $7 million; firm A, in a telephone call, advised themto hold that amount back from the purchase price. However, Rivasrefused to provide an indemnity of more than $1.4 million.Royal Laser focused on one paragraph in a memorandum by firmA which seemed to suggest that the value of Mr. L’s shares mightbe calculated as of the date of his termination, based onVenture’s book value, rather than on the basis of the purchaseprice offered by Royal Laser some months later. Newbould, J.accepted that the purpose of this memorandum was only toevaluate whether a $1.4 million indemnity was sufficient. Ifthe memorandum contained a negligent error, which the courtexpressly did not find, the memorandum was only a work inprogress, and it expressly declined to say that $1.4 million wasan adequate indemnity.Royal Laser took the position that it closed the purchase basedon this “error.” The court noted that NO evidence was adducedfrom any of Royal Laser’s directors who voted to close the sharepurchase transaction that they saw, read, or relied on the memorandum.Therefore, it was impossible to find that Royal Laserrelied on this memorandum in closing the sale purchase on thebasis that it did.The action against firm B has also been terminated.Family law lawyersAs with commercial lawyers, family lawyersare sometimes sued on the basis that theyrecommended improvident settlements andagreements. The following summaries are twoexamples of LAWPRO’s successful defence offamily lawyers.Elmgreen v. Evans 3The plaintiff sued lawyer E, who had represented him in 1985 indrawing a marriage contract. Twenty years later, E representedthe plaintiff in divorce litigation. This litigation was settled in2005, with the plaintiff making an equalization payment to hiswife of $185,000, plus support payments of $2,500 per month.The wife had negligible assets and limited earning capacity.Three years later, the plaintiff sued E. The plaintiff alleged thatthe settlement was improvident and not in accordance with hisinstructions. The plaintiff alleged that he instructed E to attemptto uphold the marriage contract at all costs.2 2011 ONSC 1026 (CanLII); Reversed By Court Of Appeal – 2011 ONCA 655; Summary judgment dismissing action against defendant firm 2012 ONSC 11703 2011 ONSC 6674. PDF copies available from debra.rolph@lawpro.cawww.lawpro.ca LawPRO Magazine | Volume 11 issue 2 25


