More Questions and Answers
The Practice Management Advisor
David J. (Dave) Bilinsky is the Society's Practice Management Advisor. His focus is to develop educational programs and materials to increase lawyers' efficiency, effectiveness and personal satisfaction in the practice of law with a special emphasis on technology.
His preferred way to be reached is by email to: firstname.lastname@example.org (no telephone tag). Alternatively, you can call him at the Law Society office at (604) 605-5331 or toll-free in B.C. 1-800-903-5300, or address mail to the Law Society office.
Are "handling fees" for disbursements allowed?
Question: We would like to add a "handling fee" to our client billings when we incur disbursements for our clients. What do you think about this?
Answer: There are a couple of cases you should be aware of:
- Pierce van Loon v. Russell (1994) 32 CPC (3d) 277 at pp 280-81: A handling fee or surcharge on disbursements is not recoverable, especially when it is sought to be justified as a way of avoiding the limit on contingent fee agreements fixed by the Law Society Rules.
- Knock v. Owen (1904) 35 SCR 168 at p 174: Lawyers must not charge their clients more for disbursements than the amounts they actually incur on their clients' behalf. See also Girardet v. Crease & Co. (1987) 11 BCLR (2d) 361 (SC) at p. 362.
These cases should be carefully considered before adding any disbursement surcharges on a bill.
Can I certify a trust cheque from a virtual bank?
Question: I have received a lawyer's trust cheque drawn on the Citizens Bank of Canada to complete a real estate transaction. It is my practice to have all such cheques certified prior to depositing them to my trust account and paying out on the conveyance. However, as Citizens Bank is a "virtual" bank, there is no "branch" that I can send the cheque to for certification. What do I do?"
Answer: Citizens Bank of Canada has been established by VanCity Savings Credit Union. It bills itself as a "different kind of bank." It is one of a new class of "virtual" banks. It does not have the branch network of the traditional banks and accordingly, does not have the facilities to certify cheques. However, lawyers using the services of a any bank and, in particular, a virtual one, must comply with Chapter 11, Rule 8 of the Professional Conduct Handbook, which states:
8. Except in the most unusual and unforeseen circumstances, which the lawyer must justify, a lawyer who withdraws or authorizes the withdrawal of funds from a trust account by cheque undertakes that the cheque (a) will be paid, and (b) is capable of being certified if presented for that purpose.
8. Except in the most unusual and unforeseen circumstances, which the lawyer must justify, a lawyer who withdraws or authorizes the withdrawal of funds from a trust account by cheque undertakes that the cheque
(a) will be paid, and
(b) is capable of being certified if presented for that purpose.
On my contacting Citizens Bank, their representative, John Nation, stated that, if a certified cheque is required from a lawyer banking with Citizens Bank, the lawyer delivering the cheque must instead request a bank draft from their Service Centre which is located on the 5th floor – 815 West Hastings Street, Vancouver. They do not have facilities to certify a trust cheque.
Accordingly, all lawyers must make appropriate arrangements to deliver a bank draft or other negotiable instrument that is the equivalent of certified funds if facilities do not exist at their bank to certify their trust cheques. Otherwise, delivering a trust cheque drawn on a virtual bank such as the Citizens Bank is in contravention of the Handbook, since it is not capable of being certified.
Can a contract legal secretary work on both sides of a file?
Question: I maintain my own practice and have a secretary who is looking for additional work. A lawyer who maintains a (separate) office down the hall has just hired her to work part-time. Now I have been advised that this other lawyer is on the other side of a family file on which I act for one of the spouses. In the ordinary course of events, the shared secretary will now be working on both sides of the file. Should I be concerned?
Answer: Secretaries are not bound by the rules of professional conduct - but the lawyers who hire them are. I have drafted a Confidentiality Agreement that can be signed by staff to bring home the important confidential nature of the lawyer's work (www.lawsociety.bc.ca - Ethics).
The Ethics Committee has stated that, over and above the ordinary obligations of confidentiality, lawyers who share the services of an employee with another firm must exercise due diligence to ensure the employee does not divulge the other firm's confidential information to them. The Ethics Committee has not suggested that it is proper for such an employee to work on matters at different law firms for clients adverse in interest. Accordingly, I would take steps to ensure that any staff member that is in your office on a shared, casual or part-time basis (such as temporary staff) not be exposed to work that could place them in a position of working on both sides of a file.
Does liability insurance extend to a firm's corporate services company?
Question: We have a non-law corporation that is acting as a records and registered office for a number of our corporate clients. We are only billing for non-legal services rendered by this corporate services company. We are concerned about liability insurance - does the standard policy extend to services rendered by a corporate services company? If not, can we add them as an additional-named insured?
Answer: There are two problems with trying to claim under the standard lawyer's liability policy for any work done in the corporate services company. First there is a business exclusion in the policy that prevents coverage of such a loss (any claim arising out of an organization in which the individual insured, the insured's family or the individual insured law firm, the law firm's partners or associates individually or collectively, indirectly or directly, had effective management or control of the organization in a amount greater than 10% - see Exclusion 6.2 for full details). Furthermore, a non-law company is not entitled to be named as an additional insured under the professional liability insurance policy.
So while using a non-law corporation to bill for registered and records office work to save a client taxes may seem at first blush to be a good idea, it carries with it the associated risk of not being covered by any professional liability insurance.
Can I take retainers or payments from clients on credit or debit?
Question: We have had enquiries from clients wanting to pay by VISA or by debit card. Does the Law Society allow lawyers to take these forms of payment? What about taking retainers in this way?"
Answer: There are two parts to your question. There is no problem in accepting payment of rendered accounts by VISA, MasterCard or other credit card, or by debit card. You must make appropriate arrangements with your financial institution to establish the credit card or debit card service, and set up a separate account to which these payments will be credited. There will be a service fee deducted from the payment, which is normally treated by the firm as a cost of doing business. However, if you are proposing to take retainers by credit card or debit card, you must take some precautions.
First, this separate account must be designated as a trust account, since Law Society Rule 3-51 (2) states: Except as permitted under section 62(5) of the Act, a lawyer must deposit all trust funds to a pooled trust account. Having this special account designated as a general account and withdrawing the funds in order to deposit them into a trust account is not sufficient compliance with the Rules.
Second, any credit card or debit card service fees or deductions from the deposit must either be taken from the lawyer's own funds (up to $300 permitted in any trust account under Rule 3-52(4)) or the lawyer must immediately deposit to the trust account sufficient funds to the credit of the client to offset these credit card or debit card service fees or deductions.
Last, you should be attentive to any policies of your financial institution that may allow the institution to withdraw any credit card or debit card payments in the event that the card was used fraudulently or if the amount exceeds the card's limit. It would be prudent to institute a policy that no such deposits would be transferred out of the trust account unless and until the time limit for the bank to institute such action has passed.
If you have recently looked at the Law Society's website at www.lawsociety.bc.ca, you will have noticed a new area under "Services for Lawyers" entitled "Practice & Ethics." It is my intent to populate this area with as many law office management precedents as possible. The need for such precedents was identified in the survey of the profession that I did a little while ago - and this is where you come in.
Over the next while, I am asking for lawyers to forward their precedents to me for posting on the website to assist others in the profession who may find them useful.
On this first round I am looking for two types of agreements:
- Agreements for lawyers in office-sharing arrangements; and
- Associate employment agreements
Kindly forward any precedents you are able to share in electronic form (Word or WordPerfect formats are fine) to email@example.com, together with any suggestions you have for other useful management precedents to be included in this initiative. Thank you.