The Benchers have approved the 2019 practice fee and insurance fee, as recommended by the Finance and Audit Committee. The total annual fee for full-time practising, insured lawyers for 2019 will be $4,060.17. The practice fee increase of $120.45 anticipates an increase in the number of discipline cases expected to go to hearings this year, the additional work necessary to support anti-money laundering monitoring and enforcement, and the impact of the new employers health tax. The full-time insurance fee is unchanged at $1,800.
Practice fee
The Benchers have set the 2019 fees pursuant to the Legal Profession Act based on a thorough review of the Law Society’s finances by the Finance and Audit Committee. The Finance and Audit Committee met with senior management to review the proposed 2019 fees and budgets for the General Fund and the Lawyers Insurance Fund. The Finance and Audit Committee also reviewed the fee proposals from a number of organizations and programs supported by Law Society fees, including Courthouse Libraries BC, the Lawyers Assistance Program, The Advocate, the Federation of Law Societies of Canada, the Canadian Legal Information Institute, the Rural Education and Access to Lawyers (REAL) program and the delivery of pro bono and access to legal services. Based on these meetings and reviews, the Finance and Audit Committee made recommendations to the Benchers regarding the amounts from the practice fee that should be allocated to each of these organizations and programs. These recommendations were approved by the Benchers at their September 21, 2018 meeting.
The overall objective when setting the fees is to ensure that the operations are appropriately funded to enable the Law Society to efficiently and effectively fulfill its statutory mandate of protecting the public interest in the administration of justice.
Retired member fee
Retired members receive pro bono insurance coverage for sanctioned services, the Advocate magazine, voting rights and eligibility to run for Bencher. The Benchers reviewed the retired member fee, which was last set in 1997, and approved increasing the fee to $125.
Law Society operations
The focus of the 2019 General Fund budget, in addition to delivering the core regulatory programs and meeting the established Key Performance Measures, is supporting regulation and education to ensure that the Law Society remains an innovative and effective professional regulatory body.
There are several new factors impacting the 2019 budget, which can be classified into five main areas: 1) The volume of discipline cases that will fall into 2019, 2) the complexity and volume of investigations, 3) strengthening the anti-money laundering and terrorist financing monitoring and enforcement efforts, 4) the provincial government’s new health care payroll tax, and 5) law firm regulation.
2019 Operating revenue
General Fund revenues to provide for operations in 2019 are projected to be $27.3 million, $2.6 million (10.5%) over the 2018 budget, due to higher membership numbers, higher PLTC student numbers, and increases to select member services and credentials fees plus an increase in the practice fee of $120.06 to provide for a balanced budget before reserve spending. The budgeted revenue is based on estimates of 12,383 full-time equivalent practicing members, 540 PLTC students, and other revenues are projected at similar levels to 2018, along with select credentials and membership fee increases.
2019 Operating expense
General Fund operational expenses, before reserve spending, are also projected to be $27.3 million. This equates to a 5.8% increase in expenses before, the additional increase in discipline external counsel fees (1.0%), the new external counsel fee contingency (.8%), initiatives related anti-money laundering efforts and investigating the misuse of trust accounts (1.5%), and the new provincial payroll health tax (1.4%). Including all these items, the general fund operating expenses, before reserve spending, have increased by $2.6 million (10.5%) over the 2018 budget.
General Fund net assets
Overall, the General Fund remains financially sound, with $17.7 million in net assets at the end of 2017 (excluding the TAF net assets). The net assets consist of capital assets, primarily the 845 Cambie Street building, the capital plan, along with a working capital reserve of $3.3 million. This level of net assets ensures that no short-term borrowing is required to fund General Fund operations.
As noted above, some funding for the 2019 budget will come from the use of reserves.
The following reserve spending is budgeted:
- Discipline external counsel fees for a total cost of $1.835 million in 2019, of which $1.115 million will be funded through reserve.
