Lawyers Urged to Exercise Increased Caution in the Face of Reported Pandemic-Related Litigation Delays and Confusion |
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Alberta Lawyers Indemnity Association (“ALIA”) and the Law Society of Alberta have received reports of pandemic-related court delays that may expose lawyers to claims related to delayed litigation or missed limitation periods and key deadlines. Continued confusion around suspension of limitation periods also has been reported.
Reports from lawyers include delays in receiving signed court orders back from Justices and Masters in Chambers and delays in receiving confirmation of court filings, as well as difficulties in scheduling timely applications.
Reported delays vary depending on the judicial district and the particular circumstances. However, any delay in a litigation action may result in claims against the lawyers involved. Even where claims are without merit, their defence may cause ALIA’s indemnity program to incur increased costs. All Subscribers of the indemnity program ultimately pay these costs.
ALIA recommends that Subscribers exercise increased vigilance against court delays that may be caused or exacerbated by the pandemic. Click here for more information on practice management tips.
Lawyers also continue to report confusion on the distinction between the suspension of limitation periods and provisions in the Rules of Court that allow courts to exercise discretion. Subscribers are also reminded that the suspension of limitation periods applies to some–but not all–provincial legislation. Click here for more information on suspensions of provincial limitation periods and deadlines and practice management tips.
Click here for information and practice management tips relating to federal limitation periods.
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Do not Risk your Indemnity Coverage: When to Report a Claim or Potential Claim, Including Notice of 4.31/4.33 Applications |
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Do you think you might have a claim to report but are wondering a) whether you should report it, or b) when the best time to report it would be. To be clear, you should always provide notice of actual or possible mistakes as soon as you become aware of them.
Coverage under the group policy of the mandatory indemnity program (the “Group Policy”) is provided on a “claims made and reported” basis, meaning that coverage depends upon when the claim is made and reported to the insurer, not when the “Occurrence” (as defined in the Group Policy) has taken place.
The Group Policy requires that all claims and any circumstances that could reasonably be expected to give rise to a claim, however unmeritorious (“potential claims”), must be reported to ALIA during the policy period in which the Subscriber becomes aware of them.
This means that all claims or potential claims the Subscriber becomes aware of in the current policy year ending June 30, 2021, must be reported to ALIA on or before June 30, 2021. Failure to report the claim or potential claim on or before the June 30 deadline can result in denied coverage.
There may be times when a Subscriber fails to report a claim or potential claim in a timely manner. The Group Policy amendments include a late notice provision to address this. Under this provision, a Subscriber may provide late notice of a claim or potential claim if the Subscriber establishes that the late notice has not prejudiced ALIA. The amendment is not retroactive. If a Subscriber was aware of a claim or potential claim on or before June 30, 2020, and did not report it by June 30, 2020, there will be no coverage for the claim regardless of prejudice. For further details on this provision, please visit our website.
To help lawyers determine when to report a claim or potential claim, ALIA offers the following examples of common claims or potential claims that should be reported immediately. ALIA considers these examples to be circumstances that could reasonably be expected to give rise to a claim, however unmeritorious:
- You receive notice of an application where your client’s claim could be dismissed or summarily decided as a result of an error or alleged error on your part. Please do not attempt to handle these matters on your own, as this may result in a denial of coverage either as a late report or having caused prejudice to ALIA. For example:
- Notice of a 4.31/4.33 application, regardless of whether you believe the application has merit;
- An application for summary dismissal based upon a missed limitation period (including liens, litigation, and claims against insurers or governments).
- You are served with a Statement of Claim or you receive a courtesy copy of a Statement of Claim alleging negligence or an error by the Subscriber/firm.
- A client has asserted that you made a mistake or alleges you have caused a financial loss.
- You receive a demand letter outlining negligence allegations against you.
- The other party alleges a specific defence based on something you have done (e.g., failing to name the correct party in an action).
