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B.C. lawyers try to tame legal costs as claims tick up

B.C.’s lawyers pay $1,800 annually into an indemnity fund for liability claims when a lawyer makes a mistake.
Law Society of B.C. expenses, including indemnity funds, are ultimately paid for by the public when they pay a lawyer; during inflationary times these expenses are coming under the spotlight more.

B.C. lawyers are freezing their professional fees next year in an attempt to curb legal costs, just as liability claims this year are on pace to reach an all-time high.

Keeping legal costs down is considered a key component of the legal community for improving access to justice and last Friday, Law Society of BC benchers (board of directors) approved a pause on a lawyer’s annual society fees, keeping them at $4,103 for 2024, according to this year’s fees and budget report.

Society president Christopher McPherson alluded to an important balancing act for lawyers, whose fees also fund vital services, such as the courtroom libraries, which provide the public with legal information.

“We need to bring revenue in line to deliver services; otherwise, we’ll see stuff falling apart on the edges,” said McPherson.

B.C.’s 14,800-plus lawyers pay $1,800 annually into an indemnity fund for liability claims when a lawyer makes a mistake. To mid-June, the society has received 589 new claims and is on pace for a record 1,289 claims, whereas it typically receives about 1,100 per year, with payouts ranging between $10 million and $14 million. This year, the society expects to pay wronged clients about $14.6 million from its indemnity fund.

Real estate transactions are a significant source of claims, with close to 200 last year. For example, lawyers have had to pay $9.1 million of the government’s tax on foreign purchasers, after errors in the sale process (such as not collecting the money from the purchaser).

Civil litigation errors also account for about 200 reports per year since 2015 and cost lawyers about $2 million, in total, on average annually. Those claims (in dollars) are showing an upward trajectory since 2003.

The society is expecting fewer claims in relation to motor vehicle lawsuits with changes to no-fault insurance and minor injury claims (under $50,000) now headed to the Civil Resolution Tribunal.

“We anticipate that over the next few years, a large number of personal injury lawyers will pivot to family, wills and estates, class actions, medical malpractice, employment law, builders liens, general insurance defence, and general litigation,” the society stated.

Countering such declines will be an expected uptick in wills and estates indemnity claims.

“Claims have increased very slightly over the last 10 years, which, given our aging demographic, is better than expected. Nevertheless, we foresee the wills and estates practice area generating increasing numbers of future claims as the population ages and passes on substantial wealth to beneficiaries,” stated the society.

There is also an uptick, over the past eight years, in “ineffective assistance of counsel” claims related to criminal defence.

As practice fees are paused, the society reported that its practice fees ($1,904) still rank below Alberta ($2,490) but above Ontario ($1,618).

All mandatory fees ($4,103) are the fifth lowest among the 13 provinces and territories, as Ontario, Quebec and Alberta fees are above $5,000 per year.

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