6.                   COMPREHENSIVE LEGAL SERVICES REPORT – JANUARY TO June 2011

 

Rapport général sur les services juridiques – de janvier à juin 2011

 

 

COMMITTEE RECOMMENDATION

 

That City Council approve Legal Services’ receipt of the $1.95M from the Ottawa Lynx litigation settlement to offset litigation costs.

 

 

RECOMMANDATION DU COMITÉ

 

Que le Conseil municipal approuve la rentrée de fonds de 1,95 M$ des Services juridiques, issue du règlement du litige concernant les Lynx d’Ottawa, visant à réduire les principaux coûts liés au litige.

 

 

 

DOCUMENTATION

 

1.      City Manager’s report dated 10 August 2011 (ACS2011-CMR-LEG-0014).

 

Report to/Rapport au:

 

Finance and Economic Development Committee

Comité des finances et du développement économique

 

10 August 2011 / le 10 aout 2011

 

Submitted by/Soumis par: Kent Kirkpatrick

City Manager / Directeur Municipal

 

Contact Person/Personne ressource : M. Rick O’Connor, City Clerk and Solicitor/

Greffier et Chef du contentieux

 (613) 580-2424 x21215, rick.oconnor@ottawa.ca

 

City-Wide / / A l’échelle de ville

                 Ref N°: ACS2011-CMR-LEG-0014

 

 

SUBJECT:

COMPREHENSIVE LEGAL SERVICES REPORT – JANUARY TO June 2011

 

 

OBJET :

Rapport général sur les services juridiques – de janvier à juin 2011

 

REPORT RECOMMENDATION

 

That the Finance and Economic Development Committee recommend that City Council approve Legal Services’ receipt of the $1.95M from the Ottawa Lynx litigation settlement to offset litigation costs.

 

 

RECOMMANDATION DU RAPPORT

 

Que le Comité des finances et du développement économique recommande au Conseil municipal d’approuver la rentrée de fonds de 1,95 M$ des Services juridiques, issue du règlement du litige concernant les Lynx d’Ottawa, visant à réduire les principaux coûts liés au litige.

 

 

EXECUTIVE SUMMARY

 

This Report presents the first comprehensive overview of the Legal Services function in the City Clerk and Solicitor Department since the City was amalgamated in 2001.  Whereas Legal Services previously supplied three separate reports detailing its litigation record, claim settlements, and legal outsourcing costs, respectively, these will now be combined into a single document and provided to Council on a quarterly basis in order to fulfill the Department’s commitment to accountability and transparency. 

 

 

Since November 2008, Legal Services has formed part of the City Clerk and Solicitor Department.  Legal Services was originally conceived as a public-private partnership combining a blend of core in-house legal staff supplemented by external service providers.  More recently, it has grown to encompass functions beyond purely legal ones, with the assumption of responsibility for claims, insurance and labour relations. The two branches that serve the legal services function within the Department, namely Litigation and Labour Relations and Corporate, Development and Environmental Law, provide a wide range of core legal support to City Council and other departments and branches in the organization.

 

The Litigation and Labour Relations Branch is made up of a team of 50 staff dedicated to defending and advancing the City’s interests in a wide variety of litigation and other legal and labour relations matters. Comprised of Lawyers, Lay Prosecutors, Law Clerks, Labour Relations Consultants, Claims Investigators and support staff, the Branch is focussed on achieving fair and equitable results in all matters.  By concentrating on resolving cases through negotiation and alternative dispute resolution, Litigation and Labour Relations staff are able to keep more than 90% of all litigation matters in-house, with only a limited number of cases being referred to external legal counsel.  The Branch’s record in litigation, which is detailed in the Report, remains consistently high, with a rate of success above 86% in decisions by courts and administrative tribunals.

 

More recently, the Litigation and Labour Relations Branch has assumed responsibility for areas outside the traditional concept of “legal services”. The addition of the Claims Unit in 2007 and the Labour Relations Unit in 2008 has allowed the Branch to better align both the claims and grievance processes, recognizing them as the early stages of what may later become full-fledged litigation matters. This holistic approach has helped to improve labour relations in the case of the grievance process, as well as bringing a more unified approach to claims administration.

 

The Corporate, Development and Environmental Law (“CDEL”) Branch consists of a team of 30 staff made up of Lawyers, Law Clerks, an Insurance Specialist, a Legal Conveyancer and a Legal Assistant.  This Branch provides expansive and diverse core legal services to support day-to-day operations, as well as key priorities of the City in a number of areas.  Lawyers in the CDEL Branch provide legal and procedural support to a number of the City’s Standing Committees, review and draft hundreds of agreements annually, and aid in the acquisition of properties for community projects and the disposal of surplus properties to maximize City revenues.

 

The Development Law Unit in the Branch provides direct support to the One-Stop Service Initiative.  Staff provide assistance to the planners when questions arise, aid in the delivery of the legal aspects of the One-Stop Service, and are collectively responsible for the preparation, review and registration of a variety of agreements for both planning and non-planning matters.   

 

Legal Services’ management of overall legal expenditures ensures that the City’s legal requirements are met in the most cost effective manner possible.  In terms of legal costs, which in Q1and Q2 2011 totalled approximately $4.4M due in large part to ongoing work in support of the Lansdowne Partnership Plan and the Friends of Lansdowne Inc. litigation, these have been contained through the continued use of a Strategic Standing Offer (“SSO”) for external legal services.  Renegotiated in late 2010, the SSO provides cost-certainty through fixed-rate pricing from the City’s two external service providers, Heenan Blaikie (litigation and labour law portfolios) and Borden Ladner Gervais (corporate commercial and development law portfolios). The new SSO also contains a number of other innovative features designed to ensure excellence and cost effectiveness in the provision of legal services.

 

According to the most recent report (2009) by the Ontario Municipal Benchmarking Initiative (“OMBI”), the cost of the City of Ottawa’s legal services is the lowest of any large Ontario municipality.  In fact, of the 14 municipalities participating in OMBI, only one Ontario municipality with a population of about 135,000 recorded a cost per hour of internal and external legal services lower than the City of Ottawa’s $127/hour and $218/hour, respectively. The City of Ottawa’s legal services costs were also well below the median $139/hour for in-house counsel and $330/hour for external legal services recorded by OMBI for 2009. 

 

 

FINANCIAL IMPLICATIONS

 

At the end of this year’s first quarter, Legal Services had a year-to-date deficit of $473K as reported to the Finance and Economic Development Committee on June 17th (ACS2011-CMR-LEG-0032).  The Q1 deficit is related to the external legal costs associated with three significant litigation files; namely, the Urban Boundary OMB hearing and two employment law cases arising from the Keefer Regulator incident.  At the end of the second quarter, the forecasted deficit is expected to increase to approximately $1.6M, as a result of these and other significant litigation that Legal Services has had to defend, including the Friends of Lansdowne Inc. case.

 

The Finance Department supports the recommendation from Legal Services that funds from the Ottawa Lynx Litigation settlement of $1.95M be applied to Legal Services to offset these and other unanticipated costs to year-end, therefore avoiding a request to fund these expenses from the One-Time Unforeseen Provision.

 

 

RÉSUMÉ

 

Ce rapport présente la première description complète de la fonction des Services juridiques dans le Service du greffier municipal et chef du contentieux depuis le fusionnement municipal de 2001.  Les services juridiques fournissaient jusqu’ici trois rapports distincts relatant en détail les dossiers des litiges, les règlements obtenus, ainsi que les coûts des ressources extérieures en services juridiques.  Conformément à l’engagement d’imputabilité et de transparence dudit Service, lesdits rapports seront désormais regroupés en un seul document et soumis trimestriellement au Conseil municipal.

 

Depuis novembre 2008, les Services juridiques font partie du Service du greffier municipal et chef du contentieux. Conçus à l’origine comme un partenariat public-privé utilisant du personnel juridique interne et des fournisseurs de services externes, les Services juridiques ont récemment connu un élargissement de mandat englobant des fonctions dépassant les seules fonctions juridiques. Ils assument désormais des responsabilités associées aux plaintes, aux questions d’assurance et aux relations de travail.  Il y a donc deux directions qui assument les fonctions des services juridiques: la Direction des relations de travail et des litiges et la Direction du droit des sociétés, de l'aménagement et de l'environnement. Ces deux directions fournissent un vaste éventail de services de soutien juridique au Conseil municipal et à d’autres services et directions de la Ville.

