Pilot Overview

The Alberta Lawyers Indemnity Association (“ALIA”) has implemented the Civil Litigation Filing Levy (the “CLFL”) effective July 1, 2021. The terms of the CLFL are set out in the Transaction and Filing Levy Schedule.

In the 2021-2022 policy year (July 1, 2021 to June 30, 2022), the CLFL has reduced the professional liability assessment (“Part A Levy”) of every member who participates in Alberta’s mandatory lawyer indemnity program (“Subscriber”), through the application of a credit of $528 per Subscriber.

Because amounts collected under the CLFL will help offset some of the claim costs of the indemnity program, the CLFL is expected to continue to generate credits to be applied against the Part A Levy in future policy years.

ALIA’s Board of Directors approved the CLFL as a two-year pilot project commencing with ALIA’s 2021-2022 policy year. The first reporting and payment of assessable filings is not due until October 31, 2021. Reporting and payment of the CLFL is quarterly. For more information on the timing of assessments and invoices, see the FAQs.

ALIA consulted 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 via email.

Description

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 conducted extensive research and due diligence and an analytical/risk rating process in developing the CLFL.

The CLFL does not apply to self-represented litigants who do not use lawyers to file commencements or responses. It also does 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 are exempted from the CLFL on an access to justice basis or for other appropriate reasons. These exemptions are set out in the Transaction and Filing Levy Schedule and include the following:

• 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, to the extent the applicable document is filed, or caused to be filed, by a Subscriber who is acting for a party through the pro bono or public legal clinic.
• 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.

Additional guidance pertaining to exemptions is also set out in the CLFL Information Chart.

The CLFL credit for the 2021-2022 policy year was $528 per Subscriber, based on a total credit of approximately $3.84 million expected to be collected through the CLFL for the 2021-2022 policy year. This reduction was made on an actuarial basis as part of setting the Part A Levy for the 2021-2022 policy year. The CLFL is ultimately intended to be revenue neutral to ALIA and is expected to continue to generate credits to be applied against the Part A Levy in future policy years.

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 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 the Law Society’s 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 self-reports of assessable court filings will be submitted through a prescribed electronic form and require Subscribers and firms to list Court of Queen’s Bench action numbers for compliance purposes. The self-reporting forms are accessed through the Law Society’s Lawyer Portal.

Additional information on the foregoing is contained in the FAQ.

Reasons for the CLFL

The ALIA Board approved the CLFL in response to civil litigation generating more claims and costs than any other area of the indemnity program. As of the approval of the CLFL in late 2020:

• 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 increased 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, 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 on an ongoing basis, because amounts collected under the CLFL (CLFL credits) 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.