September 30, 1999

To:Administration Committee

From:Chief Financial Officer & Treasurer

City Solicitor

SUBJECT:EXTERNAL LEGAL FIRMS RETAINED FOR INSURANCE CLAIM DEFENCE - REQUEST FOR PROPOSALS SELECTION RESULTS

Purpose:

This report provides information and requests approval on the results of the Request for Proposals for the retention of external legal firms to supplement the work of the City's Legal Services for the defence of insurance claims, including the terms and conditions and recommended successful legal firms.

Funding Sources, Financial Implications and Impact Statement:

There are no immediate funding implications relating to this report. Costs of insurance claim defences are ultimately reflected in corporate insurance charges to Departments and applicable Agencies, Boards and Commissions. The annual billings for external legal firms between the years 1993-1998 were between $2,205,491 and $3,831,163, each year.

Recommendation:

It is recommended that the City of Toronto enter into an agreement with the following successful proponents, in a form and content that is satisfactory to the City Solicitor:

Borden & Elliot

Forbes Chochla Trebuss Aikins

Lerner & Associates

Paterson, MacDougall

Shibley Righton

Smith Lyons

Council Reference/Background/History:

At its meeting on February 19, 1999, the Budget Committee had before it a joint report (February 2, 1999) from the Chief Administrative Officer and the Chief Financial Officer & Treasurer, providing specific information relating to external legal firms retained by the City of Toronto for insurance claim defence purposes and a recommendation that the report be received for information. The Budget Committee requested the Chief Administrative Officer and the Chief Financial Officer & Treasurer to report back to the Budget Committee on:

savings pertaining to the hiring of external legal firms retained by the City of Toronto for insurance claim defence purposes; and

when and how they intend to amalgamate Requests for Proposals for these services.

The Corporate Services Committee at its meeting on May 20, 1999, had before it a joint report (May 11, 1999) from the Chief Administrative Officer, Chief Financial Officer & Treasurer and City Solicitor, providing specific information relating to the hiring of external legal firms retained by the City of Toronto for insurance claim defence purposes; and recommending that this report be received as information and forwarded to the Budget Committee for information.

The Corporate Services Committee reports, for the information of the Budget Committee having:

(i)received the aforementioned report;

(ii)forwarded a copy of the foregoing joint report to the Budget Committee for information; and

requested the appropriate staff to review the Request for Proposals (RFP) criteria in more detail prior to issuing the RFP and report to the Administration Committee, for approval, on the results of the RFP, including its terms and conditions and recommended successful legal firms.

Comments and/or Discussion and /or Justification:

Pursuant to the request of the former Corporate Services Committee, a five member Selection Committee was established to review and further develop the RFP terms and conditions. The Selection Committee members consisted of the City Solicitor; and from Finance, the Manager, Insurance & Risk Management, the Claims Coordinator, the Senior Risk Management Analyst and a Senior Purchasing Officer; and a representative of the City's liability insurance company.

The Purchasing and Materials Management Division of Finance provided guidance in the preparation of the document and issued the RFP on behalf of the client department.

The selection criteria was developed to reflect the City's need for qualified legal firms to provide a variety of insurance-related legal services and to assist the City in implementation of its claims and risk management programs. Responding law firms were expected to demonstrate a substantial history and established practice in the defence of municipalities in Ontario and have an established and proven track record in the defence and management of insured claims.

The RFP advised proponents that the City of Toronto has a Legal Services Division, which currently provides insurance defence work. The intent of this RFP is to ensure that adequate supplementary legal services are available to the City when it cannot be provided by members of the City's Legal Services due to expertise, overload, complexity, timing and conflict reasons. At this time it is not known the number of insurance claims which will be sent to the successful proponents. There is no guarantee of the volume or regularity of claims, which will be assigned. Staff from Insurance & Risk Management and Legal Services work together to determine the volume and nature of claims defence work which is assigned to the City's Legal Services and which insurance claims should be assigned to external legal firms.

The RFP contemplates the City's period of retention of the proposed external legal firms services to be a term of three years with the City having an option to extend the retainer for two one-year terms.

Selection Criteria / Evaluation Process

The RFP was advertised in the August 4, 1999 Globe and Mail newspaper and on the City's internet website and was made available to interested proponents for pick up at Toronto City Hall, Purchasing & Materials Management Division. Proposals were required to be submitted no later than 12:00 noon, August 18, 1999. A copy of the newspaper advertisement was also faxed to the fourteen legal firms, which were retained by the former municipalities for insurance claims defence work (Incumbent External Legal Firms). These firms are:

Incumbent External Legal Firms

Retained By Former Toronto Municipalities

(Please note that all listing of external legal firms contained in this report is presented alphabetically and reflect no other order.)

