Car insurance costs/Shutterstock
This weekend, columnist Mike Smyth wrote an article for The Province that looked at the financial papers for ICBC. The headline read “Another ICBC sticker shocker? $1.9 billion paid to law firms last year.”
That headline has a great deal of power to mislead the potential readership about just what the money paid to law firms was for. The article, fairly, broke it down. $1.73 billion went to payments for accident settlements to law firms, while $184 million was paid out for costs and disbursements, including expert reports. However, the premise of the article remained clear: lawyers are to blame for ICBC’s expenses.
But that’s not at all fair or even accurate.
The majority of that money – the $1.73 Billion – was paid for settlements. This means that it was money paid to compensate injured people, who would otherwise still be entitled to that money, for their injuries. Other than potentially making the reasons for the compensation clear to the corporation, the lawyers had little to do with the entitlement that ICBC had to pay out that money. It was part of their duties under the insurance contract.
As for the complaint about $184 million paid out for costs and disbursements, including expert reports, a little legal background is necessary. Costs are specific fees, short of legal fees, that are awarded by the court when a case is resolved. The common rule is that a party is entitled to costs where they are successful in the litigation. They are entitled to double their costs if they are awarded more than a settlement offer they made, pursuant to another rule.
In practice, this means that if John Doe offers to settle his accident claim with ICBC for $50,000 and ICBC rejects his offer, then John is entitled to double his costs if the court awards him any amount over $50,000.
So that $184 million in costs and disbursements includes cases where ICBC told people to take a hike, but then lost at trial. It includes cases where ICBC did not accept an otherwise reasonable and, in fact, lowball settlement offer.
Disbursements are charges associated with litigation and the claim. For example, an expert report is considered a disbursement. In many instances, law firms will advance their clients the funds for disbursements to pursue the claim. The goal is to recover this on the contingency fee agreement at the end, which would make the plaintiff obligated to pay back those disbursements from the ultimate award.
They are costs that are often not incurred but for having to take a case to trial. And, in cases where the plaintiffs are of limited financial means, they are reasonable steps to take that a lawyer has invested in, in the good faith belief that the claim will be viable. But for the lawyers, many people would not be able to afford these disbursements and would likely not receive settlements that are as favourable, or trial awards as just.
A disbursement for an expert report is, at the end of the day, about getting the evidence necessary to prove your case at trial.
So why blame the lawyers? These lawyers are taking money from their own pockets and advancing it to help the little guy against a huge corporation that does not have to take those risks.
And yet, for some unknown reason, the article in The Province notes that personal injury lawyers typically take 30% of the ultimate award. This is the contingency fee. The author calculates that based on this, the plaintiff bar took home a collective $500 million last year.
So what?
That $500 million didn’t go into the pocket of a handful of greedy lawyers. It was spread out amongst all lawyers who settled claims with ICBC over the course of a year. Let’s not forget that there are roughly 11,000 lawyers in British Columbia.
This half billion dollars represented large sums to lawyers with large settlements, and small sums to lawyers with small settlements. And it also represented fees for services rendered. That is, after all, what legal fees are. They are the cost of the work done. And in a personal injury case, the Law Society of British Columbia caps that amount at just over 30%. Personal injury lawyers are prohibited from charging any more than that.
Imagine you are a lawyer. Of whatever the 30% is that you collect from any particular file, you still have to pay the costs to run your office. You have to pay for your assistant, or paralegal. You have to pay for office space, rent and triple net. You have to pay for office supplies. A phone line, internet, a fax machine, because lawyers still live in the 1990s. All these are costs that lawyers have to pay.
And then, for those good-hearted lawyers who advance disbursements on behalf of their clients, you also have to have some reserve funds to pay for that. If you ask me, that’s providing a service in the name of access to justice. Lawyers are encouraged to do that.
The money that the lawyers get does not go directly into the pockets of the lawyers. Instead, it goes to support the costs of running a small, medium, or even a large business. And when you go to work, you expect to get paid, right? Why does society find it so offensive that lawyers feel the same way about their jobs as anyone else?
When ICBC pays out a settlement, it doesn’t tack on an extra 30% to compensate the lawyer. If ICBC determines the claim is worth $100,000 that’s what’s paid out. Not a surcharge for legal fees. Indeed, only in cases where ICBC’s conduct is abominable are special costs (ie, legal fees) awarded. And then that would only be after trial, where a judge made a determination that ICBC behaved inappropriately.
Therefore, legal fees come out of the settlement money a person is entitled to. People who hire lawyers know this up front. These people make a decision that they believe they would have a greater shot at access to justice, and to do so they are willing to give up a third of their settlement money. That’s not the lawyer’s fault. It’s the same decision I make when I hire someone to mow my boulevard because they would do a better job than me with a push mower and a back injury.
It’s little wonder that people make this choice. The public dealing with ICBC generally feels as though the deck is stacked against them. ICBC does little to combat this perception. If you take your claim to trial, ICBC is going to have a lawyer appear against you. If you don’t want to accept their settlement offers, a trial is your only avenue.
Lawyers in this maligned $1.9 billion in payouts did their jobs. They helped people get what they deserved - what ICBC ultimately agreed was a fair settlement or what courts ultimately determined on the evidence was a fair settlement. And they deserve to be paid for that.
We have an access to justice crisis in this province. Blaming lawyers for soaring ICBC costs simply because they are providing access to justice is a symptom of the problem and not part of the solution.
