Personal Injury Law and Its Effect on Motor Vehicle Insurance Premiums in Ontario

Personal injury litigation, in regard to their contingency and referral fees, have come under scrutiny. MPP Michael Colle for Eglinton-Lawrence has put forward a private member’s bill – Bill 103 -- that would cap contingency fees at 15 per cent, and outright prohibit referral fees. Before tabling this bill, Law Society of Ontario drafted a comprehensive report to address these issues. The report’s recommendation has been deemed to be far more nuanced than the “extreme provisions” of MPP Colle’s private member’s bill.

Diamond & Diamond posted a statement on the website which said that cap percentage was “misguided” and lowering contingency fees to the level it suggests “would result in a situation in which personal injury lawyers would only be able to represent a small fraction of claims, namely the most injured. This would leave thousands of unrepresented accident victims unable to find a lawyer and forced to rely on OHIP or scarce safety nets to protect them. It diminishes injuries and has the potential to leave many financially destitute.”

We know many of the challenges that our legal system faces, particularly with access to justice, but while access to justice issues plague criminal and family law, it is “virtually non-existent in personal injury litigation.” Asher Honickman, a civil litigation lawyer in Toronto, explains that “We have contingency fees to thank for that.” Although, Honickman admits that most personality injury lawyers that he’s spoken to have agreed that a cap is necessary to protect the interests of injured plaintiffs. However, “the problem with Colle’s proposal is that the cap is too low to make commercial sense,” he writes.

There’s another stakeholder in the picture that is often overlooked – insurance brokers. IBAO CEO Colin Simpson said in a statement that “A major cost driver on the auto insurance product has been zealous litigation incentivized by contingency and referral fees. IBAO is supportive of Bill 103, which would help to protect consumers and keep costs down. All other parties in auto insurance industries are already required to disclose their compensation – it’s time lawyers and paralegals do the same.”

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