Hi friends,

Regulating AI will be challenging enough, but navigating an ever-changing set of rules and obligations as a company will be even harder. AI, ironically, might be here to help.

In today’s email:

1. Technology: Using AI to navigate AI regulation? 

2. Recent Developments: Structured settlements and Court of Appeal ruling.

TECHNOLOGY

Using AI to navigate AI regulation?  

Canada’s proposed AI legislation is confusing, and AI might be the solution. The Artificial Intelligence and Data Act (AIDA), if enacted, will be Canada’s first meaningful attempt at regulating the use and development of AI. But it’s not exactly clear how AIDA will do this, since many details, including what kind of AI the bill will apply to, still need to be fleshed out by regulations (for example, see the definition for “high-impact systems”).

Questions about whether this is the right approach aside, if enacted, companies using or developing AI will have to navigate an ever-changing patchwork of regulation in their everyday operations, and be ready to adapt when regulatory requirements change.

This will create a huge opportunity for a RegTech solution.

“RegTech” is the application of various new technologies that assist stakeholders in highly regulated industries in meeting regulatory obligations. Examples include chatbots that can advise on regulatory questions, cloud-based platforms for regulatory and compliance data management, and computer code that helps enable more automated processing of data related to regulations.

By leveraging these technologies, RegTech can be agile, and well-suited to respond to a rapidly changing regulatory landscape. IBM put out an article stating that we should expect RegTech to play a big role in AI governance, and Canada’s recent drafting of AIDA shows us why. As AI continues to proliferate, compliance will become more and more challenging, opening the door for a RegTech solution to help streamline this process.

RECENT DEVELOPMENTS

Structured settlements must be placed in escrow prior to court approval: the Ontario Superior Court of Justice in the Spicer v Wawanesa Mutual Insurance Company case ruled that placing or funding a settlement structure in escrow before court approval is both suitable and necessary. After Timothy Spicer, a low-income earner, suffered a severe traumatic brain injury in a school bus accident, the respondent, Wawanesa Mutual Insurance Company, offered a settlement of $450,000 for medical, rehabilitation, income replacement, and attendant care benefits.

In considering approval, the court emphasized the need for complete disclosure and appropriate evidence to assess the settlement's benefits. A proposed structure worth $275,000 was funded in escrow, and the court clarified that this is not the same as implementing the settlement before approval. After finding the settlement reasonable and in Spicer's best interest, the court approved it, validating the funds held with Sun Life Assurance Company of Canada.

The Court of Appeal for Ontario upheld a ruling against Campesi and Campesi LLP, a personal injury law firm that had charged a 30% contingency fee for a $1-million accident benefits award. The case revolved around a fee increase, from 15% to 30%, triggered by a minor mediation over a treatment plan worth $2,065.

The appeal court found that the firm's lawyers had not adequately advised their client about the potential fee increase. Despite the law firm's success in securing sizable settlements, their client, Blanka Novosel, successfully applied to reopen the compensation agreement, asserting the contingency fee as unreasonable and excessive.

The court ordered the law firm to repay $150,000. The appeal court reiterated that contingency fees should be fair and reasonable, regardless of the percentages stated in the Contingency Fee Retainer Agreement (CFRA). The court dismissed the firm's appeal on both the excessive fees and the costs order.