Financial help lacking as COVID-19 shuts courts, kills legal work, lawyers say

Financial help lacking as COVID-19 shuts courts, kills legal work, lawyers say

TORONTO — The shutdown of much of the country’s court system due to the COVID-19 pandemic is taking a financial toll on many lawyers, and law societies are not doing enough to help, members of the profession say.

While trial lawyers are perhaps most affected, many in the trade say other sectors — such as real estate — are also feeling the pinch. Small firms and relative newcomers, they say, are most exposed.

Godfred Chongatera, a lawyer in a small three-person mixed practice in Halifax, said he estimates his overall business has fallen 35 to 40 per cent. Declining revenues and work have meant having to lay off two full-time staff.

“Who knows where this is going?” Chongatera said. “If this drags on for a long time, some or most sole practitioners will fold.”

Most courts across Canada have now been all but closed for months. Bail hearings and other emergency applications have continued, as has other legal work that can be handled in writing or remotely, but many lawyers only make money when they can go to court for hearings.

For the most part, legal firms are small businesses. Many lawyers work as sole practitioners, perhaps with a staff member. They generally don’t qualify for emergency federal aid, even though their own bills continue to roll in for rent, technology and other fixed expenses.

One significant cost is for practice and insurance fees that can add up to around $5,000 or $6,000 a year. Some law societies have deferred payments but the bills will still come due after months of reduced income.

The Federation of Law Societies of Canada did not respond to a request for comment.

A spokeswoman for the Law Society of Ontario said Friday its efforts to help include liaising with the federal government regarding its recent announcement of the expansion of the Canada Emergency Business Account.

“This makes loans under CEBA available to lawyers and paralegals who do not have annual payrolls of at least $20,000, provided they meet the new criteria,” Wynna Brown said.

Law society directors, known as benchers, have also decided to take no pay for governance work for the time being, she said.

The pandemic has had a number of wider impacts on the profession, lawyers say: many clients can no longer afford legal services, new cases are hard to come by and there have been problems getting paid for work already rendered.

Mylene Lemieux, president of the 5,000-member Young Bar of Montreal, said those doing insolvencies or contract law, for example, are managing. Those dependent on court activity, especially solo practitioners, are hurting. Even employees of national law firms, she said, have taken pay cuts of up to 20 per cent or been laid off.

“We are concerned by the situation,” Lemieux said. “It’s been very difficult.”

Bill Trudell, chairman of the Canadian Council of Criminal Defence Lawyers, said fees should be forgiven. He also urged consideration for one-time emergency grants.

Importantly, lawyers say, law societies should make it clear they understand the problem.

“There’s no suggestion that the law society is doing anything to reduce its budget, its expenditures,” said Richard Fowler, a criminal lawyer in Vancouver. “Even symbolically, it would matter to all of the members if there was some belt-tightening going on to set an example, to show that they appreciate the hardship that many lawyers are going through.”

Larry Banack, an emeritus bencher of the Law Society of Ontario, said the society can and should be helping. Expected expenditures by the regulator for events such as the call-to-the-bar ceremony and monthly in-person meetings of benchers are not happening, he said.

“There are reserves. There is money available,” Banack said. “It certainly wasn’t intended for this purpose, but perhaps could be realigned or redesignated in a way that could reflect the financial trauma the lawyers and paralegals are experiencing.”

Banack noted that car-insurance companies have been giving pandemic-related rebates.

“There’s less risk of accidents if the cars are in the driveways,” Banack said. “Lawyers are in their driveways. They simply aren’t practising.”

A spokeswoman for LawPro, which insures Ontario’s lawyers, agreed firms are seeing changes in demand — down or up — depending on their field. There’s no indication the pandemic will lead to fewer or cheaper insurance payouts down the road, she said.

“Typically, economic downturns have driven up the cost of claims,” Naomi Dummett said. “Our claims expenses increased by approximately 15 per cent during the 2008-2009 recession.”

This article by The Canadian Press was first published on May 22, 2020.

Colin Perkel, The Canadian Press

Coronavirus

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