As announced on June 30, 2020, ALIA is revising the Group Policy to narrow coverage for foreign law matters effective July 1, 2021 to reduce the indemnity program’s exposure to foreign law risk and to help keep the base levy low.
Currently, the Group Policy excludes claims arising from professional services provided from an office or other location outside of Canada unless the professional services are in respect of Alberta or Canadian law and are incidental to the Subscriber’s Alberta practice. This coverage is generous compared to some other provinces.
The indemnity program has significant exposure to lawsuits against Subscribers and firms in foreign countries, most notably the United States. These claims can be very costly and may increase the base levy for all Subscribers. The largest of these claims over the past several years involved firms that also had excess insurance for these foreign law claims.
The new revisions will help limit the indemnity program’s exposure to foreign law claims, which are paid for by all Subscribers through the annual levy. These changes will come into effect for the 2021-2022 policy year and are intended to limit the exposure of all Subscribers to errors made by some Subscribers in non-Canadian matters.
Under these revisions, there will still be coverage for Subscribers and firms sued outside of Canada in respect of Canadian legal advice, but these claims will be sub-limited to $250,000 per occurrence (as opposed to the general $1,000,000 limit for occurrences). Firms that expose themselves to greater foreign law risk should purchase excess insurance if they do not already have it. Firms that do have it should ensure the revisions to the Group Policy are addressed in their excess insurance.
Coverage will also require that the claim involve domestic law or areas of law that are expressly authorized by a foreign governmental or regulatory authority and approved by ALIA as set out in a general endorsement to the Group Policy. This latter provision recognizes that some practice groups – immigration lawyers and patent and trademark lawyers – are able to practice before United States governmental agencies pursuant to the rules of those agencies.
To read ALIA’s previous announcement on these changes, click here