For the fourth consecutive year, A.M. Best Co., a leading rating agency, has awarded LAWPRO an A (Excellent) financial strength rating. In its release, A.M. Best commented on "LAWPRO's strong operating performance, excellent capitalization, and its historically favorable loss reserve development. . . . In addition to its favorable underwriting results, the company maintains a conservative investment portfolio, which provides a consistent source of investment income. This combination of underwriting results and investment income has greatly supported the growth in capitalization over the years."

LAWPRO to host North American insurance conference

LAWPRO will host the annual conference of NABRICO - the National Association of Bar-Related Insurance Companies -- from September 29 to October 1, 2004. NABRICO is a North America-wide association of independent companies and organizations whose members provide professional liability insurance to lawyers across the United States and Canada. The conference features plenary sessions on major economic, insurance and demographic trends shaping the future of the legal profession and the professional liability insurance industry. Break-out sessions will focus on isues specific to underwrtiting, risk and claims management and other insurance functions. At its fall conference, NABRICO also appointed LAWPRO President Michelle Strom as the association's president for 2004.

For more, visit the NABRICO conference Web site at http://www.nabrico2004-toronto.ca.

Lawyers opt to e-file in record numbers

A record 16,200 lawyers - 82 per cent of the practising bar - e-filed their 2004 LAWPRO insurance applications this fall. Last year, 78 per cent of lawyers - or just over 14,000 lawyers - filed their insurance applications via the LAWPRO Web site.

The number and percentage of lawyers who choose to file electronically using LAWPRO's interactive, Web-based application form has increased steadily since we introduced e-filing in 1998. In both 1998 and 1999, about 10,500 lawyers, representing about 66 per cent of the practising bar at that time, filed their applications online.

Lawyers who opted to e-file received a $50 discount on their 2004 insurance premiums: By e-filing, the profession saved itself 810,000 in insurance premiums.

This year, for the first time, LAWPRO also provided lawyers and law firms with the option of receiving their insurance invoice, which is based on information provided in the insurance application, electronically, via the LAWPRO Web site. Electronic invoices can be accessed only by authorized persons using a security password. About 1,600 lawyers accessed their own, unique electronic invoice and insurance policy documents online, via a secure portion of the LAWPRO Web site.

Analysis of applications filed electronically reveals some interesting trends within the profession:

Majority of e-filers are in urban areas
More than 85 per cent of lawyers in Ottawa/Carleton and Toronto completed their applications online, representing 10,700 of the 12,600 lawyers located in these two large urban areas.

However, several non-urban areas also saw a very high e-file participation rate: In Haldimand/Norfolk, Temiskaming, Kenora and Middlesex counties, 85 per cent of practising lawyers opted for electronic filing. This compares to Hamilton/Wentworth, where 76 per cent of lawyers e-filed.

Soles lag behind firms in e-filing participation rates
Although the number of sole practitioners who opted to e-file increased 18 per cent this year (to 3,518 from 2,988 in 2002), overall only 61 per cent of 5,850 sole practitioners opted to e-file. This compares to a participation rate of 100 per cent among firms with 25 or more lawyers, and an 80 per cent participation rate among firms of two to nine lawyers.

The single largest increase in participation rates was seen among firms of two to nine lawyers: 80 per cent of lawyers in this category of firm size e-filed in 2003 for 2004, a 26 per cent increase from last year. LAWPRO believes a new streamlined online application process for firms and active promotion of e-filing among firms of five or more lawyers prompted this increase.

Almost one-third of bar has e-filed in each of the last six years
More than 6,000 of the 19,800 lawyers who were eligible to e-file for 2004 are e-file "regulars" - that is they have e-filed insurance applications every year since 1998. Statistics also reveal that 1,800 lawyers e-filed for the first time this fall.

2004 insurance program

LAWPRO base premium set at $2,500 per lawyer
Lawyers will be paying a base premium of $2,500 per lawyer for their professional liability insurance coverage in 2004 - consistent with 2003 premium levels despite difficult investment and commercial insurance markets.