e&O PROgRAmMullins, J. dismissed the action. The plaintiff’s instructions werethat the divorce litigation should be settled so that the wife wasnot left destitute, and not to cause distress to their child. E wasconcerned that the marriage contract might be attacked on thebasis that the wife spoke little English and did not receive ILA,although E had advised the plaintiff that she should. The settlementwas in accordance with these goals. The plaintiff gave hisexpress and informed consent to the settlement.No expert evidence was called that E’s advice concerning thesettlement fell below the required standard of care. The courtwas satisfied that E’s strategy fell within the ambit of judgmentcalls informed by his legal knowledge and many years experience.No expert evidence was called in support of the differencebetween what the plaintiff would have paid under the marriagecontract and what he paid pursuant to the settlement. Noevidence was adduced that E’s alleged negligence caused anydamages. No medical evidence was led as to mental distressallegedly suffered by the plaintiff. Furthermore, the claim wasstatute barred, having been brought more than two years afterthe plaintiff had knowledge of the facts giving rise to the claim.Marcus V. Cochrane 4The plaintiff Ms. M’s action against her family lawyer wasdismissed.The plaintiff alleged that her lawyer failed to meet the requiredstandard of care in the negotiation of the plaintiff’s separationagreement with her husband.The plaintiff and her husband had drafted their own separationagreement. They agreed that Mr. M would purchase the plaintiff’sinterest in the matrimonial home for $87,000, which was half ofthe home’s net equity. Each would keep his/her own pension andRRSPs, and neither would pay spousal support to the other. Theplaintiff was to receive a nominal equalization payment.The plaintiff then entered into a binding agreement to purchasea property; closing was within a few weeks’ time. The mortgagelender insisted that the plaintiff produce a signed separationagreement, providing, among other things, that neither partywould claim support from the other, and that the plaintiff wouldreceive $87,000 for her equity in the matrimonial home.Lawyer C, who was retained by the plaintiff to give ILA, urgedMs. M to not sign the draft agreement, but rather to enter into apartial separation agreement, which would satisfy the mortgagelender but allow for full financial disclosure at a later date. Theplaintiff spoke with her husband, who refused to entertain anysuch arrangement. The original (full) separation agreement wassigned, with both parties waiving full financial disclosure.About one year later, the plaintiff sued her husband to set asidethe separation agreement. She also sued her lawyer. In the familylaw litigation, full disclosure was made. It emerged that theplaintiff was entitled to little more than what she in fact receivedunder the separation agreement. In the malpractice trial, thehusband’s lawyer testified that his client was never prepared tomake additional payments to the plaintiff. He agreed that theoutcome in the family law litigation was virtually the same aswhat the parties had agreed to in the first place.The expert witness called to give evidence on the defendantlawyer’s behalf commented that a lawyer is only able to proceedwith full financial disclosure and formal calculation of the parties’Net Family Property if the client is willing to proceed in thatdirection. The lawyer’s role is to advise the client; but if a client isinsistent, a lawyer ultimately has to accept the client’s instructions.The plaintiff chose not to follow her lawyer’s advice to proceedwith the partial agreement and to enter into a final agreementonly after financial disclosure had been completed.The plaintiff adduced no expert evidence, either on standard ofcare or calculation of her damage claim.In dismissing the plaintiff’s action, the court agreed held that thereasonableness of a lawyer’s impugned conduct will be assessedin light of the time available to complete the work, the nature ofthe client’s instructions and the client’s experience and sophistication.5 Where a lawyer gives appropriate advice to a client whodoes not accept such advice, she cannot later assert that thelawyer was negligent for not forcing her to listen. 6 In addition toshowing that a lawyer was negligent, the plaintiff must show thatbut for the negligence of the lawyer, the alleged loss would nothave occurred. 7 The plaintiff who alleges that she would haveacted differently had she received appropriate advice must showon a balance of probabilities that if properly advised she wouldhave proceeded in a manner that avoided the damages suffered. 8The plaintiff’s claim failed in every respect.Class action lawyersAttis v. Ontario (Minister of Health) 9This case arose in the context of aclass action, but it has implicationsfor all lawyers, and indeed foragents of every type. Had the Courtof Appeal not set aside Justice Cullity’s4 2012 ONSC 1465 Michiels v. Kinnear, 2011 ONSC 3826 (ON Sup Ct Jus)6 Rose v. Melanson, [1999] O.J. No. 512, at para 156 and 1577 Supra note 5 paras. 157-1708 Folland v. Reardon (2005), 74 O.R. (3d) 688 (C.A.), 2005 CanLII 1403 (ON CA) at para 619 2011 ONCA, 2011 Carswell Ont 13940, reversing 2010 ONSC 450826 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAmorder, lawyers would have become vulnerable to claims by thirdparties for breach of warranty of authority. The basis for theseclaims would have been that the lawyer had no authority to actfor his or her client, because the client’s consent to the lawyer’sactions was in some way not fully informed.Cullity, J. found lawyer L liable for the attorney general’s costsincurred in resisting the plaintiffs’ unsuccessful class actioncertification application. Liability was found on the basis of breachof warranty of authority. L’s clients, the class plaintiffs, allegedthat their lawyer failed to explain to them the costs consequencesof losing the certification application. Justice Cullity held that theirconsent to L’s commencing the class action was not informedconsent, and was therefore no consent.The Court of Appeal disagreed. The defendant lawyer clearly didhave his clients’ consent to bring the action. If he failed to give hisclients adequate advice about the costs consequences shouldthey lose, they had a cause of action against L in negligence. Adefendant has no right to inquire into the legal advice given to theplaintiff by the plaintiff’s lawyer.The Court of Appeal further reasoned that even if L had breachedhis warranty of authority, the attorney general was not entitled tosubstantial damages. The class plaintiffs were impecunious. IfL had proper authority to act for them, as a practical matter, theattorney general could not collect his costs. The attorney generalcould not be in a better position if L’s warranty of authoritywere false.Rule 57.07 had no application in this case. L’s conduct ofthe litigation was not criticized, and no Rule 57.07 issue wasraised before the judge presiding at the unsuccessfulcertification application.The Court of Appeal agreed that while the Court has inherentjurisdiction to control its process, there can be no unfetteredjurisdiction to correct all wrongs.Tax lawyersLipson v. Cassels, Brock & Blackwell LLP 10Perell J. dismissed the proposed Lipson class action claimagainst the defendant law firm as statute-barred. The Courtheld that their cause of action against the defendant law firm,for allegedly providing negligent tax advice, arose when CanadaRevenue disallowed their charitable tax credits, not when theirlitigation with Canada Revenue was settled. The defendant lawfirm’s third party claim against a number of accountants andanother law firm was also dismissed.The would-be class plaintiffs (900 of them)participated in a timeshare program operatedby the Athletic Trust of Canada from 2000-2003. The class plaintiffs made a cashdonation to purchase time shares, whichwere then donated to the Athletic Trusts. Theparticipants received charitable receipts forthe value of their cash donations, and for thevalue of the time shares donated to the Trust.The defendant law firm prepared an opinion that CanadaRevenue was unlikely to disallow the tax credits. It was understoodthat the opinion would be made available to the promoters fordissemination to the participants.In 2004, Canada Revenue disallowed the plaintiffs’ tax creditsin their entirety. Many of the class members retained tax firmThornsteinssons LLP to contest Canada Revenue’s disallowanceof the tax credits. In 2008, a settlement was reached. CanadaRevenue allowed the tax credits insofar as the plaintiffs actuallydonated cash. The donations reflecting the “lift” in the fairmarket value of the timeshares were disallowed.The action against the defendant law firm was commenced in2009. Justice Perell held that the action was statute-barred.The plaintiffs knew or should have known of the facts givingrise to their claims in 2004, when Canada Revenue disallowedtheir claims. In concluding that the class members’ claimswere statute-barred, Justice Perell relied on Central Trust v.Rafuse Central Trust Co. v. Rafuse 11 ; Peixeiro v. Haberman 12 ,and Nicholas v. McCarthy Tétrault. 13 Justice Perell especiallyrelied on Central Trust v. Rafuse, where the Supreme Court ofCanada held that a mortgage lender’s cause of action againstthe lawyers arose when the validity of the mortgage was firstchallenged, NOT when the mortgage was first put on title, andNOT when a court finally declared that the mortgage was void.Had the proposed class action not been statute-barred, JusticePerell would have certified it, but with individual trials on theissue of causation, reliance, and damages.A notice of appeal has been filed.Civil litigation lawyersLitigation counsel are sued from time to time for allegedly conductinglitigation in a negligent manner. In response to such claims, wehave in some cases successfully argued that the plaintiff’s actionnever had a chance of success, or that the plaintiff failed to provethat the lawyer did not meet the required standard of care.10 2011 ONSC 672411 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 14712 1997 CanLII 325 (SCC), [1997] 3 S.C.R 54913 2008 CanLII 54974 (ON SC), aff’d 2009 ONCA 692 (CanLII), leave to appeal to S.C.C. ref’d 2010 CanLII 12967 (SCC)www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 27


