Fee takes effect March 1, 2005
Benchers adopt rules on trust administration fee (TAF)
The Benchers have passed new Law Society Rules 2-72.1 through 2-72.5 to implement the trust administration fee, which comes into effect on March 1, 2005. These rules are available online at www.lawsociety.bc.ca and set out in the enclosed Member’s Manual amendment package
As reported in previous issues of the Benchers’ Bulletin and by email broadcast to the profession, the Benchers approved in principle a trust administration fee earlier this year to fund Law Society trust assurance initiatives.
A BC lawyer will be required to remit to the Law Society on a quarterly basis a $10 trust administration fee (TAF) for each client matter undertaken by the lawyer in connection with which the lawyer receives any money in trust on or after March 1. The TAF will not apply to money received as fees or retainers.
The Benchers had originally planned that the TAF would apply only to those trust matters of $5,000 or more. In Law Society consultations with several law firms, it appeared this threshold would create an additional administrative burden within firms and prove more of a nuisance than a benefit. As a result, the Benchers decided against adopting a minimum threshold in the Rules.
The proceeds of the trust administration fee will fund various Law Society trust administration programs, including the audit and investigations program, the custodianship program and a new program of trust reports that is replacing the Form 47 accountant’s report. The funding of these trust initiatives through the TAF will be on a go-forward basis.
In the future it is possible that a portion of the fee may also be allocated towards the new trust protection coverage now provided by the Lawyers Insurance Fund. If a portion of the trust administration fee is allocated as a contribution towards that coverage, this would be on a go-forward basis only (not to pay any claims made against the Special Compensation Fund). Any such allocation would result in lawyers who carry out trust transactions in effect contributing a greater portion of the overall costs associated with those transactions.
It is important to note that only one transaction fee will apply per client matter; accordingly, multiple trust deposits and disbursements in relation to one client matter will not incur multiple trust administration fees. The deposit or payment of money for the sole purpose of legal fees and disbursements will not attract the fee.
For more information on the trust administration fee, please contact Chief Financial Officer Neil Stajkowksi by email at firstname.lastname@example.org or through the Law Society office numbers.
The Rules provide for interpretation of what constitutes a “client matter” by the Law Society’s Executive Director and the Executive Committee in individual cases. The Society may also issue interpretation guidance as necessary to assist law firms in collecting and remitting the TAF — please check the Law Society website and publications early in 2005.