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September 30, 2020

Recognizing the ongoing challenges the legal profession faces as a result of the pandemic, the Benchers adopted a budget for 2021 that maintains annual practice and indemnity fees at the same levels as 2020.

The total annual fee for full-time practising, insured lawyers for 2021 will be $4,089.12. The practice fee of $2,289.12, which is unchanged from the 2020 fee, anticipates supporting the strategic plan, enhanced regulatory processes, continued focus on anti-money laundering monitoring and enforcement initiatives, a new online learning platform for online courses and increased use of virtual meeting software, security testing, data analytics and artificial intelligence. The full-time indemnity fee is unchanged at $1,800.

Practice fee

The Benchers have set the 2021 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 2021 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 25, 2020 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.

There will be a one-time practice fee reduction in 2021 based on the economic circumstances of law firms and lawyers as a result of the COVID-19 pandemic. The intention is to provide a targeted practice fee reduction to those most heavily impacted by the COVID crisis and to cover the one-time practice fee reduction from current reserves.  In addition, the annual practice fee will be collected in two instalments, the same as the indemnity fee.

Law Society operations

The focus of the 2021 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 initiatives impacting the 2021 budget: 1) supporting Bencher strategic planning, 2) implementation of the framework for introduction of licensed paralegals, 3) initiatives to improve the efficiency and effectiveness of our regulatory operations, 4) strengthening the anti-money laundering and terrorist financing monitoring and enforcement efforts and participation in the Cullen commission, 5) implementation of a new online learning platform for online courses including the Indigenous Intercultural Competency course and 6) Increased use of virtual meeting software, security testing, data analytics and artificial intelligence.

2021 Operating Revenues

General Fund revenues to provide for operations in 2021 are projected to be $28.5 million, $790,000 (2.7%) under the 2020 budget, due to slightly lower lawyer numbers and reduced D&O liability insurance recoveries and interest income. The budgeted revenue is based on estimates of 12,673 full-time equivalent practicing lawyers, 594 PLTC students, and other revenues are projected at similar levels to conservative historical actual figures. 

2021 Operating Expenses

General Fund operational expenses are also projected to be $29.2 million, $139,000 (0.5%) under the 2020 budget, with lower costs in all areas. The 2021 budget projects a modest deficit of $650,000.

General Fund Net Assets

The General Fund remains financially sound, with $24.3 million in net assets at the end of 2019 (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 $8.4 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 every 4 years. For 2021, 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 2020 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 is expected to 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 2021 will be set $2.70 million in funding versus $2.62 million in 2020.

The Advocate

The Advocate is funded at $347,000 in 2021, the same as 2020, 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 2020 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 2.7%, the funding amount is $363,286.

Lawyers Indemnity Fund Fee

In light of the challenging circumstances facing many lawyers, the Benchers have resolved to maintain the annual indemnity fee at $1,800 (full-time) and $900 (part-time) for 2020. The number of claim reports has remained reasonably steady; however, annual claim reserves have been trending up significantly 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 18 new reports. As well, 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 indemnity reports, and recent changes in real estate practice may spell increased claims activity. These risks and declining investment returns in the future will require an increase to the fee in the coming years.

Total fee comparison with other law societies*

*Assumes the same fee from 2020 for all Law Societies as 2021 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 telephone at 604.443.5712 (toll-free at 1.800.903.5300) or email at jmcphee@lsbc.org.