e&O PROgRAmGresham v. Rohaly 14This judgment contains a thorough discussion ofCombined Air Mechanical Services v. Flesch 15in the context of a legal malpractice claim arisingfrom the defendant lawyer’s alleged negligencein prosecuting medical malpractice litigation.Lawyer R was retained to prosecute a medical malpractice suiton behalf of the plaintiffs. He approached three physiciansseeking an expert opinion that the defendant physicians failedto meet the required standard of care. He was unsuccessful inobtaining an expert opinion from them. The defendant physiciansobtained an opinion that the level of operative and post-operativecare was well above the standard of surgical care in Ontario.A second lawyer took carriage of the file from R. He obtained anexpert opinion that the plaintiffs did not have a meritorious claim.The Greshams’ claim against the physicians was ultimatelydismissed without costs.The plaintiffs then sued R, who successfully moved for summaryjudgment. Bondy, J. held that this case was one that fell withinthe third category of case suitable for summary judgment, asset out in Combined Air Mechanical Services, and that therewere no “genuine issues requiring a trial.”The plaintiffs failed to adduce expert evidence that R wasnegligent, or that the physicians in the underlying actionwere negligent. R produced expert medical evidence that thephysicians in the underlying action were NOT negligent.R satisfied the onus of showing that this matter would have “nochance of success” if it went to trial. Once R made this case, theburden shifted to the plaintiffs to prove that their claim “had areal chance of success.” They failed to do so.Moore v. Hollingsworth 16This unreported judgment of the Ottawa small claims courtcontains an excellent summary of the case law relating to thestandard of care required of litigation counsel. It containsespecially strong statements that the conduct of litigationcounsel cannot be judged with the benefit of hindsight.Lawyer H represented M in litigation with M’s ex-business partner.The gist of the claim was that H brought a motion to amend thestatement of claim for a third time on the day that one defendantwas scheduled to move for summary dismissal. The motion toamend was allowed, but costs of $10,000 were awarded againstM. These costs formed the subject of the action against H.M’s action against H was dismissed. Deputy Judge Bansie of theOttawa small claims court preferred the evidence of the defenceexpert to that of the plaintiff’s expert. The plaintiff’s expert’sevidence was criticized because: 1) he didn’t review the entire file,just what the plaintiff provided to him; 2) his opinion was formedwith the benefit of hindsight; 3) he gave evidence as to causationof the plaintiff’s loss, based on what the motions judge might havedone had H proceeded differently, which is impermissible.The court accepted the plaintiff’s expert’s evidence that if Hbelieved that a motion to amend was desirable, and that beliefwas reasonable on the facts and circumstances as known to herat the time, H was not negligent. It was not appropriate to takeinto account the course the litigation took thereafter, and thereasons for judgment on the summary dismissal action given oneyear later, in deciding whether H met the standard of care at thetime. Litigation counsel do not have the benefit of hindsight whenmaking a decision; there is no reason why a court should judgecounsel’s actions with the benefit of hindsight.Real estate lawyersWalcott v. De Lucia 17The Court of Appeal dismissed theunrepresented plaintiff’s appeal fromJustice Perell’s judgment, whichsummarily dismissed the plaintiff’s action against lawyer D.Walcott retained lawyer D to collect a $248,000 unsecured loan.The debtors owned a property, but by the time D was retained, thefirst mortgagee had commenced power of sale proceedings. Theproperty was subject to more than $1 million dollars in encumbrances.D brought the notice of sale to the attention of his client,who then instructed D to register a “lien” against the property;D registered a notice of security interest, and suggested that hisclient sue the debtors.Walcott retained litigation counsel for that purpose. About sixmonths after D’s retainer was terminated, the power of sale wascompleted. The sale proceeds were insufficient to pay out thefirst mortgagee. Walcott lost his entire investment.Walcott’s action against D was summarily dismissed. Walcott’sloan was unsecured, so he was not entitled to a lien or securityinterest. In any event, the security interest was discharged byoperation of law when the power of sale was completed.Walcott’s true complaint at the argument of the motion wasthat D failed to advise him concerning the pending power ofsale. Walcott claimed that if he had been properly advised, hewould have paid out the first mortgagee, and subsequentlysold the property for enough money to recoup his entire outlay.Justice Perell found, and the Court of Appeal accepted, that D14 2011 ONSC 7652: Court File No. CV-08-12174, November 29, 2011. PDF copies available from debra.rolph@lawpro.ca15 2011 ONCA 76416 Court File No. Sc-07Sc101675-0000 (Ottawa Small Claims Court) – June 23, 2011; Costs award July 11, 2011. PDF copies available from debra.rolph@lawpro.ca17 2011 ONCA 508, dismissing appeal from 2011 ONSC 64928 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


e&O PROgRAmdid in fact give Walcott a copy of the Notice of Power of Sale.Walcott made no effort to negotiate with the first mortgagee topay out that mortgage. There was no evidence that Walcotthad the financial means to do so. There was also no appraisalevidence that the property’s value was sufficient to pay outWalcott and all prior encumbrances.There was no basis in law to fix D with responsibility forWalcott’s loss.Lograsso v. Kuchar and Daffern 18McEwen, J. held that D and K, lawyers for the purchaser andfor the vendor respectively, owed no duty of care to Lograsso,the vendor’s execution creditor.In 1992, Lograsso obtained a judgment against Reinhard Kliczkafor $30,000.00 plus $10,266.10 in prejudgment interest and$467.35 for costs. He obtained a writ of seizure, and renewedit from time to time.In 2006, Kliczka sold a property. D communicated to K the existenceof the writ late on the day of closing, just as registration wastaking place. To address the issue of the writ, K requested thatKliczka attend immediately at his office, where Klickzka falselyswore a statutory declaration that he was not the judgment debtordescribed in the writ. This allowed the property to be sold free andclear of the writ. By then, when post-judgment interest was included,the value of the writ exceeded $162,000. Lograsso wasunaware of the sale, and received nothing. After learning of thesale, Lograsso ascertained that Kliczka had no assets, as therewere no proceeds in excess of the amount required to dischargethe mortgage and pay closing costs. Lograsso then sued D and K.Lograsso’s claim against D, lawyer for the purchaser, was that Dknew or ought to have known that Kliczka filed a false affidavit,given that Kliczka had an unusual name and that the partieslived in a relatively small community. He contended D wasnegligent in failing to contact Lograsso to inquire about Kliczka’sidentity. Lograsso claimed that K, acting for the vendor, ought tohave made similar inquiries, and ought thereby to have determinedthat Kliczka’s affidavit (that is, his own client’s affidavit)was fraudulent.Lograsso contended that K and D were not entitled to rely on theprovisions of the Land Titles Act and its Interpretation Bulletins,because the amount of the writ of seizure exceeded $50,000at the time of the sale. The Interpretation Bulletins allow for theacceptance of an affidavit by a judgment debtor, where theamount of the writ of seizure does not exceed $50,000. Wherethe writ exceeds $50,000, an “unequivocal” statement from alawyer, that the vendor and the execution debtor are not the same,is required.The court accepted the evidence of the defendants’ expertwitnesses, Donald Thomson and Stephen Pearlstein, that the$50,000 figure mentioned in the Interpretation Bulletins excludespost-judgment interest. Therefore, Kliczka’s affidavit waspermissible under the Interpretation Bulletin. The Land Registrarin fact accepted his affidavit.K followed the accepted procedure when acting for a vendor inclosing the real estate transaction. He obtained a name match,then secured the necessary affidavit from his client, Kliczka. Khad no reason to disbelieve Kliczka’s sworn affidavit. The samewas true of D acting for the purchaser.Furthermore, under common law principles, K and D owedLograsso no duty of care. While it was foreseeable that negligenceon K’s and D’s parts could cause loss to Lograsso, there was no“relationship of proximity” such that a duty of care could arise.No previous case held that a duty of care exists in thesecircumstances. The court declined to find a new duty of care. Kand D did not communicate with Lograsso before or during thetransaction; they did nothing to indicate to Lograsso that he couldrely upon them; they did not voluntarily assume responsibility toLograsso; and neither of their clients intended to confer a benefiton Lograsso. It is impossible to disclaim or limit liability to thethird party as was done in Hedley Byrne itself.More importantly, to find such a duty to a third party potentiallyor actually places a lawyer in a conflict with the interest of his ownclient. While fraud may be on the increase, this does not createan additional duty of care where none exists in law. McEwen, J.could not conclude that there was sufficient proximity betweenthe parties so that it would be just and fair to impose a duty ofcare. Compensation was potentially available to Lograsso fromthe Land Titles Assurance Fund.ConclusionNo area of practice is immune from legal malpractice claims.Some clients – personal injury clients, family law clients, andothers – have “buyers’ remorse” after entering into a settlement.Other clients, sometimes through no fault of their own, havesuffered serious losses: The real “bad actors” are judgment-proof,and the clients have no other potential source of recovery. Otherclients are unable or unwilling to take responsibility for their ownbad decisions. Sometimes, no one is to blame for the disappointingway in which the client’s litigation or transaction unfolded,but the client wishes to shift some of the loss. Sometimes, thelawyer has indeed failed to meet the standard of care, but alimitation period has intervened or serious issues arise as to thelosses that the lawyer’s failure actually caused. LAWPRO hasseen all of these scenarios, and many more besides. ■Debra Rolph is director of research at LAWPRO.18 2011 ONSC 5729; 2011 CarswellOnt 15187www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 29


