The Benchers have approved the 2020 practice fee and insurance fee, as recommended by the Finance and Audit Committee. The total annual fee for full-time practising, insured lawyers for 2020 will be $4,089.12. The practice fee of $2,289.12, an increase of $28.95, anticipates supporting the strategic plan, continuing to address the increased number of citations and serious files, continued focus on anti-money laundering monitoring and enforcement initiatives, significant increases in PLTC students and continuous improvement of services to the public and lawyers through technology and process reviews. The full-time insurance fee is unchanged at $1,800.
Practice fee
The Benchers have set the 2020 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 2020 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 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 27, 2019 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 2020 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 factors impacting the 2020 budget, which can be classified into five main areas: 1) Addressing the increased number of citations and serious files 2) the significant increase in PLTC students, 3) strengthening the anti-money laundering and terrorist financing monitoring and enforcement efforts, 4) supporting Bencher strategic planning, policy and committee work, and 5) Continuous improvement of services to the public and lawyers through technology and process reviews.
2020 Operating revenue
General Fund revenues to provide for operations in 2020 are projected to be $29.3 million, $2.0 million (7.4%) over the 2019 budget, due to higher membership numbers, higher PLTC student numbers, and significant D&O Liability insurance recoveries as well as an increase in the practice fee of $29.93 (1.6%) to provide for a balanced budget. The budgeted revenue is based on estimates of 12,846 full-time equivalent practicing members, 638 PLTC students, and other revenues are projected at similar levels to 2019.
2020 Operating expense
General Fund operational expenses are also projected to be $29.3 million, $811,000 (2.8%) over the 2019 budget.
General Fund net assets
Overall, the General Fund remains financially sound, with $20.7 million in net assets at the end of 2018 (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 $5.6 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. Recent initiatives include auditing higher risk practice areas every 4 years and the use of data analytics. For 2020, 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 2019 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 be $41.94 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 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 30 physical locations. The CLBC funding for 2020 will be set $2.62 million in funding versus $2.54 million in 2019. These additional resources will primarily be used for staff cost of living increases and updating publications.
The Advocate
The Advocate is funded at $346,952 in 2020 versus $332,292 in 2019, which will continue to draw down some of The Advocate net asset reserves. 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 2019 funding.
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 2020. This funding is sent to the Law Foundation for distribution. With the CPI increase of 2%, the funding amount is $353,736.
Lawyers Insurance Fund Fee
The Benchers have resolved to maintain the annual insurance fee at $1,800 (full-time) and $900 (part-time) for 2020. The number of insurance reports and the amount of annual payments have been trending up slightly over the past few years, with 2019 expected to consistent with 2018. 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 insurance 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 resulted in additional claims, and the implementation of the Civil Resolution Tribunal’s exclusive jurisdiction over “minor injury” and Part 7 benefit claims is expected to increase exposure to personal injury lawyers. 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*
* 2020 Law Society of British Columbia annual fee compared to 2020 projections or 2019 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 notice, 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.