From the Ethics Committee

Lawyer obligations under ICBC defence retainers

The Ethics Committee recently considered several questions arising out of an agreement that the Insurance Corporation of British Columbia has with law firms that represent ICBC in the defence of motor vehicle claims. ICBC calls this agreement its Strategic Alliance Agreement (SAA).

As part of the SAA, law firms whose lawyers are retained to act as part of a legal team for ICBC must not permit those lawyers to bring actions against the Corporation that include allegations of bad faith or claims for punitive, aggravated or exemplary damages. ICBC also requires that firms acting for ICBC in the prosecution of actions alleging fraud must not act against the Corporation in defending any such actions.

Some relevant provisions of a standard SAA state the following:

Article 6.2(a)(vi): wherein ICBC at its sole discretion may impose penalties or restrictions, including termination of the SAA, where “the Firm or any member of the Legal Team, in the performance of the Legal Services, fails to act in the best interests of ICBC or ICBC’s insureds…”;

Article 6.2(b)(i): wherein the same penalties or restrictions can be imposed where “the Firm or any member of the legal team was or is engaged in any activity that was, is or may be contrary to ICBC’s strategic business or financial direction or initiatives, or the interest of ICBC’s insureds;”

Article 9.4: Members of the Firm’s Legal Team will not directly or indirectly:

  • commence or participate in claims or actions, or
  • counsel or assist others in bringing claims or actions

against ICBC which include allegations of bad faith, or claims for punitive, aggravated or exemplary damages.

Article 9.5: The Firm will not directly or indirectly:

  • resist claims or conduct the defence of actions, or
  • counsel or assist others in resisting claims or defending actions

brought by ICBC against alleged fraudulent claimants or defendants, if the Firm has agreed to act for ICBC in the prosecution of fraudulent claims or actions.

In the Committee’s opinion, a lawyer who accepts the restrictions required by ICBC must decline to act against ICBC if it appears there is a reasonable basis for believing the evidence supports a claim that the lawyer or the lawyer’s firm has agreed not to prosecute. A lawyer already acting for a client when such evidence emerges must withdraw. When a lawyer declines to act or must withdraw, it is proper for that lawyer to advise the client or prospective client to seek the advice of other counsel with respect to the claim.

In the Committee’s opinion, a lawyer may properly act against ICBC for clients whose cases fall outside the restrictions. However, a lawyer acting in these circumstances must advise these clients of the lawyer’s relationship with ICBC and the implications of the restrictions the lawyer is under.