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The Alberta Lawyers Indemnity Association (“ALIA”) will be implementing the civil litigation filing levy (the “CLFL”), which is expected to reduce the professional liability assessment (“Part A Levy”) of every member who participates in Alberta’s mandatory lawyer indemnity program (“Subscriber”). Because amounts collected under the CLFL will help offset some of the claim costs of the indemnity program, the Part A Levy is expected to be reduced from what it otherwise would have been.
ALIA’s Board of Directors approved the CLFL as a two-year pilot project starting with ALIA’s 2021-2022 policy year (July 1, 2021 to June 30, 2022). The first reporting and payment of assessable filings will not be due until October 31, 2021. However, Subscribers are expected to receive the benefit of reductions to the Part A Levy beginning with the May 2021 annual levy invoices. Reporting and payment of the CLFL will be quarterly. For more information on timing of assessments and invoices, click here.
ALIA undertook a consultation process on the CLFL with a sample population of Subscribers and professional organizations to help refine the CLFL pilot project and facilitate its smooth implementation. ALIA will continue to welcome feedback relating to the CLFL prior to and during the pilot project at ALIAinitiatives@lawsociety.ab.ca.
The CLFL is similar to levies that have been in place for many years in Ontario (LawPRO) and Newfoundland and Labrador, where civil litigation transaction levies of $100 and $75, respectively, are charged for commencing and responding to civil actions.
The CLFL involves charging a levy of $75 (plus GST) for commencing and responding to civil litigation (for example, filing statements of claim and originating notices [to the extent they launch an action]) in the Court of Queen’s Bench of Alberta. Filings that do not commence or respond to an action, for example, interlocutory applications, are excluded.
This amount was determined to be appropriate based on ALIA’s cost/risk analysis and comparing rates charged in other Canadian jurisdictions for similar levies. ALIA has conducted extensive research and due diligence and an analytical/risk rating process in developing the CLFL.
The CLFL will not apply to self-represented litigants who do not use lawyers to file commencements or responses. It also will not apply to Alberta lawyers who do not participate in the mandatory indemnity program, such as in-house counsel.
Many actions where Subscribers are counsel of record will be exempted on an access to justice basis or for other appropriate reasons. These exemptions include the following and are detailed further in the CLFL Information Chart:
- Actions pertaining entirely to family law.
- Actions commenced or responded to through pro bono or public legal clinics (including actions funded by them) as designated by the Law Society of Alberta (the “Law Society”) or otherwise approved by ALIA’s President and Chief Executive Officer.
- Actions under the Adult Guardianship and Trusteeship Act (Alberta) or to which Alberta’s Office of the Public Guardian and Trustee are party.
- Statements of claim filed by Subscribers to collect outstanding accounts from their clients.
- Actions that are fee reviews or assessment hearings before a review officer or assessment officer, including any appeal.
- Arbitration, which is not included unless an application to the Court of Queen’s Bench is made in respect of the arbitration.
- Criminal law matters.
- Governmental or regulatory boards or tribunal matters that are not commenced in the Court of Queen’s Bench, Federal Court or the Tax Court of Canada.
- All matters in the Provincial Court of Alberta. (Appeals of Provincial Court decisions to the Court of Queen’s Bench of Alberta will be included.)
- All matters in the Alberta Court of Appeal.
- Filings that do not commence or respond to an action, for example, interlocutory applications.
Under current estimates, the CLFL could help offset some of the claim costs of the indemnity program by approximately $3.85 million per year. This does not mean the indemnity program would have extra funds; rather, the Part A Levy payable by all Subscribers would be reduced on an actuarial basis due to assessments expected to be collected under the CLFL. The CLFL is ultimately intended to be revenue neutral to ALIA but is expected to reduce each Subscriber’s Part A Levy from what it otherwise would have been.
Subscribers who are required to pay the CLFL may charge it to their client as a disbursement.
Payments of the CLFL will be due quarterly throughout the year based on self-reports (certifications) of Subscribers or their firms on an “honour system” basis. Over the course of the two-year pilot period, ALIA will continue to work on methods to ensure compliance with reporting and payment obligations. These may include Law Society audit procedures and remedies under the indemnity program’s group policies for intentional avoidance of reporting assessable court filings and payment of the related CLFL.
The quarterly certifications of assessable court filings will be submitted through a prescribed electronic form and are anticipated to require Subscribers and firms to list Court of Queen’s Bench action numbers for compliance purposes.
Additional information on the foregoing is contained in the FAQ.
Reasons for the CLFL
Civil litigation generates more claims and costs than any other area of the indemnity program:
- For the five years ending with the 2018-2019 policy year, civil litigation was responsible for 45% of the total losses of the indemnity program, the largest proportion of any practice area, costing Subscribers an average of $9.9 million a year.
- For the five years ending with the 2018-2019 policy year, civil litigation was responsible for 37% of the number of claims of the indemnity program, again the largest proportion of any practice area.
- The average amount of each civil litigation claim (i.e. its severity) has steadily increased over the past 15 years.
- Civil litigation had the highest number of claims in each policy year since 1999, other than for three years (2007-2008 through 2009-2010) when mortgage fraud drove up the number of real estate claims.
A key purpose of the CLFL is to reallocate some of the higher cost/risk associated with civil litigation. Since claim costs are a key driver in establishing the base levy payable by Subscribers (Part A and Part B), the higher costs of civil litigation are disproportionately shared by all Subscribers. Filing levies collected from transactions in high cost/risk areas are expected to lower each Subscriber’s Part A Levy from what it otherwise would have been, because amounts collected under the CLFL will help offset some of the claim costs of the indemnity program. This is intended to make funding of the indemnity program fairer to all Subscribers.