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Full disclosure is the best route

We go through life largely by trial and error, learning “life lessons” along the way.

Some life lessons can be very expensive, such as when we learn that when an investment opportunity seems too good to be true, it probably is.

Why, by the way, have I needed to learn that lesson more than once?

One life lesson I wish my children, particularly my daughters, could learn by other means than by trial and error, is the importance of recognizing the interests of those we deal with.  I’m thinking of the particularly powerful interests of adolescent boys.

I actually bring that one up with potential clients when, after considering their particular circumstances, I recommend that they hire a lawyer to handle their personal injury claim.  The obvious interest that my potential clients must consider is that I financially benefit from taking on personal injury cases.  I point out that my interest in recommending that they hire a lawyer may be in conflict with their best interests.

I do my best to identify and resolve that potential conflict of interest by recommending that each and every potential client interview other lawyers before making a decision of whether or not to get me involved in their claim.

I also bring it up often when advising my clients on whether or not a settlement offer is a fair one.  I point out that a lawyer acting on a percentage fee basis benefits from settling cases, and that therefore my interest in settling the case may be in conflict with their best interests.

I do my best to identify and resolve that potential conflict of interest by carefully reviewing the reasons for my advice and, as may be appropriate, recommending that my client obtain a second legal opinion.

I believe in full disclosure.  Unfortunately, in most cases, including those I’ve given, the law doesn’t require it.  Adolescent boys are not required by law to disclose to young ladies that they’ve got one thing on their mind, and that therefore their interests may be in conflict with the interests of the young ladies they encounter.

Neither are personal injury lawyers required to disclose the potential conflicts I’ve identified.

One conflict of interest that gets under my skin the most, because in my view it results in the greatest unfairness in car crash settlements in this province, is the conflict of interest faced by insurance adjusters.

On the one hand, insurance adjusters dealing with crash claims owe a duty to injured victims to administer their entitlement to a basic set of “no fault” benefits in good faith.  I call that basic set of benefits “no fault” benefits because they are available to almost everyone who is injured in a crash, even if at fault.

When I say a “basic” set of rights, I mean it.  In most cases, these “no fault” benefits are limited to only a portion of treatment expense.  They do not include, for example, any compensation for “pain and suffering”, nor compensation for income loss apart from a meagre stipend of total temporary disability benefits.

On the other hand, when dealing with an injured victim who was innocent of fault in a crash, the exact same adjuster’s sole allegiance is to the insurance company to pay out as little as possible in compensation for the bulk of the claim which is over and above the “no fault” benefits, even if it is unfair.  It is this portion of a claim that is generally referred to as the “settlement”.

An example of when those two interests conflict is when the adjuster is considering whether or not to authorize that additional two months of physiotherapy treatment.  On the one hand, the adjuster owes a duty of good faith to authorize medically recommended treatment.  On the other hand, how much is that adjuster impacted by the fact that by authorizing the additional care, the adjuster is adding credibility to the claim the adjuster will later be trying to settle for cents on the dollar?

In my view, insurance adjusters ought to disclose those conflicting interests to injured victims.  Further, when telling injured victims what their claims are worth, essentially giving them legal advice, in my view insurance adjusters ought to encourage injured victims to obtain independent advice.

The reality is that, quite to the contrary, those conflicting interests are never disclosed and insurance adjusters actively discourage injured victims from getting independent advice.

I think that’s wrong.  I hope that by pointing out these conflicting interests I might be able to save some people from learning this particular life lesson the hard way.

Published February 27, 2011 in the Kelowna Capital News

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