- You fail to serve pleadings within the required time.
- You fail to register security properly, resulting in lost priority or entitlement (e.g., PPSA, mortgage security).
- You receive notice of a Law Society of Alberta complaint in which your client alleges negligence or that you have caused a financial loss.
If you are in doubt, you are strongly encouraged to report your claim or potential claim. ALIA is here to assist and can help you determine how to move forward. Do not try to take steps on your own to repair a potential claim. These steps may make the situation worse and could jeopardize your insurance coverage. If you report a claim or potential claim and it is not necessary to attempt to rectify the error or defend a legal proceeding, your deductible will not be triggered and there will not be any surcharge to your levy.
The above list of examples is not meant to be exhaustive and is provided for information purposes only and not as legal advice. The Group Policy contains other terms and conditions that may affect coverage. Members should always review the Group Policy to confirm their obligations in any circumstance.
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What Activities are Covered and Not Covered Under the ALIA Group Policy? |
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The Alberta Lawyers’ Professional Liability and Misappropriation Indemnity Group Policy (the “Group Policy”) provides coverage to Subscribers for claims arising from errors in the rendering of “Professional Services”.
Professional Services include services normally provided or supervised by a lawyer within the scope of a usual solicitor-client relationship and services rendered as an arbitrator or mediator. Certain “Incidental Services” that are substantially related to the above are also covered. These include a Subscriber’s activities as an executor, administrator, trustee, personal representative, committee, guardian, or patent or trademark agent.
There is no coverage for “Ancillary Activities”, which are activities of a quasi-legal or non-legal nature that are ancillary to or independent of the practice of law. These activities include providing financial, investment, accounting or brokerage advice or services and carrying on a business or undertaking that is not the provision of Professional Services, whether the Subscriber receives compensation or not.
It is important to note that any Incidental Services must be tied to Professional Services. For example, there is no coverage for a lawyer acting as a trustee or a personal representative of an estate in a personal capacity where no legal services are provided.
ALIA has recently received inquiries regarding the coverage for lawyers providing services as a Notary Public or Commissioner for Oaths. Again, whether there is coverage for this as an Incidental Service depends on whether the lawyer is providing Professional Services. The Group Policy will not respond where a lawyer makes an error solely in his or her capacity as a Notary Public or a Commissioner for Oaths.
For example, there generally would be coverage for a lawyer who makes an error in commissioning an affidavit for a client of his or her firm in a litigation or some other matter for which the firm is providing professional legal services. There is no coverage for an error in notarizing or commissioning a document for a non-client (for example, a family member or non-client walk-in) where no Professional Services have been provided.
A claim arising from the mere receipt and distribution of funds by a Subscriber without the provision of Professional Services is also not covered.
We recommend that Subscriber’s review the Group Policy in its entirety, as there are policy late notice provisions and exclusions under the policy that could apply in certain circumstances and impact coverage.
If you have any questions regarding whether a specific activity is covered under the Policy, we encourage you to contact ALIA at ALIA@lawsociety.ab.ca. |
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ALIA does not provide legal advice. ALIAdvisory notices, ALIAlerts and the content on ALIA’s website, notices, blogs, correspondence, and any other communications are provided for general information purposes only and do not constitute legal or other professional advice or an opinion of any kind. This information is not a replacement for specific legal advice, and does not create a solicitor-client relationship.
ALIA may provide links to third-party websites. Links are provided for convenience only; ALIA does not vet or endorse the information contained in linked websites or guarantee its accuracy, timeliness, or fitness for a particular purpose.
This communication does not alter the terms and conditions of the Group Policy. Lawyers are encouraged to read the Group Policy in its entirety. Lawyers requiring further information should contact ALIA via email at alia@lawsociety.ab.ca or via phone at (403) 229-4716 or toll free at 1-800-661-1694.
If you believe that you have been targeted by potentially fraudulent activity, please contact ALIAlert.
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