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Impacts of Current Economic Conditions
By Don Thompson, QC, Executive Director, Law Society of Alberta
continued from page 01
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What We're Seeing - Risk Trends
By Doug McKenzie, Investigator, Law Society of Alberta
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 The Economy
Alberta has fared relatively well in the current global economic situation, but the downturn still poses new or increased risks to lawyers, their clients, and the Law Society as regulator. From a conduct and liability perspective, experience shows the number of complaints/claims against lawyers and their cost increase when the economy declines.
High Risk Areas Include:
Real Estate Law - In the past, the Alberta Lawyers Insurance Association (ALIA) has observed an increase in claims during and immediately following periods of economic slowdown in Alberta. ALIA is expecting claims to increase approximately five per cent in its 2009 claim year, coming almost entirely from real estate practice. The severity (average cost) of real estate claims is also volatile, ranging from 20 per cent to 40 per cent more than the average ALIA claim during the last five years, reaching its highest relative level in 2009.
Investment Schemes - Ponzi schemes and other investment schemes continue to pose risks to the public and draw significant LSA resources. Rather than decreasing their incidence, enforcement efforts have generally served to increase the sophistication of such schemes. These schemes will likely continue to arise, and although practice advisories and tightened |
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Assurance Fund rules may limit financial exposure, conduct issues will probably continue to be a concern.
Estate Funds - Estate funds held in trust are inherently higher risk from a trust safety perspective. Various conduct investigations have focused on misappropriations and billing deficiencies associated with such funds and this risk is likely to continue to exist.
Bankruptcy Fraud - While it may be too early to predict a trend, the LSA has seen two cases recently where it is alleged that a lawyer acted on behalf of a potential bankrupt company or individual and may have become involved in certain payments in fraudulent preference to other creditors.
Commercial Law - Commercial claims in ALIA were at unusually high levels in fund years 1992 and 2000, suggesting increases in these claims may be related to, and follow shortly after, economic downturns. As such, the LSA expects there may be an increase in these types of issues over the next two years.
Civil Litigation - ALIA reports that Civil Litigation claims have declined since its 2005 claim year, but two issues loom:
- the outcome of the appeal to the successful challenge of the soft tissue injury cap on motor vehicle claims is uncertain and the resulting impacts are not known.
- significant changes are being made to the Rules of Court and such changes may create new pitfalls for lawyers in terms of compliance.
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Rule Amendments Expand List of Pro Bono Service Providers |
| The Rules of the Law Society of Alberta have been amended to expand the list of pro bono service providers and comply with changes to the Alberta Business Corporations Act. At the April 2-3, 2009 meeting, the Benchers approved amendments to Rule |
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148(2) & (2.1) which expands the list of pro bono service providers to include Grande Prairie Legal Guidance. As well, amendments were approved to Rules 155(2) and 159 to comply with changes to the Alberta Business Corporations Act. | |
