A Solid Win for Plaintiffs on Legal Expense Insurance

There has been great debate in recent years over the issue of disclosure of legal expense insurance (LEI) to defendants who have relentlessly pushed for full disclosure of plaintiffs’ LEI policies (also known as “After the Event” or “ATE” insurance). There have been decisions both for and against, culminating in the January 2017 decision in Fleming v Brown 2017 ONSC 1430 (“Fleming”) which held that a legal expense insurance policy must be disclosed pursuant to Rule 30.02 of the Rules of Civil Procedure. Most lawyers presumed this was the end of the debate, and with it the strategic benefit of maintaining privilege on the terms and details of their clients’ coverage.

Fortunately, Fleming was not the last word!

Unlike other LEI policies in the market (also known as “After the Event” or “ATE” insurance), LISC Legal Cost Protection (LISC LEI) is sold directly to lawyers and law firms as the insureds/policyholders, not the plaintiffs themselves. (Though the plaintiffs do benefit from the adverse cost and disbursement coverage under their counsel’s policy). This distinction factored significantly in the recent decision of Jamieson v Kapashesit et al, 2017 ONSC 5784 (“Jamieson”), which represents a solid plaintiff-sided victory in the war on disclosure.

In Jamieson, the Court has finally opined on the distinction between LISC LEI and other LEI policies specifically, with the finding that the LISC LEI policy need not be produced to the defendant.

In keeping with the existing case law at the time, the Plaintiff in Jamieson provided evidence as to the existence of the firm’s comprehensive “Firm Protect” policy with LISC, as well as the amount of coverage under the policy. However, Plaintiff’s counsel ably argued that the policy itself was not producible because, unlike the LEI policy in Fleming, LISC LEI was a blanket policy which named the law firm as policyholder. In addition, the LISC coverage continued indefinitely and applied to the law firm’s entire file inventory. As a result, disclosure would represent a breach of every other client’s solicitor-client privilege. Furthermore, as the law firm was not a “party” to the proceeding, they could not be required to disclose the policy under Rule 30.02(3).

Justice Cornell accepted the Plaintiff arguments in his detailed and well reasoned decision. The motion to produce the policy was dismissed and costs were ordered payable to the Plaintiff. Per Justice Cornell’s decision:

“This case can be distinguished from Fleming as the policy is that of Orendorff & Associates and not the plaintiffs. Given the terms of the policy and its application to other clients, the issue of solicitor/client privilege arises. The ACP in this case does not lie within the possession, control or power of a party. In view of this, the motion is dismissed.”

Clearly not all legal expense insurance is created equal. Meanwhile, Fleming will continue to stand for the proposition that all other ATE policies which are sold directly to plaintiffs will be subject to full disclosure.

This decision signals that the courts are paying increasing attention to the intricacies of legal expense insurance. We anticipate additional decisions to cite the distinctions between various LEI providers’ policies.

Jamieson has not yet been appealed, but we will continue to monitor this case.

Click here to view the full decision in Jamieson.

Find our more about LISC Legal Cost ProtectionTM and Firm ProtectTM portfolio coverage options.


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