Since assuming responsibility for the administration of the insurance program in 1995, LAWPRO has consistently reduced rates from a high of $5,600 in 1995 to the current $2,500 base premium.

Many lawyers will pay lower premiums still, depending on variables such as options selected, years in practice and practice areas. For example, part-time practitioners, those who restrict their practice to criminal and/or immigration law, and lawyers newly called to the bar could pay a premium of $1,500 or less in 2004.

Premiums for other insurance coverage, transaction levies and discounts will remain the same as they were in 2003.

The decision to maintain the premium at the $2,500 mark and not reduce it for 2004 is based on a number of factors: Claims numbers and costs are expected to increase slightly in 2004, the result of more complex claims files and higher defence costs; premium income from transaction levies is lower, reflecting an increase in the use of title insurance in real estate transactions; and because interest rates are at historic lows, investment returns will not be available to significantly subsidize premiums in 2004.

By holding the line on premiums for 2004, LAWPRO has been able to buck a trend in the insurance industry. Double and even triple digit premium increases for liability coverage have been reported for some commercial programs. As well, the professional liability marketplace continues to experience reduced capacity, the result of significant losses post 9/11 that prompted some insurers to abandon product lines, merge or consolidate or leave the markets altogether.

"It is in tight markets such as these that LAWPRO really comes into its own and provides value to the profession. We can provide a stabilizing influence without compromising a principal goal: to provide lawyers with a cost-effective program in which insurance premiums reflect the risk associated with law practice. Moreover, our strong financial position going into this hard market allows us to retain 100 per cent of the premiums and losses in the core program ourselves," says Michelle Strom, LAWPRO president & CEO.

Policy coverage changes for 2004
A number of changes have been made to the policy for 2004, in keeping with the need to ensure the program is risk-rated and provides appropriate coverage for lawyers' legal services.

Investment advice/services excluded
Lawyers who provide investment advice or services may find that claims arising out of these services are excluded from coverage under the LAWPRO policy, unless the advice or services were a direct consequence of providing legal services.

Business ventures, investments excluded
Similarly, lawyers who become involved in business ventures or in investments outside their legal practice will also find claims arising out of these services are excluded from coverage; specifically, the 2004 insurance policy has been modified to exclude from coverage claims relating to or arising out of any business ventures or investments which do not directly relate to the lawyer's practice of law.

Criteria for applying claims history levy surcharge modified
In the past, this surcharge has applied only to lawyers who have had one or more claims in which an indemnity payment was made as a result of a judgment or by way of repair or settlement of a claim. Starting in 2004, the claims history levy surcharge will apply to claims in which the whole of the $1 million per claim policy limit has been exhausted by costs and expenses incurred to investigate and defend the claim, even though no indemnity payment or repair has been made under the policy. The surcharge would be removed if the lawyer subsequently shows that no judgment, settlement or repair has yet been made outside of the policy limits.

As well, in the past this surcharge applied to lawyers who had a claim paid in the last five years; starting in 2004, the surcharge will apply if any claims were paid in the last five-year period during which the lawyer maintained practice coverage under the program. This change addresses situations in which lawyers with a claim or claims went on exemption for a period of time and then returned to practice after the five-year window had elapsed, negating the need to pay this surcharge.

Civil litigation criteria changed
As well, the $50 per transaction civil litigation transaction levy surcharge has been updated so that the transaction levy surcharge does not apply to divorces and adoption proceedings which are not opposed on any issue.

Mobility protocol prompts exemption changes
The introduction this July of the National Mobility Agreement, which paves the way for increased inter-jurisdictional mobility of lawyers, has prompted a change to the criteria under which lawyers can exempt themselves from paying the insurance premium.

Mobility exemption added
Law Society of Upper Canada members who are also called in other reciprocating jurisdictions may apply for exemption in those reciprocating jurisdictions in which they are called and not resident. Lawyers called in Ontario, but who are also called and resident in another reciprocating jurisdiction can apply for exemption "g" under the Ontario program.

