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The Business of Personal Injury Law: The cost of expert reports in personal injury litigation and one solution

By Amanda Bafaro

January 29, 2019

When I left law school, I was ill prepared for what it meant to be a lawyer. I knew I wanted to litigate and was keen to make my mark. At the same time, however, I knew nothing about the actual practice of law, or more importantly the business of law.

What is the “business” of law? Well, it’s the ugly underbelly they don’t show you on Suits: The day-to-day grind of Law Society by-law compliance, Canada Revenue Agency remittances and obligations, and the management of expenses relative to earnings. This last item is especially important in personal injury litigation where lawyers work on a contingency fees basis and must fund cases while waiting for a positive outcome to recoup their investment of time and money.

As a young lawyer in a defence-oriented practice, this was never an issue. We rendered interim accounts to our insurer clients which were promptly paid. Any outlay of cash on a client’s behalf was temporary and reimbursed in short order.

Transitioning to a plaintiff focused practice was a game changer. Suddenly, decisions on when to spend, how much to spend, and on what we should spend took on new meaning. Did the case warrant the expense? Was it an assessable disbursement recoverable from the defence or would the client be forced to reimburse it from their damages?

At the same time, my early legal career followed the birth of the Threshold and with it an explosion in the number and type of expert reports required to prove your client’s case. The Threshold has not changed much in over 20 years, except that it is worse now than ever. The idea that a litigant would only call three experts at trial has long ago fallen by the wayside, and trial durations and the expense of litigation have both skyrocketed.

How much does an expert report cost? What is driving up those costs? What is reasonable? The answers to these questions depend in large part on the type of expert and the case. The cost of engineering reports will differ from economic loss reports and these will both differ from medical reports. The more complex the case, the higher the cost and the more experts required.

When I started out in plaintiff personal injury litigation, we negotiated deferred payment arrangements with most of the experts we used. It didn’t matter what type of expert. They all knew the game; if you wanted the work, you had to wait to get paid. However, those arrangements were predicated on wait times being generally reasonable at a time when you could still settle a soft tissue case with a phone call to the adjuster pre-litigation. Those days are long gone.

It is trite to say that times have changed, but they have. The litigation landscape is vastly different. We all know insurers mean business. Aviva’s “Defensible Program” is not just a nasty rumor; it’s real and so are its negative consequences for accident victims. We all know juries don’t like personal injury plaintiffs, that they generally don’t understand soft tissue injuries, or know about the nearly $40,000 deductible. We all know it takes forever to get to trial and that fewer cases are settling, with more than ever being abandoned.

How do these things impact the business of personal injury law? Well, for one, it means all those experts waiting for payment are no longer willing to do so. They are understandably concerned with delay and the possibility of not getting paid at all if the case is abandoned. The waterfall effect is that the lawyer, who previously built their cases with reports from experts waiting to get paid, must now front the cash. Where is all the money coming from?

With fewer settlements, reduced settlement values and longer durations, the cashflow needed to fund the necessary disbursements in real time just isn’t there, despite the insurer perpetuated misconception that plaintiff personal injury lawyers are rolling in money.

At the same time, the cost of the reports is through the roof. This is not to say they are overpriced, but they certainly can be. A case in point to illustrate: Just before leaving private practice in 2016, I needed an objective review of my client’s imaging in a large case. I retained a retired radiologist who came highly recommended. I sent him everything electronically and asked him to review the imaging and call me before putting pen to paper. He did call, but only to say he didn’t see anything on the imaging to explain my client’s impairment. I kindly thanked him and asked that he send me an account for his time. His bill was $7,000. Not an insignificant sum for a consult! Not to mention, as there was no report, this was not an amount I could recoup on settlement. The cost would need to be borne by my client. In the meantime, however, my firm had to cover the $7,000 from its own reserve and then wait indefinitely to recover it.

What about the lawyers who, excellent qualifications aside, simply don’t have the money to pay for these reports? Are their clients at risk because they cannot pay for reports needed to support or investigate the case?

In the recent medical malpractice case of Wolfe v. Lady Dunn Health Centre, 2019 ONSC 190, the Court granted summary judgment in favour of the defendant, noting that despite the passage of 4 years since commencement of her litigation, the Plaintiff had failed to serve any expert report. The Defendant argued that the failure to serve an expert report suggested that no such expert report could be obtained.

We don’t really know why Ms. Wolfe failed to serve an expert report. What if, contrary to the Defendant argument that no report could be obtained, it was simply that neither Ms. Wolfe or her lawyer could reasonably afford the expense of the report? What if the report was $7,000 up front, or double that, and neither had the money?

In rendering its decision in Wolfe, the Court noted:

“…it is clear from the existing case law that the Plaintiff not only requires an expert report in order to sustain the claim at trial but must produce one toward the beginning of the action. This is not a small detail that can wait several years until the matter is set down for trial. “The requisite expert opinion ought to be available at the front end of the litigation.

Here, not only has the Plaintiff failed to provide an expert report, but the Defendants have provided expert reports supporting their positions in defense. This is not a case where the Defendants have brought a motion to dismiss based on the Plaintiff’s lack of evidence but have otherwise been passive in their approach to the litigation. To the contrary, Defendants’ counsel have put together a strong record indicating that there is no negligence on any of the Defendants’ part.”

If the Court in Wolfe is correct, and we should assume for the moment they are, then the plaintiff lawyer better beware. You must produce your report toward the “front end of the litigation”. You cannot sit passively by because those defendants who pay their experts regularly (and abundantly) like mine did, are out there getting their reports, and if you aren’t prepared to do so, your clients are at risk.

What’s the solution, knowing that the reports are required but the cost is prohibitive and the experts who routinely offered deferred arrangements are no longer willing to do so? Some lawyers are electing to join others to reduce their overhead costs. Some are borrowing where they can. Some elect not to get the reports, or delay getting them until the last possible moment hoping to stretch payment until settlement. Some use Peter to pay Paul. At what point are you potentially compromising the case value by failing to get the reports required to “sustain the claim at trial”.

What I didn’t know then, but I do know now, is that there are reasonable and readily available funding solutions available to fill this gap, but most lawyers know nothing about them. BridgePoint Financial’s Expert AccessTM program is one of them. It offers lawyers the ability to defer payment until settlement with no interest for two years for reports from hundreds of experts they’ve partnered with across every specialty. If the case cannot be settled during the interest free period, the lawyer can either pay the invoice in full, and avoid any interest charges, or delay payment with interest.

Ultimately, the goal of any lawyer is to give your clients great service. This includes making the necessary investments to successfully advance their cases against well-funded defendants prepared to go the distance and taking ever more aggressive/obstinate positions. However, when the cost to do so becomes a barrier, you need to be resourceful and find alternative solutions that ensure your client’s case gets the attention it deserves. Third party funding specifically designed for plaintiff law firms such as BridgePoint’s Expert AccessTM program is certainly one option worth exploring.

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The Business of Personal Injury Law: The cost of expert reports in personal injury litigation and one solution