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Please review the FAQs below for more information on the Civil Litigation Filing Levy (CLFL).
The CLFL will be self-reported and paid on a quarterly basis as described in the FAQ below titled “How will civil litigation filings be reported and the CLFL paid?”
The first self-reports and payments will be due on October 31, 2021 for filings from July 1, 2021 to September 30, 2021 (i.e., the first quarter of the 2021-2022 policy year). Documents which are submitted for filing before July 1, 2021, will not attract the CLFL even if they are date stamped by, or received back from, the Court of Queen’s Bench on or after July 1, 2021.
Self-reports and payments may be made by individual Subscribers or their law firms. Self-reports for a quarter must be made within 30 days of the end of that quarter and invoices must be paid to the Alberta Lawyers Indemnity Association by the following remittance dates:
- April 30 (for remittances covering the three-month period ending March 31);
- July 31 (for remittances covering the three-month period ending June 30);
- October 31 (for remittances covering the three-month period ending September 30); and
- January 31 (for remittances covering the three-month period ending December 31).
Filings should be reported based on the date of the Court Clerk’s stamped filing date. ALIA recognizes there may be a delay between the date stamped on the filed document and the date on which the Subscriber or their firm receives confirmation of the filing. If confirmation does not occur until a subsequent reporting period, then the filing may be reported in that subsequent reporting period in which the Subscriber or firm becomes aware that the document is filed, although the date to be reported should still be based on the Clerk’s date stamp. Alternatively, the filing could be added to the self-report for the current reporting period, if confirmation of the filing is received prior to payment of the invoice for that period (once the invoice is paid, further entries for the reporting period cannot be added).
The self-report is completed and filed electronically through the Law Society’s Lawyer Portal on the page titled “Civil Litigation Reporting” located under the tab titled “ALIA Filing Levies.” The self-report lists the Subscriber, their filings and the date each was filed, the Court of Queen’s Bench action numbers of their filings, and the amount due (which equals $75 [plus GST] multiplied by the number of filings being reported). The Court of Queen’s Bench action number will be used for audit and compliance purposes.
Subscribers or their firms may report the filings and pay the applicable CLFL.
Completing the self-report generates an electronic invoice on the page titled “ALIA Transactional Levies” located under the tab titled “Returns”. For Members, the invoice is generated through the Law Society’s Lawyer Portal on the page titled “My Account” located under the tab titled “My Profile.” For firm administrators, the invoice is generated through the Law Society’s Lawyer Portal on the page titled “ALIA Transactional Levies” located under the tab titled “Return Sheets.” Payments will be remitted electronically using one of the Law Society’s approved payment options.
Until the self-report for a quarter is completed and the invoice for it paid, additional filings may be added to the self-report in the Law Society’s Lawyer Portal. Once the invoice is paid, further entries for the reporting period cannot be added.
If you need to have further entries added, please contact ALIA.
Yes. Section 3.6-3 of the Code of Conduct of The Law Society of Alberta and accompanying commentary permit the billing of disbursements and other charges, provided they are “fair and reasonable” and have been “disclosed in a timely fashion”.
The Law Society has confirmed the CLFL may be passed on to clients as a disbursement (as opposed to an “other charge”). Accordingly, if you are required to pay the CLFL, you may charge it to your client as a disbursement.
The Code of Conduct requires full disclosure in all financial dealings between lawyers and clients. One of these requirements is that a lawyer should provide to the client, in writing, before or within a reasonable time after commencing a representation, as much information regarding fees and disbursements, and interest, as is reasonable and practical in the circumstances, including the basis on which fees will be determined.
Lawyers should be sure to address the CLFL in writing with their client in accordance with the Code of Conduct, for example, in their retainer letter.
Alberta’s Assessment Offices have confirmed to Alberta Lawyers Indemnity Association (“ALIA”) that the CLFL would be allowed on a review of lawyer’s charges, on the basis that the Law Society has confirmed it to be a disbursement. They have also confirmed it would be recoverable by successful litigants, whether as disbursements for Schedule C costs or for solicitor and client or solicitor and own client costs.
Civil litigation and real estate levies are charged in Ontario (LawPRO) and Newfoundland and Labrador. In addition, a personal property transaction levy is charged in Newfoundland and Labrador. Transaction levies are not currently charged in other Canadian jurisdictions.
LawPRO’s civil litigation transaction levy is $100 (including GST) for commencements and responses, and Newfoundland and Labrador’s is $75 (plus HST).