practicePROpracticePRO’s riskmanagement program:A multi-faceted range of channels and resourcesAvoidAClaim blog:The “go-to” source forinformation on fraudsagainst lawyersIn 2010 the recurring theme for LAWPRO’s practicePROprogram was fraud… and in 2011 it’s been the samestory. Although the AvoidAClaim blog – a major informationchannel for the practicePRO program – has notofficially morphed into the “AvoidAFraud” blog, in practiceit’s not that far off.INNOVATIONVALUESince inviting lawyers to forward suspicious emails tofraudinfo@lawpro.ca, we have received a flood ofreplies from more than 2,300 lawyers in Ontario and around the world. Based on this feedback, we posted morethan 100 fraud warnings in 2011 alone on AvoidAClaim blog. We provided fraudster names, copies of correspondencesent by these fraudsters to lawyers, copies of “certified” cheques used to try and perpetrate the frauds, and evencopies of fake identifications – some of which are so real that they do not immediately cause second thoughts.By tracking the location of the lawyers who’ve sent these emails, practicePRO was able to generate a map (below)that gives a sense of just how widespread the problem of lawyer-targeted fraud is:25 (NJ)34 (MA)8 (CT)1 (DE)7 (VT)7 (RI)18 (MD)8 (DC)* based on approximately2,300 emails receivedsince January 2011Hawaii: 8Mexico: 5Argentina: 2UK: 22France: 1Spain: 7Holland: 5Germany: 5Italy: 2Croatia: 1Bulgaria: 1Ukraine: 2Turkey: 3Slovakia: 3Finland: 4Norway: 1Sweden: 1Malaysia: 2Hong Kong: 1Australia: 6New Zealand: 1Bahamas: 1Virgin Islands: 2Fr. Polynesia: 230 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


practicePROPrint, electronic, and social media channelsThe AvoidAClaim blog is but one of many channels used, and fraud but one of dozens of topics addressed by the practicePROteam in its efforts to get lawyers to heed LAwPRO’s risk management message.LAWPRO Magazine continues to be our flagship publication, with an emphasis in 2011 on lawyer-client communication, agrowing source of claims against lawyers. magazine content is archived on the practicePRO website and easy to find atpracticepro.ca/LAwPROmagazine.The LAwPRO webzine – our electronic, online magazine – focused on specific areas of practice, such as family law, wills andestates law and litigation claims trends. we also were active in the social media sphere, using Twitter and Linkedin and as wellas submitting content to other blogs (notably sLAw, an online Canadian magazine for the legal community that draws readersand contributors from around the world) to raise the risk management profile.The following is a summary of the principal activities undertaken by the practicePRO and communications departments in2011 to raise the profile of risk management among Ontario.practicePRO websiteTop 10 Downloads in 2011PROFESSIONALISMVALUEsample Budget spreadsheet 10,194Business Plan Outline 5,763e-Discovery Reading List 5,295The Dangers of Metadata article 4,866general Retainer Letter Precedent 4,431LAwPRO Fraud Fact sheet 3,584Capacity Assessment article by Judith wahl 3,486Overview of Limitations Act, 2002 3,465Limitations Act comparison chart 3,126managing the Finances of Your Practice booklet 3,096Annual ReviewLAwPRO magazinePractice Tip AdministrativeDismissals, Part 2: A follow upto Domenic Bellacicco’s popular2009 article on how to avoidhaving your action dismissedfor delay, and how LAWPRO canhelp you if you find yourself inthat situation.Visits: 290,000Visitors: 99,000Resources downloaded: 329,000 downloads(up 15% from 2010)CommunicationsBreakdownis anyone listening? Poor communicationis the #1 cause ofclaims at LAWPRO. This articlelooked at how communicationsclaims can be prevented in various areas of practice.Lawyer incivility: The consequences: A look at how lawyerincivility can result in claims.Casebook: LAWPRO research director Deborah Rolphexamined how a client’s obligation to communicate withthe lawyer has affected certain LAWPRO claims cases.Practice Tip: A warning for plaintiff’s counsel to be alert toRule 48, which could see an action dismissed if certainsteps have not been taken in time.Tech Tip: A look at how lawyers can use technology toimprove their communication with clients.www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 31