 

La Direction des relations de travail et des litiges comprend une équipe de 50 employés qui défendent les intérêts de la Ville et s’efforcent de faire avancer les dossiers dans un vaste éventail de litiges et d’affaires juridiques liés aux relations de travail. Cette Direction comprend des avocats, des poursuivants non juristes, des commis au contentieux, des consultants en relations de travail, des enquêteurs de sinistres et du personnel de soutien. Elle a pour mandat d’obtenir des résultats justes et équitables dans toutes les affaires. Ses membres se concentrent surtout sur la résolution des cas au moyen de la négociation et d’autres moyens de résolution des différends; ainsi, le personnel réussit à traiter plus de 90 % des litiges à l’interne. Seulement un petit nombre de cas sont confiés à des conseillers juridiques externes. La performance de la Direction en matière de règlement des litiges, qui est présentée en détail dans le rapport, demeure très bonne, avec un taux de succès supérieur à 86 % relativement aux décisions rendues par les tribunaux et instances administratives.

 

Plus récemment, la Direction des relations de travail et des litiges a assumé la responsabilité de diverses tâches hors des compétences traditionnelles des « services juridiques ». L’ajout en 2007 de la section des plaintes et en 2008, de la section des relations de travail a permis à la Direction de mieux aligner les processus de plaintes et de griefs et de les repérer bien avant qu’ils ne débouchent sur de véritables litiges. Cette démarche intégrée a aidé à améliorer les relations de travail dans le cas des processus de griefs et à instaurer un traitement plus homogène dans l’administration des plaintes.

 

La Direction du droit des sociétés, de l'aménagement et de l'environnement, se compose d’une équipe de 30 personnes, soit des avocats, des adjoints judiciaires, un expert en assurance, un praticien de l’immobilier et un assistant juridique. Elle fournit les principaux services juridiques, diversifiés et élargis, pour appuyer les activités quotidiennes, et traite aussi diverses affaires prioritaires, dans nombre de secteurs, pour la Ville. Les conseillers juridiques de la Direction fournissent un soutien juridique et procédural aux comités permanents de la Ville. Ils examinent et préparent des centaines d’ententes annuelles. Et ils aident à l’acquisition de terrains pour des projets communautaires et à la cession de propriétés excédentaires, pour maximiser les revenus de la Ville.

 

La section de l’urbanisme et de l’aménagement de la Direction fournit un soutien direct à l’initiative du Centre de service à guichet unique. Des employés offrent leur assistance aux planificateurs quand des problèmes surgissent; ils aident à régler les aspects juridiques du service en temps opportun; et ils sont collectivement responsables de la préparation, de l’examen et de l’enregistrement d’une variété d’ententes pour les affaires liées à l’aménagement et pour d’autres qui n’y sont pas liées. 

 

La gestion des dépenses globales des Services juridiques permet de garantir que toutes les exigences juridiques de la Ville, notamment le soutien aux opérations pour les unités d’affaires et de services, sont satisfaites de la manière la plus rentable possible. Il en résulte que le coût horaire des services juridiques de la Ville d’Ottawa est parmi les plus bas des grandes municipalités d’Ontario. Les coûts juridiques externes pour les deux premiers trimestres de 2011 se sont élevés à environ 4.4 millions de dollars en tout.  Ce montant est largement imputable aux travaux d’appui courants au «Plan de partenariat Lansdowne » et au litige « Friends of Lansdowne Inc. ».  La Ville est tout de même parvenue à limiter ces coûts en recourant à l’usage régulier d’une « Offre à commandes stratégique » (OCS).  Cette offre à commandes stratégique a été renégociée à la fin de 2010.  Elle assure une certitude relativement au coût, grâce au prix à taux fixe négocié avec les deux fournisseurs externes de la Ville: Heenan Blaikie (dossiers litiges et droit du travail) et Borden Ladner Gervais (dossiers services commerciaux et aménagement). La nouvelle OCS comporte en outre bien des aspects novateurs en vue d’assurer l’excellence et le coût-efficacité des  services juridiques.

 

Selon le plus récent rapport (2009) de « l’Initiative d’analyse comparative des services municipaux de l’Ontario » (IACSM), le coût des services juridiques de la Ville d’Ottawa est le plus bas de toutes les grandes municipalités. En fait une seule des 14 municipalités participant à l’IACSM, laquelle a une population de 135 000 habitants, a enregistré pour des services juridiques internes ou externes des coûts horaires plus bas que ceux de la Ville d’Ottawa.  Ceux-ci se situent à 127$ et 218$ de l’heure respectivement. En 2009, selon l’IACSM, les coûts des services juridiques de la Ville d’Ottawa étaient bien en dessous de la médiane de 139$ de l’heure pour un avocat interne et de 330 $ de l’heure pour des services juridiques externes.

 

 

RÉPERCUSSIONS FINANCIÈRES

 

À la fin du premier trimestre de l’année en cours, les Services juridiques prévoyaient un déficit de 473 000 dollars pour l’exercice en cours, tel que rapporté le 17 juin au Comité des finances  et du développement économique (ACS2011-CMR-FIN-0032). Le déficit prévu est lié aux coûts des services externes associés à trois importantes affaires en litige : soit l’audience à la Commission des affaires municipales concernant les limites de la zone urbaine et deux affaires relevant du droit du travail qui découlent de l’incident du régulateur Keefer. On s’attend à ce que le déficit atteigne environ 1,6 million de dollars, à la fin du deuxième trimestre, en raison de ces affaires et autres litiges importants que les Services juridiques ont eu à traiter,  notamment avec les « Friends of Lansdowne Inc.»

  

Le Service des finances appuie la recommandation des Services juridiques à l’effet que les fonds provenant du règlement du litige avec les Lynx d’Ottawa, au montant de 1,95 million de dollars, servent à compenser ces coûts et autres frais imprévus d’ici à la fin de l’exercice, évitant ainsi le dépôt d’une demande de financement à la Réserve pour imprévus, en vue de les couvrir.

 

 

INTRODUCTION

 

This is the inaugural Comprehensive Legal Services Report for the consideration of the Finance and Economic Development Committee (“FEDCO”) and City Council.  It is for Q1 and Q2 of 2011 (i.e. January 1st to June 30th, 2011) and, henceforth, will be provided to the Committee and Council on a quarterly basis.  The new report format originates from a Motion that was passed by Council on April 27th, 2011, that directed, “the City Clerk and Solicitor to combine the existing Claims Settlements, Litigation Record and External Legal Costs reports into a single comprehensive report.”

 

Therefore, the primary purpose of the report is to outline to Committee and Council the Department’s main responsibilities, along with appropriate metrics so as to provide an open and transparent accounting of Legal Services’ responsibilities and expenditures, both in-house and externally. 

 

 

BACKGROUND

 

Origins

 

The establishment of a fulsome in-house legal services function within the City dates back to the days of the Ottawa Transition Board (“Board”), prior to amalgamation on January 1st, 2001.  The Board drew upon the collective experiences of eleven of the twelve municipalities within the Region of Ottawa-Carleton that retained either internal or external legal services. 

 

Catalyst Consulting (“Catalyst”), a national industry leader in the organization and development of corporate and government in-house legal departments, was retained in 2000 by the Board to recommend a design for the new City’s legal services function.  At that time, Catalyst conducted a thorough review of the existing legal services providers, which included two in-house law departments as well as numerous external law firms.  Only the Region of Ottawa-Carleton and the City of Ottawa had internal law departments at the time of amalgamation.

 

Ultimately, as proposed by the Board and endorsed by City Council, the legal services function was established as a “best in class service” conceived as a public-private partnership with an ample in-house complement of professional and paralegal staff combined with external legal resources. The use of Law Clerks to provide paralegal services is considered a best practice within the legal services industry.  As such, the 2001 Legal Services Branch included Law Clerks providing services in the areas of real estate, litigation and planning and development. 

 

The mandate of Legal Services is to provide timely, accurate and useful legal advice and representation to support Council and the City’s various portfolios, departments and branches in their respective initiatives and day-to-day operations.

