July 14, 2011 by Canadian Underwriter
Legal counsel representing claimants in Ontario arbitrations are not required to docket their hours in order for claimants to receive their legal expenses at the high range of the scale determining hours worked, an Ontario arbitrator has ruled.
In Kamal Gogna and State Farm Mutual Insurance Company, an arbitrator at the Financial Services Commission of Ontario (FSCO) granted the insurance claimant Gogna his legal expenses of $12,000. The sum was based on 100 hours of work by two lawyers, multiplied by the counsel fee of $120 per hour.
In making his decision, the arbitrator rejected the insurer’s argument that the 100 hours of legal work for which the claimant sought to be reimbursed was too high and should have been docketed by the law firm.
Gogna was injured in a motor vehicle accident in April 2004 and received accident benefits from State Farm. A dispute arose concerning his entitlement to an income replacement benefit.
An arbitration date was set, but the arbitration did not go to a hearing. Instead, the insurer settled with Gogna, who received his income replacement benefits.
The insurer noted the arbitration was not complex and did not raise any new issues of law. Therefore, since legal counsel for Gogna did not document their hours, they should not be entitled to claim their expenses at the high range of a standard scale used to calculate legal hours.
“Counsel for the applicant indicated that the lawyers at the firm do not docket their hours, noting however that 100 hours includes time for two lawyers to prepare for the hearing set in May 2010 (which was adjourned) and for one lawyer to prepare for the hearing set for October 2010,” FSCO arbitrator Alec Fadel wrote. “It was also submitted that the significant amount of time a law clerk and junior lawyer had put into the file was not being claimed.”
Fadel calculated the 100 hours based on a standard 3:1 ratio of days spent preparing for an arbitration against the number of actual arbitration hearing days. In this instance, the hearing (later adjourned because of the settlement) was scheduled to last four days.
Ratios used in arbitration decisions to estimate preparation time range from 1:1 to 4:1, with 4:1 usually being the uppermost level of the scale.
“I reject the insurer’s suggestion that since the applicant has not provided dockets of their hours they should not be entitled to a ratio of 3:1,” Fadel ruled.
“Rule 79.2(c) of the Dispute Resolution Practice Code (DRPC) lists examples of supporting documentation that must be provided. The Rule does not make mandatory that applicant’s counsel keep dockets in order to be reimbursed at a higher rate, it merely indicates that if dockets are kept they must be provided.
“Also, I note that insurer’s counsel has not provided me with their docketed hours, which would have assisted in my determination of a reasonable number of hours to permit.”