DEADLINE IS APPROACHING! Pay your 2010 premiums on or before February 9, 2010 and save $50 per lawyer (some conditions apply) (Feb. 1, 2010)

You can choose to pay your 2010 premium for your professional liability insurance in a lump sum, or by quarterly or monthly instalments. But only lump sum payments, made by cheque or pre-authorized bank account withdrawals, qualify you for the $50 per lawyer lump sum payment discount.

To benefit from the lump sum payment discount ($54 per insured lawyer from the invoiced amount – $50 for the discount and $4 for PST), you must pay the premium indicated on your invoice in full by cheque, dated and received by LAWPRO on or before February 9, 2010. Please note that paying in a lump sum by credit card does NOT qualify for the lump sum payment discount.

Please ensure that you remit the total premium amount as indicated on the premium Invoice, and not the amount indicated on the Declarations page, as that amount does not include the claims history levy surcharge (if applicable) or the PST. Your cheque should be made payable to The Law Society of Upper Canada and mailed to LAWPRO at 250 Yonge Street, Suite 3101, P.O. Box 3, Toronto, Ontario M5B 2L7. Please DO NOT include payments for Law Society membership fees in your mail to LAWPRO.

For further information, please contact our Customer Service Department at (416) 598-5899 or 1-800-410-1013; by fax at (416) 599-8341 or 1-800-286-7639; or by e-mail at service@lawpro.ca.

LAWPRO Director awarded Ontario’s highest honour (Jan. 25, 2010)

Constance Backhouse, a member of LAWPRO’s Board of Directors, has been named to the Order of Ontario. Ms. Backhouse is a distinguished law professor and legal historian internationally recognized for her feminist research and publications on gender and race within the Canadian legal system.

First presented in 1986, the Order of Ontario is the province’s highest official honour. It recognizes Ontarians who have made an outstanding contribution to society in Ontario and around the world.

practicePRO blog wins CLawBie award (Jan. 22, 2010)

practicePRO’s AvoidAClaim blog has been recognized with a 2009 Canadian Law Blog Award ("CLawBie"). AvoidAClaim tied with Thoughtful Legal Management authored by David Bilinsky in the practice management category.

practicePro’s Avoid A Claim Blog was cited as "a relatively new offering but it fills a big gap. From advice on scams that target lawyers to mitigating malpractice risk and CLE material, the advice goes far beyond its principal audience of Ontario lawyers."

Pay your 2010 premiums on or before February 9, 2010 and save $50 per lawyer (some conditions apply) (Jan. 4, 2010)

You can choose to pay your 2010 premium for your professional liability insurance in a lump sum, or by quarterly or monthly instalments. But only lump sum payments, made by cheque or pre-authorized bank account withdrawals, qualify you for the $50 per lawyer lump sum payment discount.

To benefit from the lump sum payment discount ($54 per insured lawyer from the invoiced amount – $50 for the discount and $4 for PST), you must pay the premium indicated on your invoice in full by cheque, dated and received by LAWPRO on or before February 9, 2010. Please note that paying in a lump sum by credit card does NOT qualify for the lump sum payment discount.

Please ensure that you remit the total premium amount as indicated on the premium Invoice, and not the amount indicated on the Declarations page, as that amount does not include the claims history levy surcharge (if applicable) or the PST. Your cheque should be made payable to The Law Society of Upper Canada and mailed to LAWPRO at 250 Yonge Street, Suite 3101, P.O. Box 3, Toronto, Ontario M5B 2L7. Please DO NOT include payments for Law Society membership fees in your mail to LAWPRO.

For further information, please contact our Customer Service Department at (416) 598-5899 or 1-800-410-1013; by fax at (416) 599-8341 or 1-800-286-7639; or by e-mail at service@lawpro.ca.

Change to title insurers’ release and indemnity agreement with real estate lawyers (Dec. 18, 2009)

Real estate lawyers should take note of a change in the form of release and indemnity agreement provided by title insurers for transactions completed on or after January 1, 2010, so that no real estate transaction levy applies to a specific transaction.

Under the Law Society insurance program, one requirement that must be met for the real estate transaction levy to be waived under the exclusion for title insured transactions is that the title insurer provide a release and indemnity agreement to lawyers in a form acceptable to the Law Society.