 

Current Legal Structure and Operations

 

Currently, in-house Legal Services staff provide a broad range of core services to City Council, its Standing Committees, the Police Services Board, Ottawa Community Lands Development Corporation, the Ottawa Public Library, the Board of Health and the Transit Commission as well as the portfolios, departments and branches of the City.  A “core service” is defined as one that is traditionally found within the municipal law context. In general, this would include legal advice to Committees and Council, as well as transactional work such as the preparation of by-laws, various agreements and the defence of the City in all manner of legal and quasi-judicial proceedings.  Simply put, the role of Legal Services is to ‘help make municipal business happen’ by supporting all of the City’s numerous functions and operations. The complete list of core services is set out in Document 1 to this report.

 

In 2006, the Legal Services Department was reorganized along the British System of “Barristers” and “Solicitors”.  The Litigation and Labour Relations Branch is responsible for all manner of Barristers’ work, including the defence of the City in all legal and quasi-judicial proceedings before various courts and tribunals.  The Corporate, Development and Environmental Law Branch (“CDEL”) is responsible for all types of Solicitors’ work such as by-law preparation, real estate transactions, the drafting and review of contracts and agreements as well as the preparation of site plan and subdivision agreements.  

 

A more detailed description of the two Branches and their respective work is set out below:

1.    Litigation and Labour Relations Branch

 

The Litigation and Labour Relations Branch provides an integrated approach to legal issues ranging from claims against the municipality to grievances filed by the City's bargaining agents. The Branch also undertakes the prosecution of provincial offences and municipal by-laws and provides professional advice and guidance with a view to avoiding future litigation. The specific roles and responsibilities of the four work units in the Branch are described below.

 

(a)     Labour Relations

 

The mandate of the Labour Relations Unit is to maintain and continuously improve the relationship between the City and the eleven bargaining agents representing City employees.  Recognizing that more than 90% of the City’s employees are unionized, Labour Relations staff can be viewed as the City’s internal diplomatic corps, maintaining lines of communication with the Unions and fostering collaborative labour relationships with a view to furthering the City’s strategic and operational goals.  This is in keeping with the following motion approved by City Council on May 13th, 2009:

 

 

WHEREAS more than 90% of the City’s 16,000 employees are represented

by bargaining agents for various unions;

 

AND WHEREAS the rights to unionize and to bargain collectively

have been recognized by the Supreme Court of Canada as fundamental rights protected by the Canadian Charter of Rights and Freedoms;

 

AND WHEREAS City Council has recognized in the City of Ottawa Strategic Plan that the City “wants to promote a culture that fosters employee engagement to enhance productivity, staff morale and empowerment”;

 

AND WHEREAS meeting this objective will require the participation of the bargaining agents representing City of Ottawa employees;

 

THEREFORE BE IT RESOLVED that City Council endorse the principle that the City will work collaboratively with the bargaining agents representing its employees with a view to fostering harmonious labour relations and helping the City meet its strategic goals.

 

 

The Labour Relations Unit was formerly part of the Human Resources Branch.  However, following the Auditor General’s 2007 Audit of Labour Relations (ACS2008-CCS-CSE-0031) the Unit was transferred to Legal Services in late 2008.  The objective of the move, as well as the later consolidation of the Litigation Branch and Labour Relations, was to provide a more holistic approach to labour relations issues and to improve lines of communication between Legal Counsel, Labour Relations Consultants and clients.  It was also intended to recognize the grievance/arbitration process as a continuum, starting with the receipt of an employee complaint and, where necessary, running through to arbitration.

 

Since the creation of a unified Litigation and Labour Relations Branch, the Labour Relations Unit has undergone significant change in order to address all of the Auditor General’s recommendations.  This included the call for “a review of the allocation of labour relations resources and service delivery model to provide flexibility to respond to changing needs within the operation and provide consistent and responsive service levels across the whole operation”.  These changes have resulted in a realignment of the unit’s 15 members to more closely match the City’s organizational structure, as well as the introduction of labour relations teams to better address client needs and the recent establishment of a Chief Negotiator for the City.  The success of these efforts was reflected in the Auditor General’s 2009 follow-up audit, which concluded,

 

One of the significant reasons behind the favorable improvements is the integration of Labour Relations (LR) and Legal Services (LS) reporting to the City Clerk and Solicitor. This decision has facilitated the timely access and exchange of information and has largely eliminated the disconnect that existed in the past between these divisions which was at the root cause of many recommendations arising from the 2007 Audit. The new changes will ensure better alignment, integration and cohesiveness in labour relations matters, and allow for appropriate escalation and determination of matters at senior management levels, when needed.

 

With the goal of maintaining positive labour relations in mind, the Labour Relations Unit provides professional advice and guidance to the various departmental management teams on a wide range of subjects, including such things as employee management and discipline, absenteeism and disability accommodation.  The informal day-to-day counselling provided to management teams on labour relations issues may also be supplemented by more formal training on traditional labour relations issues, such as progressive discipline, or on specific topics that arise from emerging issues, including new collective agreement language.  By working to ensure that the City’s management team is well-equipped to deal both with employee and union issues in the workplace, the Labour Relations Unit furthers Council’s direction to foster harmonious labour relations and the organization’s commitment to Service Excellence.

 

The express commitment to Service Excellence means that there are high expectations on the municipality’s workforce, as exemplified in the City’s Employee Code of Conduct.  On occasion, employees fail to meet those expectations.  In those cases, the Labour Relations Unit assists managers in coordinating and conducting investigations of workplace misconduct.  Where allegations of misconduct are borne out, the Labour Relations Unit will also help to identify appropriate corrective action, including discipline, if necessary.  

 

The Labour Relations Unit also administers the grievance system for any complaints arising out of the claimed violation of one of the City’s eleven collective agreements. Working closely with management and union representatives, the goal of the Unit is to find timely solutions to workplace concerns and conflicts.  This focus on early resolution serves a dual purpose:  it both helps to foster a cooperative approach to solving problems in the workplace and to avoid the myriad costs associated with having matters referred to arbitration, which is the equivalent of the court system for labour matters.  Those expenses range from the “hard” costs of the arbitrator’s fees and disbursements (approximately $325K to $450K annually) to the less easily defined but equally critical diversion of management and legal resources away from other tasks.  The early resolution of workplace conflict is also one of the most important factors in maintaining positive relations with employees and the City’s bargaining agents.

 

With these goals in mind, members of the Labour Relations Unit have worked with their union counterparts to reduce the number of grievances.  For the City’s largest bargaining unit, represented by CUPE Local 503, this collaborative approach has played a major part in a 50% reduction in grievances over three years, from 342 in 2008 to 176 in 2010.  In addition to improved labour relations, this work has also begun to pay financial dividends, resulting in a reduction of approximately $125,000 in arbitration costs in 2010 as compared to 2009.  Despite this progress and the Branch’s ongoing efforts, the budget allocation for arbitration costs remains underfunded, having recorded a deficit of $114,000 in 2010.  As with other Legal Services budget lines, the allocation for arbitration costs has remained static since amalgamation ($222,000), notwithstanding the growth of the City’s workforce.   

 

Finally, the Unit is also responsible for collective bargaining with the City’s eleven bargaining units.  The Unit’s approach to collective agreement negotiations is founded on the principles described in the Strategic Collective Bargaining Report (ACS2009-CMR-LEGL-0011), which was presented during in camera sessions of the Corporate Services and Economic Development Committee and City Council on April 21st, 2009, and May 13th, 2009, respectively.  In keeping with the approach articulated in that Report, the Labour Relations Unit works closely with senior departmental managers to identify bargaining objectives, develop negotiating strategies and ultimately lead the City’s bargaining teams.  The Unit also provides collective bargaining support to the Ottawa Public Library Board and the Police Services Board.

 

(b)      Claims Unit

 

Given the extensive infrastructure owned by the City and the wide range of municipal services provided, claims for compensation from members of the public are inevitable.  Not surprisingly, the sometimes harsh climate of the area is also a significant source of claims for the City of Ottawa:  frequent freeze and thaw cycles cause potholes which can result in damage to vehicle tires, rims and suspensions; snow clearing operations on City streets can result in damage to parked vehicles or to adjoining property; and the build-up of snow and ice on streets and sidewalks can give rise to personal injury claims from slip and fall accidents.  Injuries to passengers on the City’s bus system, sewer backups, which may be caused by the incursion of roots from City trees into sewers on private property, and significant rain events round out the top categories of claims received by the Claims Unit.  Altogether, the Unit receives an average of more than 1600 claims per year, though this number can be inflated considerably by a single, significant event, such as the July 2009 rainstorm.  That event alone generated in excess of 850 claims.  Below, Figure 1 sets out the value of claims received in 2010 by major service areas.

