Civil Litigation Filing Levy - ALIA

Overview

The Alberta Lawyers Indemnity Association (“ALIA”) implemented the Civil Litigation Filing Levy (the “CLFL”) effective July 1, 2021, in response to civil litigation generating more claims and costs than any other area of the indemnity program. The terms of the CLFL are set out in the Transaction and Filing Levy Schedule.

ALIA’s Board of Directors approved the CLFL as a pilot project commencing with ALIA’s 2021-2022 policy year. The pilot is continuing.

The professional liability assessment (“Part A Levy”) has been reduced in each Policy Year since the 2021-2022 Policy Year to account for amounts expected to be collected under the CLFL. Because the Part A Levy is paid by every member who participates in Alberta’s mandatory lawyer indemnity program (“Subscriber”), the CLFL makes funding of the indemnity program fairer to all Subscribers.

Reporting and payment of the CLFL is quarterly, but will be moving to a pay-as-you-go model with the launch of the new Alberta Law Portal in January 2027. View this post for more information.

ALIA welcomes feedback relating to the CLFL prior to and during the pilot project via email.

How-To Guides

For Lawyers: Civil Litigation Filing Levy How-To Guide

For Firm Admin: Civil Litigation Filing Levy How-To Guide

Description

The CLFL is similar to levies that have been in place for many years in Ontario (LawPRO) and Newfoundland and Labrador, The CLFL is similar to levies that have been in place for many years in Ontario (LawPRO) and Newfoundland and Labrador, where civil litigation transaction levies of $100 and $75, respectively, are charged for commencing and responding to civil actions.

The CLFL involves charging a levy of $75 (plus GST) for commencing and responding to civil litigation (for example, filing statements of claim and originating notices [to the extent they launch an action]) in the Court of King’s Bench of Alberta. Filings that do not commence, or respond to, an action, for example, interlocutory applications, are excluded.

This amount was determined to be appropriate based on ALIA’s cost/risk analysis and comparing rates charged in other Canadian jurisdictions for similar levies. ALIA conducted extensive research and due diligence and an analytical/risk rating process in developing the CLFL.

The CLFL does not apply to self-represented litigants who do not use lawyers to file commencements or responses. It also does not apply to Alberta lawyers who do not participate in the mandatory indemnity program, such as in-house counsel.

Many actions where Subscribers are counsel of record are exempted from the CLFL on an access to justice basis or for other appropriate reasons. These exemptions are set out in the Transaction and Filing Levy Schedule and include the following:

Actions pertaining entirely to family law.
Actions commenced or responded to through pro bono or public legal clinics (including actions funded by them) as designated by the Law Society of Alberta (the “Law Society”) or otherwise approved by ALIA’s President and Chief Executive Officer, to the extent the applicable document is filed, or caused to be filed, by a Subscriber who is acting for a party through the pro bono or public legal clinic.
Actions under the Adult Guardianship and Trusteeship Act (Alberta) or to which Alberta’s Office of the Public Guardian and Trustee are party.
Statements of claim filed by Subscribers to collect outstanding accounts from their clients.
Actions that are fee reviews or assessment hearings before a review officer or assessment officer, including any appeal.
Arbitration, which is not included unless an application to the Court of King’s Bench is made in respect of the arbitration.
Criminal law matters.
Governmental or regulatory boards or tribunal matters that are not commenced in the Court of King’s Bench, Federal Court or the Tax Court of Canada.
All matters in the Alberta Court of Justice. (Appeals of Alberta Court of Justice decisions to the Court of King’s Bench of Alberta will be included.)
All matters in the Alberta Court of Appeal.
Filings that do not commence or respond to an action, for example, interlocutory applications.

Additional guidance pertaining to exemptions is also set out in the CLFL Information Chart.

The CLFL is ultimately intended to be revenue neutral to ALIA and is expected to continue to generate credits to be applied against the Part A Levy in future policy years.

Subscribers who are required to pay the CLFL may charge it to their client as a disbursement.