The form of that agreement has now been modified such that, for all title insured transactions completed on or after January 1, 2010, and provided that an insured under the title insurance policy(ies) has not alleged that the title insurer has acted in bad faith, the title insurer’s obligation to indemnify and save harmless the lawyer is limited to the limit of coverage available under the title insurance policy(ies).

Lawyers should consider the potential additional exposure that this cap on the protection provided by title insurers presents to them and their law firms. In managing this potential exposure, lawyers may want to consider the need to purchase excess insurance protection beyond that provided under their Law Society program limits.

To review the Law Society’s notice to lawyers regarding this change, including a list of the title insurers who have provided a release and indemnity agreement in favour of Ontario lawyers and law firms in a form satisfactory to the Law Society, see http://www.lsuc.on.ca/media/dec1509_titleinsurance.pdf.

The facts about LAWPRO's overdraft protection (Dec. 14, 2009)

You may have read some confusing articles regarding LAWPRO's overdraft protection - don't be misled. The following articles will help clarify the coverage for you.

Lawyers have always had - and continue to have - protection in situations where they inadvertently pay out funds of legitimate clients to fraudsters before discovering the fraudster had provided a counterfeit instrument. But if the shortfall in your trust account was between you and the bank only (i.e. no legitimate client funds are taken, or the amount of funds disbursed exceeds that belonging to legitimate clients) there was no coverage under previous insurance policies. Under the 2010 policy, coverage has been enhanced to include protection for this type of situation provided you meet certain coverage requirements. For more see:

• LAWPRO's enhanced counterfeit cheque, bank draft protection: FAQs
• The facts on overdraft protection (editorial from LAWPRO Magazine by Kathleen Waters)
• Enhanced coverage for counterfeit certified cheques, bank drafts (E&O column from LAWPRO Magazine)

The facts on overdraft protection (Dec. 14, 2009)

This article focuses on an issue that is of concern to many of you and consequently to us - the expanded protection against counterfeit bank instruments that we announced in October. From your calls and emails, it is clear that some clarification is needed.

1. This is an enhanced protection

As is explained in the E&O coverage article on page 26 of this months magazine, the Law Society insurance program has generally provided protection in situations where funds of legitimate clients were in advertently paid out to fraudsters prior to the lawyer discovering that he or she was dealing with a fraudulent instrument. This protection for innocent clients will not change- and you do not need to make any changes to your practice for this protection to be in effect.

However, in situations where the shortfall was strictly between the lawyer and the bank - i.e. no legitimate client funds were affected - there was no coverage under the program in LAWPRO's view. This approach is consistent with the intent of a professional liability policy, simply stated: To provide a defence and/or indemnify a lawyer where a client brings a claim for negligence.

LAWPRO's commitment to stand behind client funds, as described above, may exceed the coverage generally provided by professional liability programs; in other words, some programs would not necessarily cover the loss of client funds from a trust account when a fraudulent instrument is reversed.

But in keeping with our commitment to be responsive to the concerns of lawyers and the evolving nature of the legal landscape, we are now going one step further: As of January 1, 2010, in specified circumstances lawyers will have certain coverage in situations where the lawyer is liable at law under his or her contract with the bank due to an overdraft caused by reversal of a fraudulent instrument.

2. Responsible underwriting requires "best practice" conditions on this enhanced coverage

Coverage enhancements do not exist in a vacuum: They potentially increase claims costs - which generally are passed on to insureds through increased premiums. Lawyers are already feeling the strains of a weakened economy, and the Law Society program base premium needed to be increased by$500 per lawyer to address other cost pressures. So, we at LAWPRO felt we had to do the best we could to expand coverage without creating the need for a further immediate premium increase, from an actuarial perspective.

We are mandated by the Law Society to operate in a commercially reasonable manner and to risk rate the program. Responsible underwriting is part of that equation: The "best practice" limitations that are attached to this enhanced protection moderate the risk to which the program is exposed and strive to equalize the likely impact on the insurance program arising from the different practice areas of the bar. What the best practices do not do is equalize fraud risk for lawyers as business people across all different practice areas and types of retainers. That would likely require specific risk-rating of the coverage per area of law and/or law firm.

3. It may not be possible to do "business as usual"

Some lawyers tell us that the limitations put on the enhanced overdraft coverage (the eight-day wait before drawing on funds, or verification from the drawee or lawyer's own financial institution, confirmed in writing, that the instrument is valid)are impractical or unmanageable. Again we reiterate that these limitations apply only to those wanting to avail themselves of the enhanced coverage.