 

Figure 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In view of the need to provide a timely response to claims submitted, a single event that generates large numbers of claims, such as a flood, can sometimes overwhelm the City’s ability to handle the claims with its complement of eight internal claims adjusting staff.  The City can then call upon its external claims adjusters to supplement its in-house team. 

 

The role of the Claims Unit is to receive, assess, and adjudicate claims with a view to ensuring that the City provides fair compensation where it is legally obligated to do so.  The corollary of that role is to deny requests for compensation where the City is not legally responsible for the losses claimed.  Recognizing that the total annual value of all claims received is often in the order of $20M, the proper adjudication of claims acts as a means to ensure the appropriate expenditure of public funds.

 

The following charts demonstrate that, while the number of property damage claims far exceed those involving personal injuries, it is the latter category that makes up the greater share of the monetary value of claims concluded.  This is due largely to the increasing compensation awarded by the courts in personal injury cases, many of which may also include related claims for loss of income, housekeeping, attendant care, and other expenses.

 

 

 

Figure 2

 

 

 

 

Figure 3

 

 Claims concluded over $100,000 – Q1 and Q2 2011

Department

Category

Claim Type

Amount

Parks, Recreation & Culture

Bodily/Personal Injury

Falls on City Property

$156,658.66

 

Public Works

 

Bodily/Personal Injury

 

Trip and Fall

 

$105,526.97

 

Public Works

 

Property Damage or Loss

Damage from Tree Roots

 

$132,664.18

 

Transit Services

 

Property Damage or Loss

 

Vehicle accident

 

$276,009.90

Transit Services

Bodily/Personal Injury

Losses Onboard City Vehicle

$230,024.70

TOTAL:

$900,884.41

 

Formerly part of the Finance Department, the Claims Unit was transferred to Legal Services in August 2007.  The rationale for this move was to provide an integrated approach to compensation claims.  This has helped to ensure that claims, whether they are in the form of a simple request for compensation or a formal statement of claim, are assessed using common criteria and with a unified focus on timely resolution.

 

 

Claims Assessment Criteria

 

As noted above, all claims submitted to the City are adjudicated based on the extent of the City’s legal liability for the losses claimed.  In some cases, this can be straightforward, such as where a City vehicle is involved in a collision with another vehicle.  In such cases, the statutory rules governing the apportionment of liability determine the extent of the City’s responsibility.  In other cases, the City’s liability is not so clearly defined and assessment of the claims may require an investigation of the circumstances giving rise to the loss and also of the City’s statutory and common law obligations.

 

The reliance on legal liability as the basis for the evaluation of claims is in keeping with the provisions of the City's insurance policies and reflects the same considerations that would inform a legal assessment in the court system.  It serves to ensure that, while claimants may feel that the City is morally responsible for their loss, all claims are considered fairly and in accordance with the same legal criteria.

Notwithstanding the Claims Unit’s efforts, some claimants will disagree with the assessment of the extent of the City’s legal responsibility for their losses.  In such cases, the claim may become a lawsuit with the claimant commencing formal proceedings before the courts in an effort to obtain compensation.  However, Legal Services’ integrated approach to dealing with claims, based on applying the same assessment criteria from receipt of a claim through to a full court proceeding, is designed to limit the overall legal costs of both claimants and the City and to ensure fair and consistent treatment of claims submitted by Ottawa residents and businesses.

 

(c)      Litigation Unit

 

The ten Lawyers, two Law Clerks and three support staff who make up the Litigation Unit offer services that are the equivalent of those provided by a mid-sized litigation law firm.  The Unit’s Legal Counsel advance and defend the City’s interests in both civil and administrative litigation, with the latter category including labour, human rights, planning and development, workplace safety and insurance and a host of matters involving other administrative tribunals.  This team of in-house staff are responsible for more than 90% of the approximately 400 files involving the City that are managed annually.  Where in-house resources are not available,  where specialized expertise may be necessary or as directed by the City’s insurer, the Litigation Unit is supplemented by external counsel retained pursuant to the Department’s Strategic Standing Offer, which is explained in more detail elsewhere in this report.  Matters may also be referred to external counsel at the direction of the City’s insurers.

 

The following sets out the general categories of civil litigation cases currently being handled by the Litigation and Labour Relations Branch:

 

Personal Injury                        57 files

Building Inspections               33 files

Property Damage                    32 files

Motor Vehicle Accidents        25 files

Environmental Liability          3 files

Police Claims                          70 files 

Other miscellaneous                29 files

                                                                       

Total:                                       249 files

 

Of these 249 open files, 25 are currently with external legal counsel while carriage of the remaining 224 cases rests with the City’s in-house team. Of these 25 files, 10 have been referred to external counsel at the direction of the City’s insurer, with the remainder having been outsourced largely due to the scope and/or complexity of the litigation.

 

In terms of administrative litigation, the Litigation Unit has developed a wide range of expertise in matters that arise frequently in the municipal context.  For example, changes to the provincial human rights complaint system in 2008 have resulted in a significant increase in the number of Ontario Human Rights Tribunal cases involving the City.  However, virtually all of the 30 to 35 complaints filed annually against the City are handled by in-house counsel.

 

Litigation before the Ontario Municipal Board is one more specialized area in which the Litigation Unit represents and defends the City’s interests.  In 2010, the Branch conducted 23 hearings before the Board over the course of some 42 days.  Since amalgamation, Legal Services has appeared before the OMB on 250 different matters, including rezoning and minor variance applications, challenges to planning and zoning by-laws, as well as official plan amendments, and site plan or subdivision applications.  In-house Legal Counsel, including a Senior Legal Counsel, represented the City on 220 of those 250 matters.  In 2011, the City was represented by both in-house and external legal counsel at the seven-week Urban Boundary OMB hearing challenging OPA 76.  A list setting out OMB Hearings – Outcomes and Costs- Since 2001 is on file with the City Clerk and Solicitor’s office and is updated on a quarterly basis.

 

In addition to these main areas of expertise, the Litigation Unit may be called upon to represent the City before a variety of other tribunals and specialized bodies, including the provincial and federal labour relations boards, Workplace Safety and Insurance Appeals Tribunal, and the Canadian Transportation Agency.  A more comprehensive list is attached as Document 2.

 

Combining a focus on the early resolution of matters where the City is at least partially at fault with a commitment to providing essential professional services, the Litigation Unit can claim a high level of success before the courts and administrative tribunals. This has been aptly demonstrated by reference to the quarterly reports on the City’s Litigation Record since 2009.

 

As part of the 2007 Audit of Labour Relations, the Auditor General recommended that “statistics on arbitration cases, wins, losses, draws and costs be implemented to facilitate overall performance measurement.”  This recommendation was based on a conclusion that the City “is not very successful in upholding the employer’s position through the grievance process and especially at arbitration.”  In an effort to address this perception, and also to provide a more comprehensive overview of the City’s success in formal legal proceedings, the City Clerk and Solicitor Department has, since March 2009, provided a quarterly summary of the City’s record in civil and administrative litigation, including labour and employment law matters.  Looking only at cases decided by a formal order or decision, the City prevailed in 191 of the 221 matters concluded in the period between 2008 and 2010, for a rate of success over 86%.

 

In the original report received by the Corporate Services and Economic Development Committee in March 2009 (ACS2009-CMR-LEG-0008), however, it was noted that the Unit’s record of success could not be measured solely based on the results of formal proceedings.  That report noted the propensity of judges, arbitrators, and other adjudicators to encourage the resolution of disputes through negotiated settlements, rather than through costly formal proceedings.  In light of all the benefits associated with settlements, which were detailed in the report, the City Clerk and Solicitor recommended adopting a methodology that recognizes that a settlement, in which both sides of a dispute must “take some water with their wine”, so to speak, should be characterized as a successful outcome.  As noted in that earlier report,


Finally, the classification of settlements as successful outcomes also serves to reflect the proper role of Legal Services which, reduced to its simplest notion, it to protect the City’s interests and to seek just results while mitigating the City’s financial exposure. This is aptly outlined in the Branch’s Mission Statement, which is, “[To] provide cost-effective legal services within a business-sensitive environment.” Accordingly, in cases where there is little question of the City’s liability at law, the City’s interests are best served by avoiding costly proceedings and looking to achieve an equitable settlement. To focus on a characterization of “win” or “loss” tends to promote a dogmatic approach to litigation which, in the end, does not serve the ultimate goal of protecting the City’s legal interests and limiting its financial exposure.

