Fee will fund a variety of trust initiatives
Trust administration fee delayed to October 1, 2004
The new trust administration fee, approved by the Benchers earlier this year to fund Law Society trust assurance initiatives, will come into effect on October 1, 2004, instead of on July 1, 2004 as originally scheduled. The Benchers are expected to consider new Rules to implement the fee at their meeting in July, and the Law Society's trust review staff intend to issue an interpretation bulletin on the fee, to be available on the Law Society website.
Beginning October 1, 2004, BC lawyers who maintain one or more trust accounts will be required to remit to the Law Society a $10 trust administration fee for each trust transaction (or series of trust transactions relating to one client matter) over $5,000.
The proceeds of this trust administration fee (TAF) 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 will replace the Form 47 accountant's report over the next year. 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 innocent insured coverage now provided by the Lawyers Insurance Fund. If a portion of the trust administration fee is allocated as a contribution towards the innocent insured coverage, this would be on a go-forward basis only (and not to pay any claims made against the Special Compensation Fund). Any such allocation would mean that lawyers who carry out trust transactions in effect contribute a greater portion of the overall risks associated with those transactions.
The Law Society's trust administration programs are important in monitoring the proper handling of trust funds within the profession. To date, all practising lawyers have funded these programs. However, since the programs relate to lawyers who hold trust funds and carry out trust transactions, it is appropriate for those lawyers to bear a larger portion of the overall expense. The Benchers recognize, however, that lawyers will need to adopt administrative procedures to calculate and remit the fee.
It is important to note that only one fee will apply per client file or 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 legal fees and disbursements will not attract the fee.
Lawyers will be asked to report the fees they owe for the quarters ending March 31, June 30, September 30 and December 31, and to remit those fees by the end of the following month. A penalty of 5% plus interest at a prescribed rate will apply to late payments. As the TAF is not scheduled to take effect until October 1, 2004, the first reporting period would end December 31, with the first remittance due January 31, 2005.