We also recognize that, for those wanting to limit their exposure to certain forms of fraud, certain practice realities may need to change. One risk mitigation strategy we encourage lawyers to consider is wire transfers through the Large Value Transfer System (LVTS) which provide a real value assurance according to the by-laws of the Canadian Payments Association. You may also want to lay the foundation for a new approach to funds handling in your retainer letters by, for example, requiring that your client wire you funds for the cash portion of the transaction and give you notice of who the lender is some time before closing, so you can satisfy yourself as to how funds will be delivered by the lender.

LAWPRO will, over the coming weeks, continue to work with practitioners to address these and other concerns. Look for further practice tips and ideas in our December LAWPRO Webzine (our new web-based newsletter). The fight against fraud is a journey that will continue throughout our professional lives. Failing to adopt strategies to fight fraud is saying to the fraudsters, "please, take our money", whether you hand it over directly or via LAWPRO indemnifying you. Remember that every $1 million in costs for LAWPRO equals another $50, more or less, on the base premium. It doesn't take many frauds to hit $1 million of loss these days.

Kathleen Waters

(Edited version of President's editorial from LAWPRO magazine Volume 8, Issue 4)

Real estate levies increase to $65: The rationale (Dec. 14, 2009)

Why are there real estate claims in a world of title insurance? And why are real estate claims costs rising?

The answers to those two questions help explain why LAWPRO’s real estate transaction levy will increase to $65 from $50 for files opened on or after January 1, 2010.

Why are costs rising?

If you only looked at the number of claims, you would think the civil litigation transaction levy should be going up, instead of the real estate levy. There were almost 700 litigation claims in 2008 – and only about 625 real estate claims.

But the cost of claims is more important than the number of claims when the actuary is working out the risk-rating for the transaction levy program.

For claims reported in 2007 (the most recent year for which LAWPRO has complete data on file reserves), costs paid and/or reserved stand at about $23 million for real estate claims and at about $17 million for litigation claims. Therefore, the real estate claims costs are about 35 per cent higher than the litigation claims costs. (The $15 increase in the real estate transaction levy, by comparison, represents a 30 per cent increase.)

Nor is this a one-year blip. The cost of real estate claims has been increasingly steadily since 2004.

Between 1997 and 2000, real estate claims costs averaged about $16 million annually. The annual average dipped to $14 million from 2001 to 2004, but rose sharply to $20 million per year in the 2005 to 2008 period.

The average cost of a real estate claim has fluctuated between $40,000 and $50,000 since 2002. By comparison, the average cost of a litigation claim during the same time period has been under $35,000, while the average cost of all types of claims has been about $30,000.

So why are real estate claims costs rising? Because until just this past year – when the economy took a downturn – we enjoyed many years of prosperity during which most things increased in value. Real estate was no exception. Average house prices in Ontario, for example, rose 20 per cent between 2005 and 2009.

Taking into account inflation since the mid-1990s, the increase in the real estate transaction levy to $65 from $50 can be seen, therefore, as basically an inflationary increase.

As well, high-ratio mortgages are more common. When fees are taken into account, 95 per cent or more of the value of a property may be mortgaged nowadays.

We are now also faced with more demanding clients who don’t think twice about trying to recoup their losses by suing their lawyers. (Is this attitude perhaps the fallout from the increasing commoditization of legal services?)

What causes real estate claims?

When we look at claims statistics for the last 10 years (1998 to 2008), we see that close to 40 per cent of real estate claims (2,419 claims) were attributed to a breakdown in lawyer/client communications. Moreover, communications issues in real estate claims during that period cost the insurance program $77.6 million – more than 41 per cent of real estate claims costs.

The second largest cause of loss over the last 10 years in real estate claims is inadequate investigation of the facts: 26 per cent of real estate claims reported (1,582) and 23 per cent of real estate claims costs ($45 million) resulted from lawyers not adequately investigating the facts surrounding a transaction.

In other words, more than 65 per cent of real estate claims over the past decade related to soft skills/decision-making/judgment in the handling of clients and the strategy concerning the file.

Why are there real estate claims in a world of title insurance?

In a world in which just about every refinance transaction is title insured and about 90 per cent of purchase transactions in Ontario have a title insurance policy, how is it that we are seeing more not fewer real estate claims?

