Every BC lawyer in private practice, and non-lawyer partner in a multidisciplinary practice (MDP), must pay the annual indemnity fee and participate in the indemnification Program, unless exempt. If a lawyer or MDP partner is not exempt and does not pay the indemnity fee, the member is prohibited from practicing law. For an overview of the Program, please read LIF Coverage Information - Law Society Indemnification Program.
The coverage:
The compulsory indemnification policy provides:
- Professional liability indemnity coverage (for negligence) (Part A) to protect lawyers if they are liable for negligence and ensure that clients receive compensation to which they are entitled;
- Trust protection (dishonest appropriation) (Part B) ensures that innocent members of the public do not suffer a financial loss through theft by a BC lawyer; and
- Trust shortage liability (social engineering fraud or reliance on fraudulent certified cheques) (Part C) provides some protection for lawyers if they fall victim to the “bad cheque” or other “social engineering” scams, helping ensure that clients do not suffer a financial loss.
Professional liability indemnity coverage provides each covered lawyer with $1 million of coverage for each error, to an annual maximum of $2 million for all errors reported during the year. There is a deductible of $5,000 for the first paid claim and $10,000 for each subsequently paid claim within three years of the report date of the first claim.
Trust protection coverage offers an annual aggregate, profession-wide coverage of $17.5 million. Each claimant may recover up to $300,000 per claim. If the claim arises out of the lawyer’s inter-jurisdictional practice, different limits apply.
Trust shortage liability coverage provides a limit of $500,000 per claim, lawyer, and and firm annually, and has a profession-wide annual aggregate of $2 million. The deductible is 35% unless a secondary verification has been made, in which case the deductible is 15%. Coverage is contingent upon compliance with the Law Society’s client identification and verification rules.
More information about coverage is available on the following webpages:
The indemnity fee:
The indemnity fee for a member practicing full-time is $1,890 ($1,800 plus GST) for the year. The fee is prorated on a monthly basis for lawyers who join the program mid-term.
A 50% discount is allowed to lawyers who practice part-time. You may apply for the part-time discount if you are engaged in the private practice of law (any professional services for which the indemnification policy extends coverage), related professional services and activities that further those services for an average of 25 hours per week or fewer. The terms “related professional services” and “activities that further those services” included but are not limited to:
- Practice management;
- Administration and promotion; and
- Professional duties or representation on bodies such as the Law Society, the Canadian Bar Association, the Continuing Legal Education Society and other organizations.
To be eligible for the discount, you should be continuously employed on a part-time basis. You may occasionally practice more than 25 hours per week, as long as on average, over consecutive six-month periods (January to June; July to December), you practice 25 hours per week or fewer.
You may not apply for the discount if:
- You practice full-time for a portion of the year and do not practice at all for a portion or the balance of the year;
- You have had a professional liability insurance or indemnity claim in the past five calendar years in any jurisdiction for which an indemnity payment has been made.
Applications:
Please visit the Law Society of BC's website to apply for coverage for a full-time practice, part-time practice or claim an exemption: Apply for Indemnity coverage or an exemption.
Excess professional liability coverage:
Although the $1 million per error limit offers generous financial protection for the majority of claims lawyers face, this may not be enough to protect you and your firm. If a mistake in your practice might lead to a claim that will cost more than $1 million to defend and pay, you are both at risk. For more information on excess insurance see: Excess insurance.