The petition calling for a fee cap on personal injury lawyers is being hailed as a good first step to controlling legal fees that have been criticized for driving up claim costs.
“Government needs to step up to the plate, take on this issue and come up with a reasonable solution that will result in decreasing the cost of claims and settlement expenses,” says Randy Carroll, the former CEO of the Insurance Brokers Association of Ontario and author of the blog ‘
Let’s Talk About the Elephant in the Room.’ “No-fault insurance was supposed to eliminate lawyers’ involvement and cost – not increase it.”
Carroll, who has seen the challenges presented to Ontario auto insurers first-hand during his tenure with the
IBAO, sees the petition that was presented by Conservative MPP for York-Simcoe Julia Munro as a jumping off point for more rigorous regulatory controls.
“Disclosure of fees would be a good first step,” says Carroll, “but the introduction of capped contingency fees would provide the best solutions for accident victims in Ontario.”
The first of many steps that is needed to help heal the province’s ailing auto insurance sector is a sentiment echoed by Ralph Palumbo, vice president, Ontario,
Insurance Bureau of Canada.
“One of the things I think we need to look at is what personal injury lawyers are charging; and I suspect government is looking at this (proposed fee cap),” says Palumbo. “It is slowly creeping into the public consciousness, and if there is any king of momentum, they will consider it.”
Ken MacCoy of RitePartner Financial Services told
Insurance Business that many claimants are at a disadvantage as they can’t afford a personal injury lawyer or don’t understand what they are giving up when they do hire one on a contingency fee basis.
“Charging contingency fees of up to 45 per cent on settlements is almost criminal,” says MacCoy. “No wonder Ontario auto insurance rates are so high.”
One reader commenting on the original article, ‘
Fee cap proposed for personal injury lawyers’ felt that the IBC was mistakenly on its high horse on the issue.
“Hilarious reply from the IBC. The thing is though, PI lawyers haven't been reducing their services and raising their rates for the past 15 years,” wrote Monty Dhaliwal. “The fact is, PI lawyers have to fight harder for victims' rights every time the IBC buys another piece of legislation.”
Dhaliwal went on to write that “evidence and proof are the bases of justice, which is our playing field.
“The IBC's playing field? The almighty dollar,” he concluded. (continued.)
#pb#
Looming on the horizon for auto insurers is the 15 per cent premium reduction that – in theory – is slated to take effect in August. A goal that, right now, appears to be unattainable.
“We need to fix it,” says Palumbo. “FSCO called in every insurer when the government set the 15 per cent goal. The most they got was 6 per cent. That is all that there is.”
Palumbo does smile at the irony of the same two York University authors of the recent study conducted for the Ontario Trial Lawyers Association apparently changing their findings from a report that was conducted for insurers a couple of years ago.
“It is ironic that those same two authors two years ago did a study for the insurance industry, and recommended a 10 to 12 per cent return on equity as being needed,” he says. “Now, this time, they are saying 5 per cent. What’s changed?”
And the call by the Ontario Trial Lawyers Association for transparency is a case of ‘what’s good for the goose is good for the gander,’ Palumbo points out.
“If we are going to talk transparency, then let it all be transparent,” he says.
Palumbo does admit that it is difficult to assign flat fees for PI lawyers, as every claim is different.
“There are some of these cases that are very complicated, and the lawyers should be rewarded for their hard work,” says Palumbo. “But I know there are judges who have said to lawyers, ‘You’ve taken more than you should have for the work that you have done.’”