practicePROLAwPRO webzinesLAwPRO webzine – Focus on litigation (march 2011)• Trends: Why civil litigation accounts for the most malpractice claims in all ofOntario – greater than any other area of law – and the steps lawyers can taketo reduce the likelihood of a claim.• Dealing with difficult judges: Justice Carole Curtis shared practical advice forlitigators who find themselves dealing with difficult judges.LAwPRO webzine – Focus on family law (April 2011)• Family law: still a risky business: A discussion of best practices for family lawlawyers to avoid future problems in an evolving legal landscape.INNOVATIONVALUELAwPRO webzine – Focus on wills & estates law (August 2011)• Landmines for lawyers when drafting wills: Making will-drafting errors – either becauseof poor communication, inadequate discovery or errors in law – is the single most commonissue in claims reported in this area of law.• Casebook: Dementia and the conveyance of property: LAWPRO research director Deborah Rolph looked at a case thatdeals with the question of whether a person with dementia may still be competent to convey his or her property.social media channelsFollowers: 1,000@LawPRO@practicePROTweets: approx. 900 in 2011 on variety of topicsranging from upcoming deadlines, links to newarticles & resources, company news, tech tipsand practice tips, trends to watch, and moreAvoidAClaim BlogPosts: 162 (100 on fraud-related news)Visits: average of 8,500/month (300/day)RSS feed subscribers: 470Busiest day: 3,478 visits – Wednesday, July 27, 2011 (dateon which LAWPRO Alert on fraud sent to all Ontario lawyerswarning of fraud activity before long weekend in August)Presentations/LAwPRO CPD creditSERVICEVALUETotal presentations: 90practicePROOther LAwPRO staffkey topics:Claims preventionAvoiding fraudConflictsLegal technologyProfessionalismSocial media tips and dangersTotal audience: 9,000+key topics:Real estate trends, claims,best practicesFamily law issuesSuccession planningCivilityCommercial litigationLAwPRO CPD credit programThrough this initiative,lawyers who participatein LAwPRO-approved CPDprograms can apply for apremium credit of up to $100 off theirnext year’s insurance premium.number of programs eligible for CPDcredit: 208number of lawyers attending CPD-creditprograms: 30,00032 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


practicePROpracticePRO Lending Librarynumber of books loaned: 100Top 5 titles:Flying Solo: A Survival Guidefor Solo & Small Firm LawyersThe Lawyer’s Guide to Buying,Selling, Merging and Closinga Law PracticeThe Lawyer’s Guide to Marketingon the InternetLaw Office Procedures Manualfor Solos and Small FirmsGoogle for Lawyers:Essential Search Tips andProductivity ToolsReaching outin the wake of theGoderich tornadoOn August 21, 2011, with very little warning, a powerful tornadohit the downtown core of Goderich, Ontario. The tornado, ratedas “F3” on the Fujita Scale, was the most powerful tornado to hitOntario in 15 years. One person was killed, 37 were injured, andthe town sustained at least $75 million in damage to property –including several downtown buildings housing law firms.On the Monday after the Sunday tornado, LAWPRO launched animmediate emergency communications effort aimed at providingsupport to lawyers affected by the crisis. Any time a law office isdamaged, significant issues arise, including: How will damageto paper files and electronic equipment affect lawyers’ ability toserve clients? How can lawyers best safeguard client confidentialityafter damage to a law office? How will the closure of keyfacilities (the Huron County Courthouse in Goderich did notresume full normal operations until February 27, 2012) affectthe progress of clients’ matters? Could the interruption oflawyers’ practices prejudice clients in any way?need a speaker/presenter?LAwPRO’s speakers’ bureau has speakersavailable to talk to your conference, CPDprogram, CLe event or law firm on a widevariety of topics related to both practice/risk management and technology uses bylaw firms and lawyers.To book a presentation for your firmor CPD program session, emaildan.pinnington@lawpro.ca.LAWPRO used many communication toolsto get practical advice into lawyers’ handsquickly. Our TitlePLUS Goderich TornadoHotsheet helped real estate lawyers whowere trying to close deals in the face ofthe unusual circumstances. We used ourelectronic newsletter resource (LAWPROAlert), our AvoidAClaim blog, Twitter, andword-of-mouth (with the support of lawyerslocal to the disaster, including Law Societybencher Heather Ross) to direct lawyers toresources such as practicePRO’s “ManagingPractice Interruptions” booklet, the AmericanBar Association’s “After Disaster Strikes”checklist, and contact information for theOntario Lawyers’ Assistance Program (OLAP)and emergency recovery service companies.VALUESERVICELawyers in the affected area said that the checklists remindedthem of things that might have slipped through the cracks, that thetimeliness of our resources helped them move forward and thatthey were grateful that information had been provided so quickly.www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 33


TitlePLUs PROgRAmTitlePLUs updateCareful management of risks, claimspaves way for TitlePLUs program’s future}subscriberbaseaverageindemnitypaymenton a TitlePLUs claim(based on claims closedas of December 31, 2011)Fraud preventionscreening-out of applicationsbased on fraud potentialsaved the programan estimated$861,000in claims costs in 201190%+4,700lawyers andQuebec notaries= $4,800of claims are resolved for< $10,000PROFESSIONALISMVALUEmanaging risk: Rigorous underwritingThe 2011 policy year marked a period of fine-tuning for the TitlePLUStitle insurance program, now headed into its 15 th anniversary year.Rising building compliance-related claims costs in recent yearsprompted our underwriters to make some underwriting changesin 2010 that were deemed prudent for the program’s long-termsuccess. Subsequent additional underwriting changes implementedin early 2011 have contributed to solid results for the TitlePLUSprogram: The subscriber base remains stable at just over 4,700lawyers and Quebec notaries, and policy sales rebounded stronglyin the last quarter of 2011. To date, 2012 results have outpacedpolicy sales for the same period in 2011 – an encouraging trend.As well, TitlePLUS consultants were successful in recruiting 362new subscribers – that is, lawyers and Quebec notaries who optedto become eligible to order TitlePLUS insurance for the first timein 2011.managing risk: screening applicationsFine-tuning underwriting is not the only way policy administratorsmanage risk. Each individual policy application is carefully scrutinizedfor red flags, and in some cases the lawyer-subscriber would noteven realize it, assuming the application passed. But the screeningoutof applications based on fraud potential saved the programan estimated $861,000 in claims costs in 2011. Although noapplications were rejected due to grow-op factors, two policies wereissued with special exceptions to address the presence of this typeof risk at a potential savings to the TitlePLUS program of closeto $750,000.seeing results: A downward trend in claimsCareful management of program risks has contributed to aconsistent downward trend in claims numbers and costs since2007. The claims that do arise regularly under the program tendto be comparatively modest: The average indemnity payment ona TitlePLUS claim (based on claims closed as of December 31,2011,) is $4,800, and 90 per cent of claims are resolved for lessthan $10,000.34 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