A number of possible explanations come to mind:

• Communication and inadequate investigation errors – the two most frequent causes of loss – are less likely to be covered by most title insurance policies. In fact, a claim may even be based on an allegation that the client did not give informed consent to the purchase of title insurance. The client may allege that the lawyer did not explain what was covered or not covered or that the lawyer didn’t properly question the client or conduct an adequate investigation to determine what special coverage might be necessary to fit the client’s situation. A claim may also be based on an allegation that the lawyer failed to obtain title insurance when instructed to do so.
• As well, title insurance does not,
  • necessarily cover value fraud,
  • get ordered for every commercial deal or private mortgage, or
  • address vendor client claims.

New email address for submitting your transaction levies – levies@lawpro.ca (Dec. 3, 2009)

You asked for it and we listened. You can now submit your transaction levies to the shorter, more convenient email address levies@lawpro.ca. Our old email address – transaction-levies@lawpro.ca – will continue to exist for the time being.

Online filing of 2010 renewal insurance application is no longer available (Dec. 4, 2009)
The deadline to file your renewal insurance application was November 9, 2009. Applications filed after November 9, 2009, are subject to a surcharge equal to 30% of the base premium. Please note that the November 2 e-file discount to save $25 per lawyer has also passed.

If you have not yet filed the application for your 2010 professional liability insurance, you can submit your completed application form by fax to our office at (416) 599-8341 or 1-800-286-7639, or mail it to:

Lawyers’ Professional Indemnity Company
250 Yonge Street
Suite 3101, P.O. Box 1
Toronto, Ontario
M5B 2L7

The pre-populated PDF copy of your application form can be accessed by signing in to MY LAWPRO at www.lawpro.ca, using your Law Society number and your confidential e-filing password. (If you cannot remember that password or need to set up a new one, follow the online instructions or contact our Customer Service Department for assistance). Select "2010 Professional Liability Application Form (Pre-populated PDF form)" under the "Primary Policy Docs" tab.

Lawyers were either notified by email that their 2010 application was available online on the LAWPRO website (or if practising in a Partnership or Law Corporation of five or more lawyers, the key contacts in that firm were notified by email), or an application package was mailed to you on or about October 5, 2009.

While it is not mandatory that lawyers complete this form, there is a ‘no application form’ premium surcharge equal to 30% of the base rate which is applied to the policy in the event that a completed application is not received by LAWPRO when due. This surcharge is in accordance with By-Law 6 of the Law Society Act and the policy.

2010 renewal insurance application filing deadline has now passed (Nov. 10, 2009)
The deadline to file your renewal insurance application was November 9, 2009. Applications filed after November 9, 2009, are subject to a surcharge equal to 30% of the base premium. Please note that the November 2 e-file discount to save $25 per lawyer has also passed.

If you have not yet filed your application form, you can e-file by signing in using your Law Society number and your confidential e-filing password. (If you cannot remember that password or need to set up a new one, follow the online instructions or contact our Customer Service Department for assistance). Select "Renew my 2010 Professional Liability Insurance" and complete the filing using the online instructions. If filing your renewal application online, please note that you will have successfully e-filed when you receive a confirmation number that begins with the letter "P".

Lawyers were either notified by email that their 2010 application was available online on the LAWPRO website (or if practising in a Partnership or Law Corporation of five or more lawyers, the key contacts in that firm were notified by email), or an application package was mailed to you on or about October 5, 2009.

While it is not mandatory that lawyers complete this form, there is a ‘no application form’ premium surcharge equal to 30% of the base rate which is applied to the policy in the event that a completed application is not received by LAWPRO when due. This surcharge is in accordance with By-Law 6 of the Law Society Act and the policy.

If you wish to have a pre-populated PDF copy of your application form, visit our Web site at www.lawpro.ca and sign in using your Law Society number and confidential e-filing password. The PDF copy can be retrieved under the link "My Policy Documents". Hard copy applications may be faxed to our office at (416) 599-8341 or 1-800-286-7639, or couriered to:

Lawyers’ Professional Indemnity Company
250 Yonge Street
Suite 3101, P.O. Box 1
Toronto, Ontario
M5B 2L7

2010 renewal insurance application filing deadline fast approaching (Nov. 3, 2009)
All renewal insurance applications must be filed by the final deadline of November 9, 2009. Applications filed after November 9, 2009, will be subject to a surcharge equal to 30 per cent of the base premium. Please note that the November 2 deadline to file online to save $25 per lawyer has now passed. Applications can still be filed online, but are NOT eligible to receive the e-file discount.