Payments of the CLFL are currently due quarterly throughout the year based on self-reports of Subscribers or their firms on an “honour system” basis.

Please note that with the launch of the new Alberta Law Portal in January 2027, Subscribers will be able to report their filings and pay the CLFL using a pay-as-you-go model [RP1] .

ALIA has been working on methods to ensure compliance with reporting and payment obligations. These may include the Law Society’s audit procedures and remedies under the indemnity program’s group policies for intentional avoidance of reporting assessable court filings and payment of the related CLFL.

The quarterly self-reports of assessable court filings will be submitted through a prescribed electronic form and require Subscribers and firms to list Court of King’s Bench action numbers for compliance purposes. The self-reporting forms are accessed through the Law Society’s Lawyer Portal.

Additional information on the foregoing is contained in the FAQ.

Please review the FAQs below for more information on the Civil Litigation Filing Levy (CLFL). View the How-To Guides for Lawyers and Firm Admin for steps on filing a levy in the Lawyer Portal, editing a filing submission and reviewing invoices.

The ALIA Board approved the CLFL in response to civil litigation generating more claims and costs than any other area of the indemnity program. As of the approval of the CLFL in late 2020:

For the five years ending with the 2018-2019 policy year, civil litigation was responsible for 45% of the total losses of the indemnity program, the largest proportion of any practice area, costing Subscribers an average of $9.9 million a year.
For the five years ending with the 2018-2019 policy year, civil litigation was responsible for 37% of the number of claims of the indemnity program, again the largest proportion of any practice area.
The average amount of each civil litigation claim (i.e., its severity) has steadily increased over the past 15 years. Civil litigation had the highest number of claims in each policy year since 1999, other than for three years (2007-2008 through 2009-2010) when mortgage fraud increased the number of real estate claims.

A key purpose of the CLFL is to reallocate some of the higher cost/risk associated with civil litigation. Since claim costs are a key driver in establishing the base levy payable by Subscribers, the higher costs of civil litigation are disproportionately shared by all Subscribers. Filing levies collected from transactions in high-cost / high-risk areas are expected to lower each Subscriber’s Part A Levy from what it otherwise would have been on an ongoing basis, because amounts collected under the CLFL (CLFL credits) will help offset some of the claim costs of the indemnity program. This is intended to make funding of the indemnity program fairer to all Subscribers.

[RP1]Link to CLFL post from ALIAdvisory

Civil Litigation Filing Levy FAQs

The terms of the CLFL are set out in the Transaction and Filing Levy Schedule. The CLFL Information Chart provides guidance to determine filings to which the CLFL applies. The chart is updated from time to time based on questions received from Subscribers.

Self-reports and payments may be made by individual Subscribers or their law firms. Self-reports for a quarter must be made within 30 days of the end of that quarter, and invoices must be paid to the Alberta Lawyers Indemnity Association by the following remittance dates:

April 30 (for remittances covering the three-month period ending March 31);
July 31 (for remittances covering the three-month period ending June 30);
October 31 (for remittances covering the three-month period ending September 30); and
January 31 (for remittances covering the three-month period ending December 31).

Please note that with the launch of the new Alberta Law Portal in January 2027, Subscribers will be able to report their filings and pay the CLFL using a pay-as-you-go model. This will eliminate the quarterly deadlines for the CLFL and the annual Dec. 31 suspension for failing to meet the quarterly deadlines. View this post for more information [RP1] .

Filings should be reported based on the date of the Court Clerk’s stamped filing date. ALIA recognizes there may be a delay between the date stamped on the filed document and the date on which the Subscriber or their firm receives confirmation of the filing. If confirmation does not occur until a subsequent reporting period, then the filing may be reported in that subsequent reporting period in which the Subscriber or firm becomes aware that the document is filed, although the date to be reported should still be based on the Clerk’s date stamp.

Alternatively, the filing could be added to the self-report for the current reporting period, if confirmation of the filing is received prior to payment of the invoice for that period. Once the invoice is paid, further entries for the reporting period cannot be added. View the How-To Guides for Lawyers and Firm Admin for steps on filing a levy in the Lawyer Portal, editing a filing submission and reviewing invoices.

