Government

Leveling the Field – How Legal Expense Coverage has Changed the Legal Landscape for Local Government

Q: What’s the difference between a lawyer and a herd of buffalo? A: The lawyer charges more.

Legal fees have long been perceived as a significant barrier to access to justice. The cost of starting a dispute in the court system can be significant, and sometimes not worth the end result. While it sometimes prevents parties from being fully compensated for their losses, it can also dissuade parties from pursuing claims that have no merit or likelihood of success. But the legal landscape has begun to change.

A few years ago, we started to see the influence of a new type of insurance emerge in the MIABC’s liability claims. Some plaintiffs were no longer hesitant to pursue their claims to trial. They no longer feared that if they were unsuccessful, they would have to pay both their own legal expenses and the local government’s legal expenses out of their own pocket. It seems that many plaintiff law firms were purchasing “After the Event Insurance” or “Adverse Costs Insurance” (“ATE” insurance) for their clients. ATE insurance is a product that plaintiffs and plaintiff firms can purchase to cover the legal expenses of a claim if the claim is unsuccessful. The premise of ATE insurance is that it levels the playing field for plaintiffs and defendants, thereby increasing access to justice. A plaintiff’s decision to pursue their case would no longer be influenced by their ability to pay costs if a decision didn’t go their way. In some cases, ATE Insurance has made it more difficult for us to settle claims as plaintiffs can be more reluctant to consider and accept what we think is a reasonable settlement. The emergence of insurance coverage for legal expenses has not

been all bad news for local governments. In fact, the upside is that this coverage is also available for local governments to purchase in order to cover the costs associated with their own legal actions, not otherwise covered by their liability insurer. Legal Expense Insurance coverage can fill coverage gaps in a local government’s commercial insurance portfolio. It also provides resources for local governments to protect themselves and in some cases,

actively pursue third parties to safeguard their financial interest. There are a number of products on the market. For instance, the MIABC has recently partnered with DAS Legal Protection Inc. to provide a tailor-made program for BC local governments. It includes coverage for judicial review proceedings of local government decisions, employment disputes, contract disputes and the legal costs associated with debt recovery. In addition, the policy includes unlimited access to a Legal Helpline that will provide claims handling advice and general answers to any legal question, regardless of whether it is covered by the policy. No matter how small your local government is, you may benefit from this new coverage. It is certainly worth calling up your insurance broker to find out what is available. If you would like more information about the MIABC’s program feel free to contact Erica Shi at eshi@miabc.org. •

ERICA SHI joined the MIABC’s Insurance Department as the Insurance Programs Administrator in May 2018. In this newly created position, Erica’s role is strongly member-focused. She is the in-house subject expert for ancillary policy placements. She assesses and responds to Members’ calls for changes to insurance programs and assists Members in interpreting policy language. She also processes renewals, responds to new business opportunities, and assists in the development of the Insurance Department’s business infrastructure. With 15 years experience in insurance industry, Erica held multiple roles in insurance company and different insurance brokerages. Erica graduated with a Bachelor’s Degree in Civil Engineering from Tongji University in Shanghai and later obtained a Bachelor’s Degree in Business Administration from SFU. Erica currently holds a General Insurance Agent Level 2 License and Chartered Insurance Professional (CIP) designation.

MEGAN CHORLTON’S career path has taken a number of twists and turns over the years. She obtained a B.Ed from McGill University and a M.Ed. from the University of Alberta in the 1990’s, followed by seven years of teaching. She returned to school in 2002 to obtain a LLB from the University of Alberta, then clerked for the Alberta Court of Queen’s Bench and the Alberta Court of Appeal. Megan was called to the bar in British Columbia in 2007. After specializing in municipal and insurance defence litigation while working at a large regional law firm for seven years, Megan joined the Municipal Insurance Association of British Columbia (MIABC) as a staff lawyer in 2013. Her career veered in an interesting direction in 2014 when she was appointed as the Director of Member Services. Presently, Megan acts as both the Director of Member Services and the MIABC’s General Counsel.