Fee scheduled to take effect July 1, 2004
Trust administration fee (TAF) will fund array of trust initiatives
Beginning July 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: see "Benchers take steps toward more effective trust reporting regime" on page 4. 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 toward new innocent insured coverage that the Lawyers Insurance Fund will offer beginning May 1, 2004: see page 9. If a portion of the trust administration fee is allocated as a contribution toward the innocent insured 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 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 transaction 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 July 1, 2004, the first reporting period would end September 30, with the first remittance due October 31.
The Benchers will consider rules to implement the new trust administration fee in early 2004.