Blaney McMurtry Stapells Friedman(Toronto)

Borden & Elliot(Toronto, York, Metro and Etobicoke)

Deacon Spears(Toronto)

Forbes Chochla Trebuss Aikins(North York)

Glaholt & Associates(Metro)

Hicks Morley Hamilton Stewart Storie(Toronto)

Lerner & Associates(Metro)

Loopstra Nixon & McLeish(East York)

McCarthy Tetrault(Scarborough)

Paterson, MacDougall(Toronto)

Reble, Ritchie, Green & Ketcheson(Etobicoke)

Shibley Righton(Toronto)

Smith Lyons(Metro)

Weir & Foulds(Metro)

At the close of the submission date, proposals were received from eleven external legal firms. Of the firms submitting a proposal:

nine were from the incumbent firms listed above; and

two were from firms currently not defending the City's claims.

Of the fourteen incumbent firms, five choose not to submit proposals.

External Legal Firms Responses to the RFP

The external legal firm of Weir & Foulds picked up an RFP, however after consideration, provided the City with a Notice of "No Submission".

The selection criteria were developed to reflect the City's insurance claims legal defence requirements and formed the substance of the proposal content. Each proponent was required to respond to seven proposal content categories, by utilizing charts, tables and spreadsheets wherever possible, and at a total maximum length of ten pages plus Curriculum Vitae's. Points were assigned to each of the seven categories, which total 100 points. The available points for each category was outlined in the RFP and made known to the respondents to assist them with preparing their response. The Selection Committee then graded the proposals based on the pre-determined schedule of points associated with each category. Attached is Appendix "A" entitled Proposal Evaluation Form - P-47-99.RFP - Legal Services For Insurance Claim Defence, which outlines the seven evaluation criteria categories along with the available points. Each of the seven evaluation criterion were carefully developed jointly between Finance and Legal Services staff to capture the specialities required to defend large municipal claims as a supplemental service to that provided by the City's Legal Services Division. Although hourly fees of external legal firms was an evaluation criterion, it was not considered to be the most significant attribute required by the City from external legal firms defending insurance claims.

A benchmark of 75% was established, as the minimum points required for recommendation as a successful proponent. In addition, the 75-point separator qualified enough firms to meet the expected claims volumes, which would be referred externally and provided the required expertise. The 75% benchmark ensures that there is sufficient diversity and number of firms to supplement the City's Legal Services. The following firms achieved evaluation points of 75 or more:

Borden & ElliotPaterson, MacDougall

Forbes Chochla Trebuss AikinsShibley Righton

Lerner & AssociatesSmith Lyons

It should be noted that open claim files currently being defended by incumbent firms choosing not to submit a proposal and incumbent firms not recommended herein will remain with those firms until the claim is concluded. It would not be economically or strategically advantageous to transfer an open claim file to another external legal firm because of this RFP process. It is the intention of Insurance & Risk Management, Finance, to utilize external legal firms for insurance claim defence only to supplement the City's Legal Services. The annual billings for external legal firms to perform insurance claims defence work during the years 1993-1998 was between $2,205,491 and $3,831,163, each year. Future amounts for external legal firm billings will be directly related to:

City's Legal Services' capacity to accept claims defence work;

Specific expertise needed not found within the City's Legal Services Division;

Complexities of the claims;

Severity and Frequency of claims;

Conflict of Interest matters.

The key to determining cost effectiveness with insurance claim defence from both internal and external solicitor is by managing the litigation process through Litigation Plans and Claims Reserve Budgets. Insurance & Risk Management staff and the City's insurance adjusters are monitoring and controlling the litigation process to ensure cost effectiveness.

The Manager, Fair Wage and Labour Trades Office, has reported favourably on the firms recommended.

Conclusion:

It is recommended that the City of Toronto enter into a contract with the six successful proponents identified above, in a form and content that is satisfactory to the City Solicitor.

Contact Name:

Jeff Madeley, Manager, Insurance & Risk Management, 392-6301

E-mail: jmadeley@mta1.metrodesk.metrotor.on.ca

Len Brittain, Director, Treasury & Financial Services, 392-5380

E-mail: lbrittai@toronto.ca

Lou Pagano, Director Purchasing and Materials Management Division, 392-7311

E-mail: lpagano@toronto.ca

H.W.O. Doyle, City Solicitor, Legal Services Division, 392-7239

W.A. LiczykH.W.O. Doyle

Chief Financial Officer & TreasurerCity Solicitor

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