No. You are not required to make any report or payment in respect of a quarter if you have no Civil Litigation Filings (i.e., filings to which the Civil Litigation Filing Levy applies) that were filed during the quarter. Please refer to section 3.6 of the Transaction and Filing Levy Schedule.

No. Only filings in respect of which the CLFL is payable need to be self-reported.

Until the self-report for a quarter is completed and the invoice paid, additional filings may be added to the self-report in the Law Society’s Lawyer Portal. Once the invoice is paid, further entries for the reporting period cannot be added.

If you need to have further entries added, please contact ALIA.

Yes. Section 3.6-3 of the Code of Conduct of The Law Society of Alberta and accompanying commentary permit the billing of disbursements and other charges, provided they are “fair and reasonable” and have been “disclosed in a timely fashion”.

The Law Society has confirmed the CLFL may be passed on to clients as a disbursement (as opposed to an “other charge”). Accordingly, if you are required to pay the CLFL, you may charge it to your client as a disbursement.

The Code of Conduct requires full disclosure in all financial dealings between lawyers and clients. One of these requirements is that a lawyer should provide to the client, in writing, before or within a reasonable time after commencing a representation, as much information regarding fees and disbursements, and interest, as is reasonable and practical in the circumstances, including the basis on which fees will be determined.

Lawyers should be sure to address the CLFL in writing with their clients in accordance with the Code of Conduct, for example, in their retainer letter.

The Canada Revenue Agency, in GST/HST Policy Statement P-209R entitled “Lawyers’ disbursements” (Lawyers’ disbursements – Canada.ca), provides guidance that the application of GST to lawyers’ disbursements depends on whether the disbursement is characterized as having been “incurred as agent” for a particular client or “not incurred as agent.” Because the reporting and payment of the CLFL is a Subscriber obligation (and not that of the client), even though the CLFL can be charged to a client as a disbursement on the client’s litigation matter, it should be characterized for GST purposes as not being incurred as agent.

When you pay the CLFL to ALIA, ALIA’s invoice includes the GST and you pay the GST on the CLFL. Because the CLFL should be characterized as not being incurred as agent, when you bill the CLFL to your client as a disbursement, it should be shown on the account as net of GST (as opposed to showing the GST as part of the disbursement itself). This amount is then included in the amount of your invoice to which GST applies. You should be entitled to claim any input tax credit which may be available to you for the tax portion of your CLFL expense. Please note that this method may not apply to all items in your invoice; in particular, expenses incurred as agent that are not subject to the GST. The Law Society has published general information on the application of GST to disbursements: Law Business Essentials: 6.5 Application of GST to Disbursements (lawsociety.ab.ca).

What if I can’t charge GST to my client?

Some entities are not required to pay the GST. Where such an entity is your client, your invoice will be different from the description above, because GST would not be applied to your fees or to expenses not incurred as agent and charged as disbursements.

For example, certain Alberta provincial government entities or offices are not required to pay the GST. Where such an entity or office is your client and you pay the CLFL to ALIA and charge the disbursement to your client, you still pay the GST on the CLFL to ALIA, and the CLFL should still be characterized for GST purposes as not being incurred as agent. However, you would not apply GST to your fees or the CLFL on your invoice. You should remain entitled to any input tax credit which may be available to you for the tax portion of your CLFL expense.

Other examples may include clients that are not resident in Canada for GST purposes, and different billing methods, and certification and record keeping requirements, may apply. You would need to consider the GST implications in each particular circumstance.

The foregoing is provided as general information only and not as tax advice. You should consider consulting a GST expert with respect to any particular client or retainer.

Section 3.6-3 of the Code of Conduct of The Law Society of Alberta and accompanying commentary permit the billing of disbursements and other charges, provided they are “fair and reasonable” and have been “disclosed in a timely fashion”.