 

Based on the above rationale, the Litigation Unit has demonstrated over the last three and one-half years an ability to reach a successful outcome for the City in over 95% of cases.  The graphical representation of the Unit’s litigation results set out below shows that those for the first two quarters of 2011 are in keeping with the trend established over the 2008-2010 period.

 

Figure 4

 

 

 

 

 

 

Figure 5

 

 

 

 

Set out below is an explanation of the four unsuccessful cases, along with any recommendations on changes that might help the City in dealing with similar cases in the future.

 

In the first case, the adverse ruling involved an application for rezoning and associated consents to sever for a reduced lot frontage, which had been opposed by the City.  Before the Ontario Municipal Board, the main issue in dispute was the community compatibility of the smaller lot. In the face of conflicting evidence by those in the neighbourhood, including support for the application by those closest to the property in question, the Board ultimately determined that the smaller lot size was compatible with the community and granted the application.

 

In the second instance, as in most Workplace Safety and Insurance Act (W.S.I.A.) cases, the appeal was initiated by the employee in respect of a decision by the Workplace Safety and Insurance Board (W.S.I.B.).  At issue was a denial of temporary benefits for a period of approximately two months in 1995, during which the employee was not at work due to complaints of respiratory problems stemming from pesticide residue in the workplace.  

 

The Workplace Safety and Insurance Appeals Tribunal (W.S.I.A.T.) determined that there was sufficient evidence of a link between the workplace and the employee’s condition to meet the requirements of the W.S.I.A. and thus granted benefits for the period in question.  Though this decision is specific to the facts presented, staff are reviewing other similar claims, in consultation with the W.S.I.B., in order to minimize the need for any further W.S.I.A.T. proceedings.

 

The third case was a judicial review of an unsuccessful labour arbitration.  The Divisional Court was of the view that it is reasonable to expect the employer to conduct a search of alternate temporary positions for a paramedic who is unable to perform his duties due to pending criminal charges relating to a patient.

 

The last instance was the Urban Boundary (OPA 76) OMB hearing.  This matter was reported to the Planning Committee meeting of July 4, 2011:  see ACS2011-CMR-LEG-0020.  In June 2009, City Council had approved that 230 hectares of land should be added to the Urban Area.  After the seven week hearing, the OMB determined that 850 hectares should be added.  In summary, the Board found that it was not appropriate for the City, having provided for a 2031 horizon year early on in the Official Plan review process, to change that date at the end of the process, resulting in a reduced need for development land and the lower figure. 

 

In addition to its role as defender of the City’s legal interests, the Litigation Unit may also be called upon to take positive actions and to commence a lawsuit against another party on behalf of the City.  These cases would normally involve the recovery of money owing to the City, for contract deficiencies or perhaps for damage to City property.  Though cases where the City is a plaintiff are only a fraction of the total number of cases handled by the Unit, in the order of one to two percent, they are equally important and contribute significantly to the City’s objectives, as evidenced by the recent Ottawa Lynx settlement of $1.95M and the 2010 settlement with Rogers Cable for $1M.  In the Rogers Cable case, the City Clerk and Solicitor retained the Toronto law firm of Miller Thomson, who specialize in litigation involving utilities, to represent the City’s interests.  Legal Services incurred costs of $88,500 over a period of three years.  However, generally accepted accounting procedures dictated that only the legal costs incurred in the year the City receives the settlement should be recovered.  This totalled $24,054, or less than one-third of the costs incurred by Legal Services. 

 

In the Lynx case, resolved earlier this year, the Litigation Unit was successful in recovering more than $1.95M that would otherwise have been lost by the City with the departure of the Ottawa Lynx Baseball Club in 2007.  Should the same accounting principles be applied again in the case of this settlement, Legal Services would recover a mere 30% of the costs actually incurred  ($211,275 incurred in 2011 versus total legal expenses of $688,052 over four years). The disposition or allocation of these settlement funds is addressed later in this report and through the staff recommendation to Committee and Council.

 

However, not all of the Unit’s recovery efforts are in respect of such high profile matters.

 

Working alongside Legal Counsel, the City also employs a Law Clerk dedicated to recovering amounts owing to the City.  These amounts may be as a result of, among other things, unpaid fines, overpayment of benefits or damage to City property.  The measure of success of these efforts can be seen in the amounts recovered, which in the period of June 2010 to June 2011 exceeded $300,000.

 

(d)      Prosecution Unit

 

In March 2001, the Ministry of the Attorney General transferred responsibility for the administration and prosecution of most provincial offences to municipalities. This downloading of the more minor quasi-criminal and regulatory offences was the culmination of several years of consultation between the Ministry and the municipal sector.  It was ultimately implemented by changes to the Provincial Offences Act (POA), as well as formal agreements between the Ministry and partner municipalities, including the City of Ottawa.  These agreements set out the roles and responsibilities of municipalities and evidence the municipalities’ commitment to preserving fundamental justice principles, such as the independence of prosecutors. 

 

Under its agreement with the Ministry, the City’s Prosecution Unit handles more than 13,000 cases per year. The majority of these involve offences under the Highway Traffic Act, as well as the Liquor License Act, Compulsory Automobile Insurance Act and the Trespass to Property Act. Examples of other cases include prosecutions under the Dog Owners’ Liability Act, Building Code Act, Fire Protection and Prevention Act, Health Protection and Promotion Act, and various municipal by-laws.  As indicated earlier, a legal industry “best practice” is to utilize paralegal staff wherever feasible.  As such, at the time of the Provincial download of this function, the City opted to hire and train “lay” Prosecutors (i.e. non-lawyers) to carry out this function.  Under the supervision of Senior Legal Counsel in the Litigation Unit, the City’s six lay Prosecutors are also supplemented by in-house Legal Counsel and Articling Law Students, usually for lengthier trials involving violations of the City’s by-laws (zoning, property standards, etc.), as well as complex regulatory violations (Building Code, Fire Code, etc.).

 

As is the case with other types of litigation, a majority of cases handled by the Prosecution Unit are resolved through negotiations, usually resulting in a plea arrangement whereby the defendant offers a guilty plea in exchange for an agreed-upon sentence.  In the last few years, the Prosecution Unit has formalized these pre-trial discussions through a First Attendance process. This allows defendants to meet with a Prosecutor to discuss their case, to clarify any factual or evidentiary issues and to explore the possibility of an early resolution of the case without the need for a trial.  The success of these efforts on the part of the Prosecution Unit means that the wait times for trials in Ottawa are among the lowest in Ontario.  Reducing the need for the costly judicial and court resources that go with trials has also helped to reduce the City’s cost to administer the POA function to one of the lowest of all participating municipalities.

 

The financial benefits flowing to the City from the transfer of the POA courts are significant.  In accordance with its agreement with the Province, the City of Ottawa is entitled to retain the majority of fines imposed for provincial offences as a fee for providing the service.  Though the principles of fundamental justice dictate that these amounts not flow back to the City Clerk and Solicitor Department, the provision of POA prosecution and administration services generates revenue to the City in excess of $13.6M per year.

 

 

2.    Corporate, Development and Environmental Law Branch

 

The Corporate, Development and Environmental Law (“CDEL”) Branch provides broad and diverse core legal services to support day-to-day operations as well as key priorities of the City in the areas such as Planning and Development (e.g. the City’s One-Stop Service initiative), Water and Wastewater, Infrastructure Services (e.g. Infrastructure Stimulus Funding Initiative), Affordable Housing, Housing and Homelessness Reduction Plan, Public Health and Transit and Transportation.

 

The CDEL Branch includes 12 Lawyers, 15 Law Clerks, one Insurance Specialist, one Legal Conveyancer and one Legal Assistant.  The specific roles and responsibilities of the the Branch are described more particularly below.