We encourage you not to wait until the last moment to file. You can e-file by signing in using your Law Society member number and your confidential e-filing password. (If you cannot remember that password or need to set up a new one, follow the online instructions or contact LAWPRO Customer Service at 416-598-5899 or 1-800-410-1013). Select Renew my 2010 Professional Liability Insurance and complete the filing using the online instructions. If filing your renewal application online, please note that you will have successfully e-filed when you receive a confirmation number that begins with the letter "P".

The current issue of our magazine - which provides detailed information on changes to the insurance program for 2010, and a summary of the insurance coverage options available to lawyers and law firms - is now available online at http://www.practicepro.ca/Lawpromag/LawPROmagazine8_3_Oct2009.pdf

Online filing of 2010 LAWPRO insurance applications now available (Oct. 5, 2009)

File your application online by November 2, 2009, and you'll save $25 per lawyer on the 2010 insurance premium. The final deadline for filing applications is November 9, 2009 (note that applications filed after November 2 but before the filing deadline of November 9 will NOT be eligible for the $25 premium discount). Applications filed after November 9, 2009, will be subject to a surcharge equal to 30 per cent of the base premium. The base premium for 2010 will be $2,950 per lawyer.

To e-file, sign in to the secure section of the LAWPRO website using your Law Society number and your confidential password. Your application, pre-populated with your specific information from our database, will be available for you to review, make changes as necessary and submit. If you cannot remember your password or need to set up a new one, please contact LAWPRO Customer Service at 1-800-410-1013 or 416-598-5899 or e-mail service@lawpro.ca.

To e-file now, click here.

Be vigilant about fraud as Thanksgiving weekend approaches (Oct. 5, 2009)

Fraudsters like to strike when banks are closed and firms are often short-staffed – so be extra vigilant about your internal controls as the October 12 long weekend approaches.

Also consider taking time to review the Fraud Update in the recent September issue of LAWPRO Magazine, which looks at several common misconceptions that prevent some lawyers from recognizing potential frauds. Copies of the magazine were mailed to all lawyers in early September. It was also emailed to all lawyers on September 9, 2009, as the LAWPRO Webzine.

For more fraud prevention resources, see www.practicepro.ca/fraud.

Deadline has now passed to save $150 per lawyer on your 2009 premiums (some conditions apply) (March 10, 2009)

The deadline to benefit from the lump sum payment discount ($162 per insured lawyer from the invoiced amount – $150 for the discount and $12 for PST) has now passed. Premium payment made in full by cheque must have been dated and received by LAWPRO on or before March 6, 2009 in order to receive the discount. Please note that paying in a lump sum by credit card does NOT qualify for the lump sum payment discount.

For further information, please contact our Customer Service Department at (416) 598-5899 or 1-800-410-1013; by fax at (416) 599-8341 or 1-800-286-7639; or by e-mail at service@lawpro.ca.

Deadline is approaching! Save $150 per lawyer on your 2009 premiums (some conditions apply) (Feb. 27, 2009)

You can choose to pay your 2009 premium for your professional liability insurance in a lump sum, or by quarterly or monthly instalments. But only lump sum payments, made by cheque or pre-authorized bank account withdrawals, qualify you for the $150 per lawyer lump sum payment discount.

To benefit from the lump sum payment discount ($162 per insured lawyer from the invoiced amount – $150 for the discount and $12 for PST), you must pay the premium indicated on your invoice in full by cheque, dated and received by LAWPRO on or before March 6, 2009. Please note that paying in a lump sum by credit card does NOT qualify for the lump sum payment discount.

Please ensure that you remit the total premium amount as indicated on the premium Invoice, and not the amount indicated on the Declarations page, as that amount does not include the claims history levy surcharge (if applicable) or the PST. Your cheque should be made payable to The Law Society of Upper Canada and mailed to LAWPRO at 250 Yonge Street, Suite 3101, P.O. Box 3, Toronto, Ontario M5B 2L7. Please DO NOT include payments for Law Society membership fees in your mail to LAWPRO.

For further information, please contact our Customer Service Department at (416) 598-5899 or 1-800-410-1013; by fax at (416) 599-8341 or 1-800-286-7639; or by e-mail at service@lawpro.ca.