Alberta’s Assessment Offices have confirmed to Alberta Lawyers Indemnity Association (“ALIA”) that the CLFL would be allowed on a review of lawyer’s charges, on the basis that the Law Society has confirmed it to be a disbursement. They have also confirmed they will treat it as recoverable by successful litigants, whether as disbursements for Schedule C costs or for solicitor and client or solicitor and own client costs. However, the Assessment Offices do not review all cost matters, some of which are reviewed on a desk application basis by Clerks of the Court of King’s Bench of Alberta.

The actual amounts raised by the CLFL may be affected by factors such as the number of exempts versus assessable filings, the number of filings by self-represented litigants, and the actual volume of litigation. If actual amounts materially differ from forecasted amounts, adjustments in future levies may be required.

Because amounts collected under the CLFL will help offset some of the claim costs of the indemnity program, the CLFL is expected to continue to generate credits to be applied against the Part A Levy in future policy years.

The terms of the CLFL are set out in the Transaction and Filing Levy Schedule. The CLFL Information Chart provides guidance to help determine those filings to which the CLFL applies. The chart is updated from time to time based on questions received from Subscribers.

A detailed list of scenarios can be found in the CLFL Information Chart. While the CLFL will be charged per filing of a commencement or response document, there may be examples where more than one Subscriber would be charged in commencing or responding to an action. For example, if more than one Subscriber in a firm is working for the same party to the litigation in respect of filing the statement of claim, only one CLFL would be charged. However, if different Subscribers represent multiple plaintiffs in different firms, a Subscriber in each firm would be charged. Subscribers and firms will be responsible for determining which Subscriber is responsible for the filing. For more information on how reporting and payment will be made, please see the FAQ above titled “How will civil litigation filings be reported and the CLFL paid?”.

Where more than one Subscriber in a law firm acts on behalf of the same party in respect of which the filing is made, only one of them is required to disclose the filing and pay the applicable CLFL. Accordingly, the Subscribers in the firm that are acting on behalf of the party may determine which one of them will report it and cause the CLFL to be paid.

The Rules of the Law Society of Alberta obligate all members to disclose the member’s transactions and filings and pay the applicable levy. As noted under the CLFL FAQ titled “What steps will ALIA and the Law Society take to ensure Subscribers self-report assessable filings and pay the CLFL”, failures to report an assessable filing or pay the CLFL would result in breaches of the Rules. Accordingly, it is important that the Subscribers in a firm acting on the matter ensure one of them reports the filing and pay the applicable CLFL. Further, failures to pay outstanding CLFL invoices will result in automatic suspensions in the same way and on the same dates as failures to pay the Part A Levy or any Part A Levy instalment. These suspensions would apply to the Subscribers identified in the related self-report as having filed the applicable filing.

The above-mentioned FAQ also notes that during the pilot period, ALIA will consider repercussions under the Group Policy for failure to comply with CLFL obligations. For example, ALIA will consider substantially increasing the deductible for claims against Subscribers involving civil litigation actions in which the Subscribers (or their firms) failed to report the filing and consider requiring the Subscribers to indemnify ALIA for some or all amounts paid out on such claims. If these kinds of repercussions were put into place, they would affect the Subscribers against whom the claim was made (as well as their firms), as opposed to the Subscriber who reported the filing. However, the identity of the Subscriber who reported the filing may be a factor in determining which Subscriber is responsible for paying an increased deductible or for indemnifying ALIA for amounts paid out on a claim. These matters are yet to be determined.

No. A new CLFL would not be charged unless that subsequent firm filed a document that commenced or responded to an action.

Only one CLFL would be payable for a statement of defence and counterclaim filed simultaneously, but a CLFL would be charged on each filing where they are filed separately. Further, a new CLFL would not be payable by a Subscriber who commences an action by a statement of claim which then files a defence to a counterclaim. A detailed list of various payment/exemption scenarios can be found in the CLFL Information Chart.

The CLFL does not apply to applications that commence or respond to surrogate proceedings and are non-contentious under Part 1 of the Surrogate Rules of the Court of King’s Bench, or which are not disputed. However, if the matter is, or becomes, disputed, it would then attract the CLFL.