Both the LawPRO and the Newfoundland and Labrador programs use an “honour system” for collecting the amounts. Lawyers and firms are required to make quarterly declarations of the number of commencements and responses filed in the quarter and submit the required amount within 30 days of the end of the quarter.
Both programs exempt several matters from their civil litigation transaction levies. Subscribers who wish to review the details of these exemptions may refer to the respective program websites for further information.
Each year, ALIA’s Board sets the levy for professional liability coverage (the “Part A Levy”) and misappropriation coverage (the “Part B Levy”) under ALIA’s group policy. The levy is set in two steps: first, calculating the “theoretical levy”, which is the net levy requirement determined on an actuarial basis to address existing and anticipated claims and fund ALIA’s operations; and second, determining the actual levy paid by Subscribers, which involves an actuarial adjustment of the theoretical levy based on ALIA’s capital levels. Both the theoretical levy and the actual levy are recommended by ALIA’s actuary and approved by ALIA’s Board.
Claim costs are a substantial portion of indemnity program costs, and as such have a large bearing on the theoretical levy. Although the Part A Levy for the 2020-2021 policy year levy was approximately $800 lower than the prior year, this was not because the projected claim costs were lower (which would have lowered the Part A theoretical levy); it was because ALIA was able to make a larger reduction to the Part A theoretical levy by using ALIA’s existing capital reserves. The Part A theoretical levy was reduced more in 2020-2021 than it was in 2019-2020 due to strong investment returns and a one-time $316 adjustment to help provide relief for Subscribers facing cashflow issues with the onset of COVID-19. Without the one-time COVID-19 adjustment, the Part A Levy in 2020-2021 would have been approximately $500 lower than it was in 2019-2020 (versus $800 lower).
For the 2021-2022 policy year, the Part A Levy was reduced by $304 from the 2020-2021 policy year. This was a result of the application of capital funds ($1,212 per Subscriber) and of an additional $528 per Subscriber credit based on forecasted CLFL revenue.
Without the CLFL, the Part A Levy would have increased for the 2021-2022 policy year. That said, the purpose of the CLFL is not to provide financial relief; it is to make the Part A Levy fairer to all Subscribers by reallocating some of the higher cost / risk associated with civil litigation to that practice area.
What if lawyers decide not to disburse the CLFL to their clients? Could that make their total levy payment higher than pre-CLFL?
There may be cases where Subscribers agree with their clients not to pass on the CLFL or otherwise decide not to pass it on as a disbursement. To the extent any Subscriber or firm does not pass on the CLFL, they will absorb the $75 levy, as they would for any other cost that they incur but do not pass on to their clients.
Mathematically, if a Subscriber absorbs this cost enough times, that cost could equal or surpass the reduction of the Part A Levy received by all Subscribers. That potential consequence would involve the only situation in which implementation of the CLFL would increase the total professional liability levy (Part A Levy plus CLFL) paid by a Subscriber, regardless of the practice area.
This result is aligned with one of the basic premises of underwriting: if one engages in higher-risk activities, one is likely to have to pay higher premiums.
Moreover, the CLFL will not necessarily raise the total professional liability levy (Part A Levy plus CLFL) paid by Subscribers practicing in civil litigation. This is one of the benefits of the CLFL for those Subscribers, as opposed to simply increasing the Part A Levy for all Subscribers practicing in civil litigation.
A CLFL credit of $528 per Subscriber was applied to the Part A Levy for the 2021-2022 policy year. This is based on forecasted CLFL revenue for this policy year. The actual amounts raised by the CLFL may be affected by factors such as the number of exempt versus assessable filings, the number of filings by self-represented litigants, and the actual volume of litigation. If actual amounts materially differ from forecasted amounts, adjustments in future levies may be required.
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.
Will ALIA adjust the amount of the CLFL if the revenue collected differs greatly from the amount required to deal with civil litigation matters?
The CLFL is designed to reallocate indemnity program risk / costs more fairly among all Subscribers; it is not intended to cover all civil litigation costs. The amount of the CLFL, $75 (plus GST), was calculated to offset some of these claim costs.
ALIA continuously monitors indemnity program data, including losses by practice area. This data will help inform the analysis of financial results at the end of the two-year pilot project, and necessary adjustments may be made at that time. Adjustments could also be made annually when ALIA’s Board of Directors sets the annual base levy (Part A and Part B). This is consistent with the practice in other provinces with similar levies.