TitlePLUs PROgRAmWe continue to see a significant number of claims related tobuilding compliance issues broadly defined: 977 compliancerelatedclaims have been reported under the program since2000. These 977 claims represented 23 per cent of the totalclaims reported during the period, but accounted for 47 percent of claims costs ($15 million). The TitlePLUS underwritingteam continues to work on methods to better detect buildingcompliance risks before a policy is approved.As well, TitlePLUS claims personnel are focusing closely on salvageopportunities and opportunities to recover costs in circumstanceswhere a previous property owner should be held responsible forlosses. In 2011, a multi-year effort to recover on two claimswith a fraud component led to a $700,000 recovery. Ongoingsubrogation efforts by TitlePLUS claims specialists have resultedin an additional $75,000 in recoveries, most on building claimsand tax arrears claims.The chart below illustrates the claims trends for the period2000 to 2010.TitlePLUs claims count and costs*Diligent efforts helpmaximize recoveriesWhen deciding which recoveries to pursue,LAWPRO counsel don’t overlook opportunitiesto recover fairly modest sums. If the costs ofrecovering a loss can be contained so thatthe effort is reasonable when compared tothe potential and quantum for recovery, arecovery effort is justified. There are manyways to control recovery costs, including,for example, by delegating appropriatematters to our articling students, and/orby having recourse to small claims court.VALUEINTEGRITYOne class of recoveries that is often amenable to such effortsis obtaining judgment for property tax arrears against vendors.While recoveries in these cases tend to be limited to a fewthousand dollars, most cases are straightforward, and the sumsrecovered all add up to savings for the program.For example, in 2011, a LAWPRO articling student handled thefollowing recovery.When a TitlePLUS policyholder purchased a home in 2008, thevendor claimed he had paid $2,100 toward 2008 propertytaxes. Based on this information, the vendor was credited with,and received from the purchaser, a credit of $680 for the taxprepaid as of the closing date. However, in December 2009,the new owner received a reminder notice that revealed therewere tax arrears for the property dating back to 2007.The policyholder made a claim under the TitlePLUS policy forreimbursement of the arrears payment. LAWPRO sent multipledemand letters to the vendor at his last known address. Whenthese failed to prompt a response, we took steps to confirmthat the address to which the letters had been sent was indeedthat of the vendor. LAWPRO then sued and in August 2011, wasawarded judgment against the vendor for approximately $5,500,pre-and post-judgment interest, and the costs of the proceeding.We then registered a writ that will permit us to collect on thejudgment when the vendor sells his current property.www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 35


TitlePLUs PROgRAmTitlePLUs legal services coveragereduces e&O claims against lawyersINNOVATIONVALUEOne feature that sets TitlePLUS title insurance apartfrom most competitors in the market is the inclusion oflegal services coverage in all but a small range of policies.In a nutshell, this coverage allows a policyholder whobelieves that he or she has suffered a loss flowing froma lawyer’s error or omission in providing legal servicesin relation to a property transaction to make a claimunder his or her TitlePLUS policy rather than have tofile a claim against the lawyer to recover through thelawyer’s E&O policy.Historically, a certain proportion of claims reported underthe TitlePLUS program include allegations of problemswith legal services. For consumers, the TitlePLUS programlegal services coverage provides an added layer ofprotection not generally available from other insurers;for lawyer subscribers, using the TitlePLUS programmeans they have potentially avoided claims, deductiblecosts and associated claims levy surcharges levied underan E&O program, depending on the approach in thejurisdiction of the mandatory legal malpractice insurer.Tailoring marketing and subscriber supportfor maximum impact and efficiencyBecause TitlePLUS insurance policies are ordered by lawyers and Quebec notaries (or insurance intermediariesin appropriate jurisdictions) but insure consumers and lenders, the TitlePLUS sales and marketing group carefullytarget their communications to the various constituencies. So, LAWPRO has both a broad-based public awarenesscampaign directed at the public, and a highly personalized program of direct contact with lawyers.LEADERSHIPVALUEThe consumer campaignConsumer-focused communication efforts centeredon a public awareness campaign aimed at educatingthe general public about situations in which they couldbenefit from the guidance of a lawyer. For details, seeEducating consumers about the lawyers’ role in realestate transactions.new sUBsCRiBeRssigned up for TitlePLUs programfor the first time in 2011The professional campaignCertain communications are carefully targeted tospecific professional audiences. Of the 100 livepresentations made in 2011, TitlePLUS personneldelivered 72 to lenders and 28 to real estate agents.TitlePLUS consultants are responsible both forattracting new business to the program andsupporting current subscribers. Communication withprospective and current subscribers takes a numberof different forms. More than 3,700 sales calls weremade to prospective subscribers, and the TitlePLUSprogram sponsored, hosted or presented informationat 136 events attended by real estate lawyers acrossthe country in 2011.Support for existing subscribers is often providedone-on-one, through “housecalls” to subscriberfirms. Nearly 1,600 such visits were made in2011. Housecalls are made to provide training,to troubleshoot problems, or to demonstratetechnology to a subscriber.36 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


TitlePLUs PROgRAmEducating consumers about thelawyers’ role in real estate transactionsFor six years, LAWPRO has taken the lead role in a campaign that hastwo goals: 1) to educate consumers about how working with a lawyercan protect their interests, especially in real estate-related transactions;and 2) in so doing, to raise the profile of the real estate lawyer incommunities large and small, thus supporting the real estate bar asa whole. LAWPRO views this as an access to justice issue as the realestate bar is often pivotal to the supply of legal services in nonurbancommunities.In 2011, this consumer-oriented education campaign centered on theneed for a lawyer in two types of transactions: when consumers take outa line of credit; and when they decide to buy or sell a house themselves(without a real estate agent) to take advantage of changes to theMLS system.These efforts resulted in coverage in close to 100 newspapers andbroadcast outlets across Canada, with an audience reach of morethan 7.7 million Canadians.Supplementing these proactive efforts were severalarticles that also emphasized the lawyer’s role inprotecting consumer interests in different types oftransactions. These articles, used by communityVALUEnewspapers, realtors and other professionals onblogs and websites, addressed topics such aschanges to the MLS system, liability implications oftaking out a line of credit, issues to consider whenbuying cottage property, the importance of buildingpermits, and issues to consider when buying a condo. More than 200papers, websites and blogs with an audience reach of just under ninemillion carried these stories.LEADERSHIPFurther exposure was achieved through advertising: More than 160TitlePLUS ads appeared in 31 publications in 2011.A new website: TitlePLUs.ca revamped in 2011INNOVATIONVALUETo support its visibility with both consumers andlawyers the TitlePLUS program launched a new websitein September 2011.With new features and intuitive drop-down menus, thewebsite has many tools and resources for lawyers, lawfirm staff, consumers and other stakeholders.The TitlePLUS department actively promotes the importantrole of real estate lawyers on the new website by explainingthat TitlePLUS title insurance is only available throughlawyers, and by giving more prominence to the “Locate aLawyer” feature. The new design incorporates all the keyinformation that attracted readers to its predecessor,including helpful FAQs and access to resources such asthe Real Simple Real Estate Guide.A new feature are the risk management tools, such assample, retainer and reporting letters, available throughthe Resources tab on the TitlePLUS website.www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 37