To qualify, they must have coverage under the reciprocating jurisdiction's law society program that is comparable in terms of both coverage and limits to the insurance coverage required by Law Society members.

If a claim subsequently arises for those who qualify for exemption "g," the policy of the reciprocating jurisdiction in which they are resident and paying the premium will generally apply to the claim. However, if their practice was previously located in another reciprocating jurisdiction, such as Ontario, and a claim arises out of their earlier legal services there, the insurance policy of that earlier reciprocating jurisdiction will apply.

Once a lawyer stops practising in a reciprocating jurisdiction, or ceases to maintain insurance coverage in that jurisdiction for ongoing private practice, he or she is not longer eligible for the "g" exemption under the Ontario program.

Real Time Transfer system for e-regTM transactions a reality

• Full story
• LAWPRO Q&A
• BMO Q&A
• Law Society Practice Guideline 5 --"Electronic Payment of Closing Proceeds and Discharge Funds"
• How to sign up
• Real Time Transfer Agreements:
  • Directline® Real Time Transfers for e-reg™ Information Profile;
  • Cash Management Services Master Agreement; and
  • Legal Trust Account Directline® Service Agreement

LAWPRO, Bank of Montreal launch Real Time Transfer system for e-reg^TM transactions
Real estate practitioners can now complete another important aspect of their transactions - the transfer of closing funds -- electronically, from their computer desktops.

LAWPRO and the Bank of Montreal (BMO) have launched a real time funds transfer system that lets a purchaser's lawyer deliver closing funds for an electronic registration (e-reg™) transaction to the vendor's law firm electronically, real time, real value. The system, available to lawyers across Ontario, was specifically designed to complement and streamline real estate transactions in the e-reg™ environment. It uses BMO's Directline® product as its technology platform.

The new system offers real estate lawyers a number of benefits:

• Rather than meet physically to arrange for funds transfer or send closing funds by courier in escrow, closing proceeds are transferred electronically, real time and real value.
• Lawyers also can retrieve account information and perform financial transactions, such as the transfer of funds from one BMO Trust Account to that of another lawyer also set up on the system, from their desktops, in real time.
• Funds transferred through this program will be considered "cleared" funds in the selling lawyer's trust account as soon as a transfer is received. This eliminates the need for the vendor law firm to contact the bank to determine if and when the deposit has occurred and the form of the funds deposited, thus adding an important measure of security for vendor lawyers concerned about the type of funds provided by purchasers' lawyers in a transaction. As well, it reduces if not eliminates the chance that a closing can be delayed because of bank related delays in depositing or transferring funds in a timely manner.

To facilitate this initiative and address any risk management issues it raises, the Law Society amended its practice guideline regarding the payout of existing institutional mortgages in June 2002. According to Practice Guideline 5 --"Electronic Payment of Closing Proceeds and Discharge Funds" -- in situations where the electronic real time cleared funds transfer capability is used, "it would be acceptable for the purchaser's solicitor to transfer the amount required to pay out an institutional mortgage directly to the vendor's solicitor's trust account." The purchaser's lawyer then would rely on the vendor's lawyer to obtain a mortgage discharge.

To access the system, which is available on an extended hours basis, six days a week, lawyers need only a user identification and password. Participating law firms must have trust accounts with the Bank of Montreal, and must have submitted required legal agreements to the Bank before they can use Directline real time transfers for their transactions.

How to sign up with the Real Time Transfer system

Law firms with existing BMO trust accounts
    Complete the forms set out below and send them to:

    Bank of Montreal
    Cash Management Services
    First Canadian Place, Level B2
    100 King Street West
    Toronto, Ontario M9W 1A7

Other law firms
Contact your local branch of the Bank of Montreal to establish a trust account first and then file these forms at the address specified.

Real Time Transfer Agreements:

• Directline® Real Time Transfers for e-reg™ Information Profile;
• Cash Management Services Master Agreement; and
• Legal Trust Account Directline® Service Agreement

™ "e-reg" and the e-reg logos are trademarks of Teranet Inc.
® Directline is a registered trademark of the Bank of Montreal.