How will ALIA help Subscribers determine what filings must be reported and interpret the exemptions from the CLFL?
How will the CLFL deal with multiple lawyers working on a single litigation file in a firm or multiple firms working for multiple parties?
A detailed list of scenarios can be found in the CLFL Information Chart. While the CLFL will be charged per filing of a commencement or response document, there may be examples where more than one Subscriber would be charged in commencing or responding to an action. For example, if more than one Subscriber in a firm is working for the same party to the litigation in respect of filing the statement of claim, only one CLFL would be charged; however, if multiple plaintiffs are represented by different Subscribers in different firms, a Subscriber in each firm would be charged. Subscribers and firms will be responsible for determining which Subscriber is responsible for the filing. For more information on how reporting and payment will be made, please see the FAQ above titled “How will civil litigation filings be reported and the CLFL paid?”.
No. A new CLFL would not be charged unless that subsequent firm filed a document that commenced or responded to an action.
Would two CLFLs be payable if a Subscriber files both a statement of defence and a counterclaim? Would a CLFL be payable if the other Subscriber filed a defence to a counterclaim?
Only one CLFL would be payable with respect to a statement of defence and counterclaim filed at the same time, but a CLFL would be charged on each filing where they are filed separately. Further, a new CLFL would not be payable by a Subscriber who commences an action by a statement of claim who then files a defence to a counterclaim. A detailed list of various payment / exemption scenarios can be found in the CLFL Information Chart.
The CLFL does not apply to applications that commence or respond to surrogate proceedings and which are non-contentious under Part 1 of the Surrogate Rules of the Court of Queen’s Bench, or which are not disputed. However, if the matter is, or becomes, disputed, it would then attract the CLFL.
For example, an application under Part 1 of the Surrogate Rules for any grant would not attract the CLFL; however, if the grant was then challenged, or a claim was brought against the estate and the personal representative did not agree to all or part of the claim, the matter has become disputed, and the Subscribers who had made filings that commenced or responded to the dispute would then be liable to self-report and pay the CLFL in respect of those filings.
What steps will ALIA and the Law Society take to ensure Subscribers self-report assessable filings and pay the CLFL?
During the CLFL consultation process, ALIA received feedback that it should take steps to ensure Subscribers comply with their CLFL obligations. This was consistent with ALIA’s view. Steps to ensure compliance may differ between the two-year pilot period and following the pilot period.
Failures to report an assessable filing or pay the CLFL would result in breaches of the Rules of the Law Society of Alberta.
Failures to pay CLFL invoices will result in automatic suspensions in the same way and on the same dates as failures to pay the Part A Levy or any Part A Levy instalment. Payments of the Part A Levy are due on June 30 in each year, or on June 30 and December 31 where the Subscriber chooses to pay in instalments. Payment defaults lead to automatic suspensions shortly after these due dates. Any CLFL invoice that remains unpaid as of June 30 or December 31 will be treated in the same fashion.
During the two-year pilot period, ALIA and the Law Society will consider additional steps to ensure compliance with the CLFL.
Audit procedures, which may be undertaken by the Trust Safety department of the Law Society, will be developed in the pilot period. These procedures will rely in part on Court of Queen’s Bench action numbers listed in the self-report.
ALIA will also consider repercussions under the Group Policy. For example, ALIA will consider substantially increasing the deductible for claims against Subscribers involving civil litigation actions in which the Subscribers (or their firms) failed to report the filing. ALIA will also consider requiring the Subscribers to indemnify ALIA for some or all amounts paid out on such claims. ALIA understands that Subscribers (or their firms) may inadvertently miss reporting a filing and only intends to exercise these remedies in cases where Subscribers (or their firms) were attempting to avoid the CLFL. These remedies, if implemented, will not apply during the two-year pilot period.
ALIA will also consider whether a late fee should be charged where the CLFL was not reported or paid. This will depend on the nature of compliance issues that arise during the pilot period. No late fee will be implemented for the pilot period.
Reallocating the cost of high-risk practice areas has been a strategic topic for ALIA’s Board of Directors for several years. Depending on the success of the CLFL pilot project, ALIA may consider additional transaction levies for other high-risk practice areas, such as real estate.
The CLFL was approved by ALIA’s Board of Directors in November 2020 as a two-year pilot project commencing with the 2021-2022 policy year (July 1, 2021 to June 30, 2022). The intent of the pilot is to refine the CLFL through the two-year period to improve ongoing implementation of the CLFL.