 

(a)      Support to Council and Standing Committees

 

The City Clerk and Solicitor provides legal and procedural support to Council and to the Finance and Economic Development Committee.  In turn, the Deputy City Solicitor provides support to the Community and Protective Services Committee while the Manager of Litigation and Labour Relations provides support to the Ottawa Police Services Board.  The balance of the Standing Committees are supported by lawyers from the CDEL Branch, with the exception of the Agriculture and Rural Affairs Committee, which is supported by Legal Counsel from the Litigation and Labour Relations Branch.  Attached as Document 3 to this report is a chart identifying the Legal Counsel providing support to all of the Standing Committees of Council.

 

(b)      Support to City Departments and Branches

 

The CDEL Branch provides support to all of the departments and branches within the City in their delivery of legislated and discretionary services and programs to the residents of Ottawa.  By way of example, legal services are provided in such areas as public health, public transit, fire services, paramedic services, affordable and social housing, drinking water, road and sidewalk maintenance, library services, by-law services, parks and recreation, arts, culture, museums, festivals and heritage, municipal assessment and taxation and garbage collection. Hundreds of agreements are reviewed and/or drafted each year to support and document the City’s ongoing delivery of services and programs with residents, stakeholders, external service providers and program and service partners.

 

The Branch also supports the Real Estate Property and Development Office (“REPDO”), as well as the Ottawa Community Lands Development Corporation in the acquisition of properties for such projects as community centres, day-care facilities, road construction and repair, wetlands preservation, the municipal redevelopment of surplus school properties and public-private partnerships.  It is also involved in the sale or disposal of surplus City properties so as to maximize revenues to the City for such properties. Over the past two years, 144 real estate transactions – both purchases and sales – were completed by CDEL staff, having a combined value of nearly $35M.

 

The CDEL Branch plays a key role in supporting the City’s Municipal Election and Municipal Freedom of Information and Protection of Privacy Act Office.  Legal services are provided in the review and analysis of requests for information, as well as making submissions on behalf of the City in appeals before the Information and Privacy Commissioner (“IPC”).  For example, in 2007, the Branch provided support for several high-profile inquiries pertaining to the Light Rail Project and the City’s by-law relating to second-hand goods.  More recently, in late 2010, CDEL Lawyers assisted external legal counsel with the successful legal challenge to a controversial IPC decision allowing a third party access to personal employee e-mails originating from incidental, permissible personal use that were unrelated to City business.  The Divisional Court ruling reversed the IPC’s original decision and the case provided helpful guidance on the issue for public sector organizations throughout Canada. 

 

(c)    Development Law Unit

 

One-Stop Service was initiated by the City Manager in 2009 to provide for a timely and efficient review of development applications through filters such as the Official Plan, community development plans, parks and parking considerations, infrastructure considerations, traffic management related to the development, grading and drainage, road modifications and heritage considerations.

 

In recognition of One-Stop Service, Legal Services established a Development Law Unit and created a new Development Agreement Officer position as the lead.  All of these staff are located in one area in order to facilitate availability to the planners when questions arise and to assist in the timely delivery of legal aspects of the Service.  In addition, the Senior Legal Counsel who signs off on all development agreements and the Legal Conveyancer who registers all of the documents are centralized within this area.  As such, Planning staff frequently consult with staff in the Unit on planning-related matters.

 

A key feature of One-Stop Service is the notion of the planner, as the file lead, maintaining responsibility for the file throughout all components of the development review process.  That being said, Legal staff plays a key role in ensuring timely completion of a development matter through the preparation of various agreements and related real estate transactions.  As agreement preparation is often the last element before an owner/developer receives a building permit, there are often pressures on Legal staff to complete the applications in a timely fashion – sometimes within a day or two.  In this respect, the Development Law Unit participated in the 18–month review of the One-Stop Service with Planning staff and the development industry to identify and implement improvements to the service provided.  The Action Plan for moving forward is to be finalized in the fall of 2011. 

 

Currently, the CDEL Branch has eight full-time Law Clerks and one Development Agreement Officer, reporting to a Senior Legal Counsel.  This team is collectively responsible for the preparation of a variety of development agreements such as subdivision, site plan, condominium, maintenance and liability, encroachment and early servicing, as well as agreements related to consent or minor variance applications.  In addition, these individuals prepare associated documents such as development charge deferral agreements, easement agreements, part lot control by-law, road opening and closing by-laws and conveyances for parks, road widening, reserves or environmentally significant lands, any of which may be required as conditions of development.

 

There is a high volume of work associated with this portfolio, with 608 agreements prepared and reviewed in 2009 and 566 in 2010.

 

Legal staff also participated with planning staff in the review and finalization of a new subdivision agreement template for rural and urban subdivisions, which was commenced June 11th, 2010.  The purpose of the exercise was to provide clarity to wording of draft conditions and to recognize some of the differing requirements between the rural and urban subdivision applications, for example in areas such as servicing.  The development community participated in discussions regarding the contents of the precedent agreement and for the most part there were no major issues arising when it was considered and approved by Committee and Council.

 

A further example of the working relationship being developed with Planning staff related to the recent expiration of the development charge exemptions for certain areas of the downtown in July 2011.  Staff in the Development Law Unit worked closely with Planning staff over the month of July to ensure that all site plan applications in the central area qualifying for the exemption  and that received a site plan approval requiring an executed site plan agreement were finalized by the end of July. To ensure these time frames were met, staff in the Unit met with Planning staff well in advance of the deadline to obtain a list of potential approvals and then undertook preliminary research to assist in the timely preparation of these agreements. During this same timeframe, staff in the Unit continued to process all other development agreements that were required to meet the on-time review targets. 

 

 

Accountability and Transparency

 

In addition to its complement of in-house staff, Legal Services also retains external legal resources.  External legal resources are utilized for complex or unique matters, such as the Ottawa Light Rail Transit (“OLRT”) Project and the Lansdowne Park Partnership Plan, as well as for specific matters such as the Urban Boundary (OPA 76) which was recently before the Ontario Municipal Board and the Ottawa Lynx litigation arising from the operation of the City’s baseball stadium.  External legal resources also provide support in cases where there is a professional conflict of interest that would prevent a matter from being handled by the City’s in-house legal staff.

 

Pursuant to the City’s Delegation of Authority and Purchasing By-laws, the City Clerk and Solicitor is assigned the exclusive authority for retaining all external legal counsel required by the City.  In accordance with Legal Services’ internal protocols, legal work may be outsourced to external law firms for the following reasons:

 

  1. Specialized area of expertise not available in-house (i.e. defamation);
  2. Professional conflict of interest that would prohibit in-house lawyers from carriage of file/matter;
  3. Second opinion required to protect the City’s interest;
  4. Volume/Scope/Magnitude of file/matter that requires resources beyond those available in-house;
  5. File Continuity; and/or
  6. Direction of the City’s Insurer.

 

Furthermore, work is only outsourced by the City Clerk and Solicitor on the recommendation of the Deputy City Solicitor and/or the Manager, Litigation and Labour Relations.

 

The following are historical examples of files or matters that have been outsourced over the past ten years:

 

 

In accordance with Subsections 13(1) and (2) of the  Purchasing By-law, the City Clerk and Solicitor is required to identify those law firms in receipt of an annual cumulative total of $100,000 or more.  To date, the disclosure of these costs has been included in the Treasurer’s “Delegation of Authority – Contracts Awarded” reports.  These now form part of this comprehensive report in accordance with Council’s April 27th, 2011 direction and are contained in Document 4.

 

For the 2011 Budget, Legal Services has a budget of approximately $910K for external legal services. In addition to the $910K, Legal Services has a recovery budget of approximately $1M.  Recoveries may be associated with capital projects, such as the Federal Stimulus Funding Initiative, Source Separated Organics project and the Lansdowne Park Partnership Plan (exclusive of the Friends of Lansdowne Inc. litigation). 

 

It should also be noted that the legal costs reported in the first two quarters of 2011 include amounts paid to external law firms with respect to the OLRT Project.  These amounts, which include legal fees and disbursements associated with the OLRT Project, are funded through the Infrastructure Services and Community Sustainability Department.

 

Also included in this report are those amounts paid to external law firms with respect to insured litigated claims.   The costs associated with these claims are not paid through the Legal Services budget; but, rather, are funded by various Departmental budgets. The information provided in Document 4 is a summary of all external legal services costs for the first two quarters of 2011. 