CORPORATe sOCiAL ResPOnsiBiLiTYCorporate citizenship:An evolving new LAwPRO mandatein may 2011, the LAwPRO Board adopted a Corporate social Responsibility (CsR) statement that is basedon four principles: a commitment to provide a healthy workplace, respect for the environment, supportfor the legal community, and support for the larger community in which we live and work.The following is a summary of how LAwPRO fulfilled its role as a responsible corporate citizen in 2011.PROFESSIONALISMINTEGRITYVALUEVALUE1Providing a healthyand rewardingworkplace through:• policies & practices that respect diversity,promote inclusion & fellowship;• providing opportunities for professionalgrowth through education andservice; and• promoting health, safety and wellness.A healthy, safe and rewarding workplace isfundamental to any organization’s success.LAWPRO ensures that its human resourcespolicies and procedures are current andconsistent with applicable and evolvinglegislation and regulation. We also supporta health and safety and a wellness committee,provide funding for employees’professional and educational development,and recognize long-service through anemployee recognition program.2Respecting theenvironment throughinitiatives that meet dualmandate of being stewardsof both the environment andthe bar’s financial resources.In addition to supporting an employeeledGreen Committee, we have an activeprogram of reducing paper waste anddeveloping technology solutions thatresult in a paper-reduced environment.2011 HIGHLIGHTS• developed policies, training and education to support January 1, 2012, implementationof Accessibility for Ontarians with Disabilities Act;• provided about $100,000 in funding for professionaland academic development among our 130+ employees;• recognized 18 long-service employees who had 5+ yearsservice with LAWPRO;• encouraged employee participation in diverse rangeof professional organizations representing finance/accounting, insurance, legal, IT, human resourcesand communications sectors;• Health & Safety committee held 3 meetings,validated existing policy framework, and receivedupdates on facilities inspections.2011 HIGHLIGHTSGreen Committee:• spearheaded education campaign in support ofbuilding landlord’s Zero Waste Program;• organized series of noon-hour screenings of Planet Earth for employees;• organized information session on community supported agriculture featuring a localorganic farmer.Corporate activities:• reduced power consumption by more than 50 per cent by moving to virtual servertechnology; also recycled decommissioned server;• completed move to fully paperless application filing process with elimination ofpre-populated application forms;• developed plans to reduce use of printed reports, replace aging equipment withenergy efficient models – to be implemented in 2012.38 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


CORPORATe sOCiAL ResPOnsiBiLiTYLEADERSHIPVALUE3Fosteringthe legalcommunity through:• support and/or sponsorship of legal-relatedcauses that advance the role/reputation oflawyers & foster access to justice (includingcauses supported by the bar);• support of CLe and other activities that leadto the bar’s enrichment & foster ties to thelegal community; and• support of lawyer wellness.More than 30 of our professional-level employees areactively involved on boards, committees and taskforces of a variety of legal-related organizations. Weregularly help organize CLE/CPD conferences andevents; we speak at these events, as well as to individualfirms on a wide variety of risk/practicemanagement topics. These kinds of activities not onlyhelp us gain a better understanding of the bar’s needs,but also ensure that our risk management messagesare getting heard. Our LAWPRO CPD Credit programencourages ongoing learning in the “soft” skills.Through a proactive public awareness campaign, weeducate consumers about the value of using a lawyerin real estate and other transactions – and in so doingsupport the real estate bar and access to justice insmaller communities.4supportingthe broaderCanadian community through:• support for employee participation incharitable causes;• support for the insurance industry;• dialogue with government & regulatorybodies to represent bars’ interests (andrelated interests of consumers);• expanding our range of materials in both officiallanguages and other languages as needed.LAWPRO employees are encouraged to be activevolunteers and fundraisers. We also encourage themto participate in organizations representing theprofessional liability, title and general insurancesectors. A proactive government relations programensures the voice of lawyers, and the interests of theirclients, are heard in legislative and regulatory circles,on topics where LAWPRO believes it can bring insights.To serve the needs of our multi-lingual audience,while also respecting our commitment to costcontainment,we provide all mandatory insuranceprogram materials in both English and French andother materials in selected languages as needed.2011 HIGHLIGHTSAdvancing role/reputation of lawyers; fostering access to justice• provided corporate support for the following organizations with legal-relatedmandates: LEAF, Ontario Legislative Internship Program, AJEFO (associationof French-speaking jurists), and University of Toronto Law School;• supported public awareness campaign focused on educating consumers aboutlawyers’ role in protecting public’s interests in real estate & other transactions. Twomedia campaigns based on results of TitlePLUS-commissioned polls generatedmedia coverage in close to 100 media outlets and reached about nine millionconsumers. One poll tested consumer awareness of changes to Multiple ListingService (MLS) and focused on how important lawyers are when consumers opt tobuy or sell without a real estate agent; a second poll revealed low level of consumerunderstanding of implications of home equity lines of credit, with messagingfocused on how lawyers can help consumers who opt for HELOCs.CLE/CPD support• LAWPRO CPD Credit program: Approved 208 programs attended by 30,000 lawyerswho claimed more than $514,000 in CPD credits (up significantly from $244,000in 2010);• delivered 90 presentations/speeches on claims & risk management-related topicsat conferences, CPD events & law firms;• co-chaired Law Society/OBA annual Solo & Small Firm Conference for 6 th year;• assisted Law Society in finalizing model file retention policy for large law firms;• helped develop area of law-specific file retention guidelines for real estate andwills & estates bar;• helped promote CBA Conflicts of Interest Task Force promote its Conflicts Toolkit.Outreach• developed law school student outreach plan that included presentationsto law schools in Toronto & Ottawa, promotional campaign to introducestudents to risk issues and risk management, and preliminary work onspecial issue of LAWPRO Magazine for law school students.Lawyer wellness• provided links to wellness resources on website; continued to dedicate sectionof LAWPRO Magazine to coverage of lawyer wellness issues and initiatives.2011 HIGHLIGHTS• raised more than $13,000 (matched by the company) for a total donation of$26,000 to five employee-selected charities. Employees also participated incharitable causes such as the Cancer Society’s daffodil campaign, the Movembercampaign, toy drives, and a feed the homeless campaign, among others;• met and briefed key government officials and representatives of our regulator,the Financial Services Commission of Canada (FSCO) on LAWPRO concerns withuse of contests by other title insurers to induce title policy sales. Also continuedto meet with MPPs in their ridings to raise awareness of connection between ahealthy real estate bar and access to justice for consumers;• strengthened ties to bar and title associations in Canada and U.S.A.: hosted/sponsored two special events in conjunction with American Bar Associationmeetings held in Toronto: helped sponsor National Conference of Bar Presidentsand hosted meeting of ABA’s Law Practice Management section;• completed translation into French of all insurance materials for the primary errors& omissions program.www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 39


