As a civil litigation lawyer, you advise your client about litigation risks and you take steps to protect against those risks throughout their action. You also need to protect your firm from any potential actions against it. This is why you should properly advise your clients about Redress After the Event Insurance (RATE).
Great Britain’s Code of Conduct for lawyers the SRA sets out compliance rules regarding After the Event Insurance. These rules indicate that clients must be informed about RATE Insurance coverage and be offered the opportunity to purchase an appropriate policy. While no Canadian Law Societies have issued guidance on After the Event Insurance yet, in Great Britain, where ATE is a mature product, lawyers that have failed to properly advise clients on the subject have experienced actions against them.
Since the legal systems in Canada and Great Britain are similar, the potential for repercussions when it is not properly advised, exists in Canada.
LAWPRO (Lawyers Professional Insurance Company for Ontario Lawyers) has made comment on failure to bind Title Insurance product for clients, and the comparison is easily made between the two products.
In a 2012 article in Lawyers Weekly, LAWPRO CEO Kathleen Waters wrote: “At the heart of most claims is the lawyer’s failure to deliver something the client has requested or expected”, and “When a lawyer is asked to secure title insurance and doesn’t, he or she effectively becomes responsible for everything the policy would have covered, even if the range of insurance protection exceeds the normal standard of practice…”
So how can you protect yourself against this type of claim?
It is always good practice to:
- advise clients specifically about the potential risks of adverse costs of litigation
- inform them how RATE mitigates against some of the risk
- and to establish procedures to provide evidence that you have done so, especially in the case that a client chooses not to purchase RATE insurance.
When it comes to the last point, it is extremely important to meet with all clients who fail to not take out an RATE Insurance policy to ensure they understand the risk of proceeding without it. Lawyers need to go further than just telling their clients that RATE exists. A client who was passively advised that RATE Insurance is available, such as through a brochure, but declines could argue it was their lawyer’s responsibility to clearly advise them they needed an RATE policy rather than just leaving them the decision.
Even here in Canada where there are no official rules requiring the discussion of After the Event Insurance, if a complaint made a complaint to your Provincial Society they may agree that, because the client was at risk of losing a large sum, it was your obligation to meet with the client and ensure that he or she fully understood the risks of not obtaining RATE Insurance and to recommend the purchase of one.
If you feel you don’t know enough about how to go about advising your client, here a few simple steps to get you started thinking about it:
- Become familiar with RATE insurance
- Compare providers and know the vast difference between a licensed insurance product and an unlicensed indemnity product,
- Have an arrangement in place with a broker to be able to offer RATE Insurance to clients,
- At the same time as executing your CFA, have RATE materials available for your clients to educate themselves,
- Send information about RATE to your existing clients,
- Strongly recommend that your clients consider purchasing a policy,
- If any of your clients do not wish to purchase a RATE policy, have them execute an Opt Out of Coverage Form, and
- Meet with clients who fail to take out a Redress After the Event Insurance policy to ensure they understand the risks of proceeding without RATE Insurance protection.
Law firms need to take every precaution to ensure they avoid putting themselves at risk of potential actions against them while still providing the best possible service to each client. One way to ensure this is by obtaining the Redress After the Event Insurance Program for your firm so all clients can be properly advised of the benefits.