 

 

Costs Containment

 

In keeping with its objective to provide cost-effective legal services within a business sensitive environment, the City Clerk and Solicitor Department continuously strives to reduce and contain the cost of legal services for the municipality while ensuring a very high level of service. The Department’s success in this regard is reflected both through a comparison to other municipalities in Ontario, as well as the statistical data detailed in this report. As noted above, external resources may be called upon where necessary.  However, Legal Services’ focus is on ensuring that in-house staff are used to the fullest extent possible.

 

Over the past decade, Legal Services has developed in-house expertise in the evolving areas of municipal finance, as well as development and environmental law.  A dedicated group of Law Clerks within the Development Law Unit now prepare all subdivision, site plan and other development agreements, with the review and approval of such agreements conducted by in-house Legal Counsel.   Staff within the Corporate, Development and Environmental Law Branch acquired expertise in the area of P3 projects, such that the last P3 project, the Ben Franklin Soccer Dome at Ben Franklin Park, was handled entirely by in-house legal staff.   Furthermore, the Lawyers and Prosecutors within the Litigation and Labour Relations Branch are now handling the vast majority of litigation matters and 100% of the City’s prosecutions. 

 

In terms of its external legal costs, Legal Services has sought to manage these through its use of the Strategic Standing Offer (“SSO”) as described below.

 

Strategic Standing Offer

 

On December 10th, 2010, the City Clerk and Solicitor Department completed its second competitive procurement process regarding its Strategic Standing Offer (“SSO”) for the provision of external legal services for 2011-2014.  The successful law firms are:

 

·      Heenan Blaikie LLP for the Litigation and Labour/Employment Law portfolios; and

·      Borden Ladner Gervais LLP for the Corporate/ Commercial/Development portfolio.

 

The essence of a standing offer is that it allows the City to purchase services from suppliers at prearranged prices, under set terms and conditions, when and if these services are requested.  In effect, it is a proactive, not reactive, approach that allows the City to obtain favourable pricing and terms for a service before it is needed. 

 

Catalyst Consulting, an acknowledged national leader in providing management consulting services to the legal profession in Canada, recommended the following six-point strategy that was adopted for the SSO:

 

1)      A reduction in the number of external service providers (i.e. convergence);

2)      Holding external firms accountable to predetermined staffing profiles when doing the work;

3)      Utilizing a weighted rate (or blended rate) at which services would be charged;

4)      Adopting a rigorous approach to case budgeting;

5)      Obtaining optimal pricing through direct competition; and

6)      Streamlining communication and eliminating most disbursements typically associated with legal fees.

 

The prior SSO that was put in place for the 2007-2010 term of Council allowed the Department to purchase external legal services from four law firms at “wholesale” pricing with a fixed blended hourly rate.  There are a number of changes with the new SSO for 2011-2014.  

 

First, is the achievement of even greater convergence with the movement from four law firms to two.  Briefly, the concept of “convergence” in this respect provides the opportunity for even greater competition among external law firms since the City’s external legal work may be divided between two, instead of the previous four, external law firms as firms could compete for multiple portfolios of legal work.  Heenan Blaikie will now be the external legal services provider for two of the Department’s three portfolios, being litigation as well as labour and employment law.  The result was an even more favourable blended hourly rate for all three of the practice areas compared to the rate under the previous SSO.  

 

Second, the new SSO affords pricing stability as the blended rates are frozen for both firms at 2011 rates for the entire four years.  Consequently, the City is shielded from typical pressures facing ‘retail’ consumers of external legal services, such as cost of living increases and interest rate pressures during this period.

 

Third is the implementation of a new performance program to reward service excellence.   The performance program provides financial motivation to meet and exceed objectives with respect to the provision of external legal services by delivering timely, high-quality legal services within or below the agreed upon budget for such services (i.e. ‘legal project management’).

 

Finally, the Department’s administrative requirements in managing the former SSO are reduced.  The focus will now be on “legal project management” oversight undertaken by both the Legal Services Management Team and the external law firms. Overall, the new features of the SSO are innovative and, in fact, could become the new municipal standard or template for standing offers with external legal services providers.

 

Combined with effective management of in-house resources, the newly-refined SSO has permitted the City of Ottawa to put itself in the position of having the lowest cost of legal services of any large Ontario municipality, according to the most recent report (2009) by the Ontario Municipal Benchmarking Initiative (“OMBI”).  In fact, of the 14 municipalities participating in OMBI, only one Ontario municipality with a population of 135,000 recorded a cost per hour of internal and external legal services lower than the City of Ottawa’s $127/hour and $218/hour, respectively. The City of Ottawa’s legal services costs are also well below the median $139/hour for in-house counsel and $330/hour for external legal services recorded by OMBI for 2009

 

As part of its original recommendation to establish a public-private, legal services model, Catalyst Consulting compiled financial data from ten former lower-tier municipalities (all but the Township of Osgoode), as well as the Region of Ottawa-Carleton.  The data collection was to determine the net legal costs for the years 1997-2000 for the eleven former municipalities.

 

During the four-year period of 1997-2000, the total net legal costs for the eleven former municipalities averaged $6.2M per year.  At amalgamation, the budget for the new Legal Services Branch was $4.7M.  As noted earlier, in addition to the core legal services provided pre-amalgamation, the Province of Ontario downloaded the functions associated with the prosecution and administration of the Provincial Offences Act with Legal Services assuming responsibility for the prosecution function in March 2001.

 

 

Figure 6 shows the four-year net cost of legal services pre-amalgamation, and the annual net cost of legal services from 2001-2010.  As discussed earlier, the Claims and Insurance functions were transferred from the Finance Department to Legal Services in August 2007 and those costs have not been included in the figures below.  Furthermore, in late 2008, the Labour Relations function was also transferred to Legal Services and, again, those costs are not reflected in the net cost of legal services in order to ensure an accurate year-over-year comparison.

 

 

 

Figure 6

 

 

The ten year average of post-amalgamation net legal costs is $5.4M. The most recent four-year average based on net legal costs from 2007-2010 is $6.2M.  It should be noted that these figures have not been adjusted for inflation.

 

 

 

 

 

 

                                                                       

12001 - Prosecution responsibilities added and included in costs for 2001 and on a go-forward basis

2007 - Exclusive of Claims, Insurance and LRT

2008 - Exclusive of Claims, Insurance and LRT

2009 - Exclusive of Claims, Insurance, Labour Relations and LRT)

2010 - Exclusive of Claims, Insurance, Labour Relations and LRT)

 

 

Q1 and Q2 2011 – External Legal Costs

 

Notwithstanding the Department’s efforts to contain the cost of legal services, amounts attributable to high-profile Council initiatives, as well as significant litigation involving the City, continue to put pressure on the Legal Services budget.  As previously reported, Council-driven initiatives continue to result in legal costs.  The table below summarizes a number of these projects and expenditures for the first two quarters of 2011.

 

Council Initiative                                                                 2011 Q1 and Q2 Legal Costs

 

Lansdowne Partnership Plan and Exhibition Hall                           $547,610

OMB Hearing and LR Issues:

 

 

Friends of Lansdowne Inc. Litigation                                          $1,044,867           

 

South March Highlands Litigation                                                     $54,653

 

Urban Boundary OMB Hearing                                                       $314,552

 

Orgaworld Canada Ltd. Commercial Arbitration                       $283,083.22

 

A number of litigation matters continued to result in expenditures in the first two quarters of 2011, including: the $10M claim by the Ottawa Lynx and $3M claim by Ottawa Rapidz ($211,275 and $10,801 respectively); the claim by the City for over $400,000 in emergency repair costs, as well as the $2M claim against the City for loss of business associated with Somerset House ($67,874); and the two employment law claims associated with the Keefer Regulator incident ($300,696).

 

While the cost of defending cases such as that involving the challenge brought by the Friends of Lansdowne Inc. will exceed $1 million, no portion of this amount is recoverable in accordance with City Council’s current Policy on Seeking Legal Costs, as described in the companion Report entitled Policy on Seeking Legal Costs – Review [ACS2011-CMR-LEG-0025].  