FinAnCiAL sUmmARYFinancial results explainedinCOme sTATemenTsAnet premiums:$109.7 millionNet LAWPRO revenues in 2011 stood atabout $109.7 million, about $9 millionmore than in 2010.An increase in the 2011 base premiumto $3,350 per lawyer, and in the numberof lawyers insured under the program aremajor factors affecting the net premiumfigure for 2011. Excess premium revenueswere on budget while TitlePLUS premiumswere slightly lower than forecast.Bnet claims:$101 millionNet claims appear at first glance to be upsignificantly from 2010. But a refinementof LAWPRO’s actuarial model in 2010contributed significantly to the release ofmore than $18 million of claims reserves(pre-tax) that year, making the net claimsnumber lower than it would otherwisehave been.Factors affecting the net claims expense in2011 included a decrease in the discountrate (the rate applied to funds set aside topay for unresolved claims that takes intoaccount rates of return in investment markets)that added more than $10 millionto claims costs; a higher claims count in2011 (2,468 claims compared to 2,231in 2010); and increased costs associatedwith resolving claims. Offsetting theseincreases was a decrease in the fundsneeded to pay prior years’ claims as someunresolved claims from previous years areclosing for less than projected, includingTitlePLUS claims.40 LawPRO Magazine | Volume 11 issue 2www.lawpro.ca


FinAnCiAL sUmmARYCgeneral expenses:$17.5 millionExpenses to operate LAWPRO came in $1.5million less than expected and representonly about 19 per cent of overall costscompared to industry averages of closerto 30 per cent.Year-over-year general expenses are up$1.2 million or six per cent. Effectiveinternal controls and a concerted effortby our employees to control costs wherepossible contributed to bringing expensesin under budget.Dinvestment income:$21.9 millionInvestment income was up only $2.7million compared to 2010. Difficult andoften unpredictable investment markets,the need to reinvest maturing investmentsat lower rates and the need to take a writedownof about $2.7 million on somesecurities (because of a change in theway new accounting rules under IFRStreat even a temporary investment loss)resulted in a relatively flat result forinvestment income.enet (loss) income:$8.7 millionNet income of $8.7 million is abovebudget of $5.5 million; higher claims costs,offset by stable investment returns andlower-than-budgeted expenses contributedto this result.FComprehensive income:$8.6 millionA positive net income result of $8.7 millionhelped offset a slight loss of $0.1 millionin other comprehensive income resultingfrom small losses in investments in oursurplus portfolio as of year end 2011.Total comprehensive income – an importantbarometer of a company’s stability– was $8.6 million for 2011. As a result,the equity that our shareholder has in thecompany increased by that amount to justunder $168 million – tangible proof of theviability and financial strength of the investmentthat Ontario lawyers have in LAWPRO.key benchmarksAs a result of these solid financial results,LAWPRO continues to meet or exceed theMinimum Capital Test (MCT) benchmarksset by our regulators.The company’s MCT for 2011 stood at 220per cent, down slightly from 226 per centat the end of 2010. This MCT level helpsLAWPRO to absorb a degree of financialadversity and weather coming changes inaccounting and regulatory rules that couldadversely affect our financial results goingforward. Although well above the 185per cent minimum MCT set by LAWPRO’sregulator (FSCO), the 2011 MCT of 220per cent is at the lower end of the preferred220 to 230 per cent range that LAWPROBoard and management believe isappropriate going forward.A number of factors will continue toaffect LAWPRO’s ability to meet BoardsetMCT targets:1. planned changes in the way the MCT iscalculated could result in a significantdecline in the MCTs of all insurers –without the companies themselvesmaking any changes to their underlyingbusiness. LAWPRO expects this newmethod of calculating MCT will putsignificant pressure on the company’sability to meet its MCT targets in thecoming years;2. new international financial reportingstandards are expected to have a majorimpact on how insurance companiestreat funds held in reserve to pay forclaims in the future.*To maintain its MCT (which requiresLAWPRO to have a proportionate amountof capital beyond what is just needed topay the year’s claims), LAWPRO needs toadd about $5 to $7 million to its equityevery year. In other words, as each year’sclaims are added to our claims liabilitiesour capital also has to grow by the relevantproportionate amount.There are two ways to do this: By havingnet income on the income statement orother comprehensive income through unrealizedgains. It is very difficult to predictthe latter. Therefore, it is important thatin most years, LAWPRO budget to expecta net income in the millions of dollars.The company’s return on investment (ROE)in 2011 was five per cent compared to 10per cent for the previous year. Since 1995,LAWPRO’s average ROE has been 9.07per cent. ■* As of the end of 2011 the cost of current and previousyear claims that are not yet resolved stood at just under$408.7 million.www.lawpro.ca LawPRO Magazine | Volume 11 issue 2 41


Risk managementwww.practicepro.caAdditional professionalliability insurancewww.lawpro.ca/excesswww.lawpro.caTitle insurancewww.titleplus.caReturn undeliverable Canadian addresses to:LAWPRO • 250 Yonge Street • Suite 3101, P.O. Box 3 • Toronto, Ontario M5B 2L7Printed on recycled paper. This product can be recycled.

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