- Additional resources to develop policies for law firm regulation with estimated costs of $100,000.
Trust administration fee
The goal of the Trust Assurance program is to ensure that law firms comply with the rules regarding proper handling of clients’ trust funds and trust accounting records. This is achieved by conducting trust accounting compliance audits at law firms, reviewing annual trust reports, and providing member advice and resources. The compliance audit program ensures that all firms are audited at least once within a six year cycle. For 2019, the trust administration fee (TAF) will remain unchanged at $15 per transaction.
The Federation of Law Societies of Canada
The Federation of Law Societies of Canada fee will remain the same as the 2018 fee of $28.12 per lawyer. The Federation provides a national voice for provincial and territorial law societies on important national and international issues.
The Canadian Legal Information Institute
The Canadian Legal Information Institute (CanLII) fee will remain the same as the current 2018 fee of $39.24 per lawyer. CanLII is a not-for-profit organization initiated by the Federation of Law Societies of Canada. CanLII’s goal is to make primary sources of Canadian Law accessible for free on its website at www.canlii.org. All provincial and territorial law societies have committed to provide funding to CanLII.
Courthouse Libraries BC
Courthouse Libraries BC (CLBC) provides lawyers and the public in BC with access to legal information, as well as training and support in finding and using legal information. Through its expanding digital collections, website content and training, and 30 physical locations, the library provides practice support for lawyers across the province; and for the public. The CLBC funding for 2019 will be set at $205 per lawyer, an increase of $10 over 2018. This will result in approximately $2.54 million in funding versus $2.36 million in 2018. These additional resources will be used to provide for staff salary and benefit increases, and the new provincial payroll health tax.
The Advocate
The Advocate is funded at $332,292 for 2019, which will draw down some of the Advocate net asset reserves, reducing the 2019 funding to $21.75 per member. The Advocate publication is distributed bi-monthly to all BC lawyers.
Lawyers Assistance Program
LAP provides confidential outreach, education, support and referrals to lawyers and other members of British Columbia’s legal community. LAP has requested funding of $792,440 which is consistent with 2018 funding. This is estimated at $64 per lawyer.
Pro bono funding
The Law Foundation includes Law Society funding in its financial support to organizations, offering pro bono legal services to the public. The Finance and Audit Committee recommended the contribution to pro bono and access to legal services funding be increased by the CPI index in 2019. This funding is sent to the Law Foundation for distribution. With the CPI increase of 2%, the funding amount is $346,800.
Rural Education and Access to Lawyers
The Rural Education and Access to Lawyers (REAL) initiative is no longer funded by the Law Society.
Lawyers Insurance Fund fee
The Benchers have resolved to maintain the annual insurance fee at $1,800 (full-time) and $900 (part-time) for 2019. The number of insurance reports and the amount of annual payments have been trending up slightly over the past few years, with 2018 expected to be slightly higher in number but lower in payments than 2017. Effective claims, risk and investment management, combined with good investment returns, have made it possible to hold the Law Society’s insurance fee at $1,800 next year. In addition, actuarial advice indicates that based on industry standards existing net reserves are at appropriate levels. However, there are risks to be considered. The expansion of coverage under Part C for trust shortages from social engineering scams has increased the exposure to claims, and significant theft losses are expected to be paid under Part B. Civil litigation practice on the plaintiff side continues to generate significant numbers of insurance reports, and recent changes in real estate practice may spell increased claims activity. These risks, higher costs, and declining investment returns in the future may require an increase to the fee in years to come.
Total fee comparison with other law societies*
* 2019 Law Society of British Columbia annual fee compared to 2019 projections or 2018 annual fees of other law societies, increased by 2%.
For more information
If you have questions about the fees or the financial information in this highlight, please contact Jeanette McPhee, Chief Financial Officer and Director of Trust Regulation, by telephone at 604.443.5712 (toll-free at 1.800.903.5300) or email at jmcphee@lsbc.org.