 

In light of the significant costs associated with these matters, Legal Services is forecasting a budget deficit for year-end.  As reported to FEDCO at its June 7th meeting, at the end of Q1, Legal Services had a year-to-date deficit of $473K based largely on its defence of City Council’s Urban Boundary decision and employment matters arising from the Keefer Regulator incident.  However, Q2 saw the litigation of the Friends of Lansdowne Inc. challenge to the Lansdowne Partnership Plan proceed before the Ontario Superior Court of Justice with the result that the forecasted deficit for Legal Services will increase to $1.6M by year’s end.

 

While the Department’s efforts to minimize litigation through the administration of the claims and grievance process has helped to contain the overall cost of legal services, staff ultimately have little or no ability to control or regulate the number of legal matters to which the Department is required to respond.  These unforeseen costs can have a sizable impact on the Department’s budget and, as a result of the substantial number of large and/or complex matters that have arisen over the course of the year to date, Legal Services is forecasting a budget deficit for year-end.

 

However, Legal Services’ was able to recover the amount of $1.95 million as part of the litigation involving the Ottawa Lynx, which was concluded earlier in 2011. It is therefore proposed, as supported by the Finance Department, that this amount be retained by Legal Services in order to help defray the costs of the Friends of Lansdowne Inc. litigation, as well as a number of the other significant Council initiatives described earlier in this Report.   

 

 

CONSULTATION

 

As this is largely an administrative report issued on a quarterly basis, no consultation was undertaken.

 

 

RISK MANAGEMENT IMPLICATIONS:

 

There are no risk management concerns arising from this report.

 

 

LEGAL IMPLICATIONS

 

Some settlements referenced here are subject to the confidentiality requirements that commonly form part of a claim resolution.  Should further details be sought on those matters, it may require an in camera discussion.

 

 

FINANCIAL IMPLICATIONS

 

At the end of this year’s first quarter, Legal Services had a year-to-date deficit of $473K as reported to the Finance and Economic Development Committee on June 17th (ACS2011-CMR-LEG-0032).  The Q1 deficit is related to the external legal costs associated with three significant litigation files; namely, the Urban Boundary OMB hearing and two employment law cases arising from the Keefer Regulator incident.  At the end of the second quarter, the forecasted deficit is expected to increase to approximately $1.6M, as a result of these and other significant litigation that Legal Services has had to defend, including the Friends of Lansdowne Inc. case.

 

The Finance Department supports the recommendation from Legal Services that funds from the Ottawa Lynx Litigation settlement of $1.95M be applied to Legal Services to offset these and other unanticipated costs to year-end, therefore avoiding a request to fund these expenses from the One-Time Unforeseen Provision.

 

 

DOCUMENTS

 

Document 1:        Core Services List

Document 2:        Courts and Tribunals Attended by Legal Counsel

Document 3:        Legal Counsel to Standing Committees and Counsel

Document 4:        External Legal Services Costs for Q1and Q2

 

 

DISPOSITION

 

Subject to any direction by the Finance and Economic Development Committee and Council, the City Clerk and Solicitor will continue to produce this report on a quarterly basis.

 

 

DOCUMENT 1

 

Legal Services – Core Services*

 

 

Service

Service Provider

1

General Legal Advice and Services

Legal Services

2

Procedural Advice to Council, Committees and Local Boards

City Solicitor and Legal Counsel

3

Governance Issues

City Solicitor and Legal Counsel

4

Legislation – Drafting, Interpreting and Applying

City Solicitor; Corporate, Development & Environmental Law (“CDEL”)

5

By-laws – Drafting, Interpreting & Applying

City Solicitor; CDEL

6

Agreements – Drafting and Reviewing:

  • Software/Hardware
  • Municipal Capital Facilities
  • Corporate and Commercial
  • Planning and Development (Subdivision, Site Plan, Condominium, etc.)
  • Arts Funding, etc.
  • Encroachment

CDEL

7

Public Private Partnerships – Legal drafting, review and advice

CDEL and/or Borden, Ladner, Gervais

8

Tendering and Procurement Law Matters

CDEL

9

Real Estate/Property including:

  • Acquisitions
  • Disposals
  • Leases
  • Easements
  • Land Titles information
  • Expropriations

CDEL and/or Borden, Ladner, Gervais (re expropriations)

10

Housing Issues

  • Rent Supplement Program
  • Affordable Housing Projects

CDEL

11

Access to Information and Protection of Privacy

CDEL

12

Insurance

  • Purchasing
  • Management

CDEL

13

Municipal Assessment and Taxation

CDEL

14

Environmental Law Matters

CDEL and/or Blake, Cassels, Graydon

15

Road Openings/Closings/Dedications

CDEL

16

Zoning and Official Plan Issues (including Comprehensive Zoning By-law)

CDEL (By-law drafting)

Litigation and Labour Relations (OMB Hearings)

17

Ontario Municipal Board Hearings

  • Preparation
  • Representation

CDEL, Litigation and Labour Relations  and/or Borden, Ladner, Gervais

18

Labour and Employment Law

  • Arbitrations
  • Human Rights Issues
  • Workers Safety Insurance Board

Litigation and Labour Relations and/or Heenan, Blaikie

19

Labour Relations

·         Collective Bargaining

·         Grievance Processing/Resolution

·         Union/Management Relations

Litigation and Labour Relations

20

Claims Management

·         Claims Investigations

·         Claims Processing

·         Statutory Accident Benefits

 

Litigation and Labour Relations and/or McLarens Canada

21

Civil Litigation

  • Defence
  • Claims
  • Mediations
  • Motions
  • Trials

Litigation and Labour Relations  and/or Heenan, Blaikie

22

Collections

·         Demand letters

·         Repayment negotiations

·         Restitution Orders

Litigation and Labour Relations

23

POA and By-law Prosecutions

Litigation and Labour Relations

 

 

“Core Service” is defined as a service that is traditionally found within the municipal law context and would include transactional work such as OMB hearings, by-law preparation, subdivision agreements, etc. 

 

 

DOCUMENT 2

 

Courts and Administrative Tribunals Attended by Legal Counsel

 

 

Animal Court Tribunal

Arbitration Panels

Assessment Review Board

Canada Industrial Relations Board

Canadian Human Rights Tribunal

Canadian Radio and Television Commission

Canadian Transportation Agency

Committee of Adjustment

Conservation Review Board

Divisional Court

Employment Standards Referee

Environmental Review Tribunal

Federal Court

Information and Privacy Commissioner/Ontario

Labour Relations Board

 

License Committee

Line Fences Committee

Office of the Information Commissioner of Canada

Ontario Court of Appeal

Ontario Court of Justice (prosecutions)

Ontario Energy Board

Ontario Human Rights Tribunal

Ontario Municipal Board

Ontario Rental Housing Tribunal (Landlord and        Tenant Board)

Pay Equity Tribunal

Privacy Commissioner of Canada

Small Claims Court

Social Benefits Tribunal

Superior Court of Justice

Supreme Court of Canada

Workplace Safety and Insurance Board

 

 

 

DOCUMENT 3

 

Legal Counsel to Standings Committees and Council

 

Committee

Legal Counsel

Agriculture and Rural Affairs

Tim Marc, Ext. 21444

(Christine Enta, Ext. 13579)

(Cathy Crosby (municipal drain reports), Ext. 21440)

Audit Sub-Committee

M. Rick O’Connor, Ext. 21215

(Carey Thomson, Ext. 21365)

Community and Protective Services

Carey Thomson, Ext. 21365

(Cathy Crosby, Ext. 21440)

(Valérie Bietlot, Ext. 21384)

Environment Committee

Hana Nader-Merhi, Ext. 12813

(Carey Thomson, Ext. 21365)

Finance & Economic Development

M. Rick O’Connor, Ext. 21215

Carey Thomson, Ext. 21365

David White, Ext. 21933

Anne Peck, Ext. 13407

Information Technology Sub-Committee

David Sloan, Ext. 13564

Planning

Tim Marc, Ext. 21444

(Christine Enta, Ext. 13579)

(Anne Peck, Ext. 13407)

Transit Commission

Taffy Nahas, Ext. 21220

(Carey Thomson, Ext. 21365)

Transportation

Taffy Nahas, Ext. 21220

(Valérie Bietlot, Ext. 21384)

Ottawa Board of Health

Anne Peck, Ext. 13407

Ottawa Public Library Board

Valérie Bietlot, Ext. 21384

Cathy Crosby, Ext. 21440

Police Services Board

M. Rick O’Connor, Ext. 21215

David White, Ext. 21933