For example, an application under Part 1 of the Surrogate Rules for any grant would not attract the CLFL. However, if the grant was then challenged, or a claim was brought against the estate and the personal representative did not agree to all or part of the claim, the matter has become disputed, and the Subscribers who had made filings that commenced or responded to the dispute would then be liable to self-report and pay the CLFL in respect of those filings.

The filing by a Subscriber or their law firm in the Court of King’s Bench of Alberta of an application to appoint a receiver by a creditor, and any response to that filed by a Subscriber or their law firm on behalf of a party (including the debtor/borrower), would attract the CLFL. Subsequent actions and reports by existing parties and by the receiver would be interlocutory unless they could be construed as commencing or responding to a new action (for example, the addition of a debtor or creditor).

Bankruptcy and CCAA proceedings would be treated in a similar fashion. For example, the CLFL would apply to the assignment into bankruptcy by a party and any response to that application by a creditor to that application, to the extent they were filed (or caused to be filed) in the Court of King’s Bench by a Subscriber or their law firm. The CLFL would also apply to the application by the company to seek protection under the CCAA and any response filed by a creditor to that application, again to the extent they were filed (or caused to be filed) in the Court of King’s Bench by a Subscriber or their law firm.

The CLFL applies to each filing that a Subscriber or their law firm files, or causes to be filed, with the Court of King’s Bench of Alberta that commences or responds to an action, subject to applicable exemptions. It does not apply to documents filed by self-represented litigants with no counsel of record.

The CLFL is an indemnity program assessment and does not apply to Members of the Law Society of Alberta who are exempt from the indemnity program pursuant to the Rules of the Law Society of Alberta and who do not pay the annual assessment.

Yes. The CLFL applies to each filing that a Subscriber or their law firm files, or causes to be filed, with the Court of King’s Bench of Alberta that commences or responds to an action, subject to applicable exemptions. This would include acting as an agent for another lawyer or firm, for example, a non-Alberta firm.

During the CLFL consultation process, ALIA received feedback that it should take steps to ensure Subscribers comply with their CLFL obligations. This was consistent with ALIA’s view. Steps to ensure compliance may differ between the two-year pilot period and following the pilot period.

Failures to report an assessable filing or pay the CLFL would result in breaches of the Rules of the Law Society of Alberta.

Failures to pay CLFL invoices will result in automatic suspensions in the same way and on the same dates as failures to pay the Part A Levy or any Part A Levy instalment. Payments of the Part A Levy are due on June 30 in each year, or on June 30 and December 31, where the Subscriber chooses to pay in instalments.

Payment defaults lead to automatic suspensions shortly after these due dates. Any CLFL invoice that remains unpaid as of June 30 or December 31 will be treated in the same fashion.

During the two-year pilot period, ALIA and the Law Society will consider additional steps to ensure compliance with the CLFL.

Audit procedures, which may be undertaken by the Trust Safety department of the Law Society, will be developed in the pilot period. These procedures will rely in part on the Court of King’s Bench action numbers listed in the self-report.

ALIA will also consider repercussions under the Group Policy. For example, ALIA will consider substantially increasing the deductible for claims against Subscribers involving civil litigation actions in which the Subscribers (or their firms) failed to report the filing. ALIA will also consider requiring the Subscribers to indemnify ALIA for some or all amounts paid out on such claims. ALIA understands that Subscribers (or their firms) may inadvertently miss reporting a filing and only intends to exercise these remedies in cases where Subscribers (or their firms) were attempting to avoid the CLFL. These remedies, if implemented, will not apply during the two-year pilot period.

ALIA will also consider whether a late fee should be charged where the CLFL was not reported or paid. This will depend on the nature of compliance issues that arise during the pilot period. No late fee will be implemented for the pilot period.

Reallocating the cost of high-risk practice areas has been a strategic topic for ALIA’s Board of Directors for several years. Depending on the success of the CLFL pilot project, ALIA may consider additional transaction levies for other high-risk practice areas, such as real estate.