Fee splitting rule

LLPs can include law corporations and non-lawyer partners from other provinces

Recent Law Society Rule changes now expressly allow limited liability law partnerships in BC to include a law corporation or, in the case of an inter-jurisdictional LLP, a non-lawyer who is permitted to participate in a law partnership in another Canadian jurisdiction.

Law corporations as partners of LLPs

Rule 9-13, which permits a BC lawyer to practise law through an LLP, also now expressly permits law corporations to do so. Since the duties and responsibilities of an individual lawyer are not changed by virtue of being an employee, shareholder, officer, director or contractor to a law corporation, there is no reason to prevent a law corporation from joining an LLP.

The Law Society requires only that the partner making the application on behalf of the LLP confirm that the voting shareholders of a BC law corporation are practising members of the Society.

Non-lawyer partners in national LLPs

A national law firm may become an LLP under the BC Partnership Act and then register extraprovincially in any other province (or provinces) in which it carries on business. The firm may alternatively set up the LLP under the legislation of another province and register extraprovincially under the BC Partnership Act.

The Law Society Rules contemplate a system for approval of LLPs, including those that do business in more than one province. As first introduced, Rule 9-15(2) provided that the Executive Director may issue a statement of approval for an LLP in which all partners are members of the Society or are members of a recognized legal profession in another jurisdiction. In April, the Benchers approved an expansion of the Rule to allow partners of an LLP to include “a non-lawyer participating in another Canadian jurisdiction as permitted in that jurisdiction.”

This change reflects the national landscape. Law firms in some provinces now include entities that are not “members” of a recognized legal profession, but are nonetheless entitled to join in partnership with lawyers in those provinces. In Quebec, for example, certain trusts are permitted to form partnerships with lawyers, and in Ontario some non-lawyers whose work complements legal practice (such as patent and trademark agents and engineers working under lawyer supervision) can also be partners in an Ontario law firm.

While the new Rules may result in multi-disciplinary partnerships between lawyers from BC and both lawyers and non-lawyers from another province, Part 9, Rule 6 of the Professional Conduct Handbook continues to prohibit fees from being shared by BC lawyers and non-lawyers in the partnership.