The Benchers have approved the 2022 practice fee and indemnity fee, as recommended by the Finance and Audit Committee. The total annual fee for full-time practising, indemnified lawyers for 2022 will be $4,089.00. The practice fee of $2,289.00, which is unchanged from the 2021 fee, supports the strategic plan, along with key operational priorities, including enhanced regulatory processes, innovation sandbox initiatives, continued focus on anti-money laundering monitoring and enforcement initiatives, and enhanced practice support and online courses. The full-time indemnity fee is unchanged at $1,800.
Practice fee
The Benchers have set the 2022 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 2022 fees and budgets for the General Fund and the Lawyers Indemnity 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 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 24, 2021 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.
Law Society operations
The focus of the 2022 General Fund budget, in addition to delivering the core regulatory programs and meeting the established Key Performance Measures, is supporting regulation to ensure that the Law Society remains an innovative and effective professional regulatory body.
There are several key initiatives in 2022 including: 1) improving the efficiency and effectiveness of the regulatory operations; 2) strengthening the anti-money laundering and terrorist financing monitoring and enforcement efforts; 3) enhancing practice support and online courses; 4) increasing the use of data analytics and artificial intelligence; 5) supporting innovation sandbox initiatives to improve access to legal services; 6) reviewing alternative pathways to licensing; and 7) the continued implementation of the diversity action plan.
2022 Operating Revenues
General Fund operating revenues in 2022 are projected to be $30.4 million, $1.9 million (6.5%) over the 2021 budget due primarily to an increase in the number of lawyers year over year, along with increases in electronic filing revenue, credentials fees and interest income. The budgeted revenue is based on estimates of 13,545 full-time equivalent practising lawyers, 610 PLTC students, and other revenues are projected at similar levels to historical actual figures.
2022 Operating Expenses
General Fund operating expenses in 2022 are projected to be $31.2 million, a 6.3% increase (prior to call ceremonies carry-forward costs), with the increase mainly due to staff wage increases, additional staff resources to support the delivery of core functions, costs relating to the digitization of the workplace and other technology upgrades, and higher external counsel fees. The 2022 budget projects a modest deficit of $825,000, which will be funded from net asset reserves.
General Fund Net Assets
The General Fund remains financially sound, with $27.9 million in net assets at the end of 2020 (excluding the trust administration fee 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 $11.3 million. This level of net assets ensures that no short-term borrowing is required to fund General Fund operations.
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, and includes audits of higher risk practice areas at least every four years. For 2022, the trust administration fee will remain unchanged at $15 per transaction.
The Federation of Law Societies of Canada
The Federation of Law Societies of Canada fee will reduce to $24, down from the 2021 fee of $28.12 per lawyer, as the Federation will use some of its excess net asset reserves to fund some of their operations. 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 at $42 per lawyer. CanLII is a not-for-profit organization initiated by the Federation of Law Societies of Canada, with the goal 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 provides lawyers and the public in BC with access to legal information, as well as training and support in accessing and using legal information. Through its information services, curation of print and digital collections, website content and training, the library provides practice support for lawyers and access to justice support to the public across the province, through its 31 physical locations. The CLBC funding for 2022 is set at $2.759 million.
The Advocate
The Advocate funding has been set at $414,200 for 2022. 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 funding has been set at $850,000 for 2022.
Pro bono funding
The Law Society contributes funding to support pro bono and access to legal services. The 2022 funding is set at $365,000 and is sent to the Law Foundation for distribution.
Lawyers Indemnity Fund Fee
The indemnity fee will remain at $1,800 (full-time) and $900 (part-time) for 2022. The number of claim reports has remained reasonably steady; however, annual claim reserves have been trending up over the past three years.
And there are additional risks to be considered. The pandemic has found its way into the indemnity program and, to date, is the cause of 28 new reports. As well, personal injury and civil litigation practice on the plaintiff side continue to generate significant numbers of indemnity reports, and recent changes in real estate practice, including new Land Ownership Transparency Act requirements, may spell increased claims activity. These risks coupled with declining future investment returns will require an increase to the fee in the coming years.
Total fee comparison with other law societies*
*Assumes the same fee from 2021 for other Law Societies as 2022 has not yet been set
For more information
If you have questions about the financial information in this notice, please contact Jeanette McPhee, Chief Financial Officer and Director of Trust Regulation, by email to jmcphee@lsbc.org.