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: dbilinsky@lsbc.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.

How does an independent contractor bill a firm? (clarification)

In my June column, I answered a question from an independent associate counsel who was paid a percentage of the paid billings from the files on which the lawyer had worked. The question was whether or not this associate was required to bill the firm for PST and GST on the associate's accounts.

In my answer I stated that the lawyer was required to bill both PST and GST. This answer is correct where associate counsel is working for several firms. However, if an independent counsel is working exclusively for one firm under a contract for services, he or she is not required to bill the firm for PST under Regulation 40/94 pursuant to the Social Services Tax Act. Section 8.2 of Regulation 40/94 provides as follows:

8.2 Legal services provided to a law firm or notary firm by a lawyer or notary who is employed exclusively by the firm under a contract for services or as an associate counsel, but who is not an employee for purposes of the Income Tax Act (Canada), are exempt from tax under section 2.012 or 2.013 of the Act if the purchase price to the firm for the legal services is recovered directly by the firm in its sale price of the legal services to the firm's client in respect of whom the legal services were provided.

The associate is still required to bill for GST regardless of whether he or she is working exclusively for one firm or for many firms. My apologies for any resulting confusion. Many thanks to Douglas MacAdams, John Annesley and Clark M. Roberts and any others who drew my attention to this distinction.

When is GST not billable to the Legal Services Society?

Question: I have heard that we do not have to charge GST when billing the Legal Services Society after our billable time on a file exceeds $50,000. Is this true?

Answer: According to the Legal Services Society, GST is billable on the LSS tariff, but not PST. Once a criminal trial has reached $50,000 in fees (after the LSS 10% holdback), funding is then done by way of a Rowbotham application with accounts then being paid by the Attorney General. The Legal Services Society reviews the accounts submitted to the A.G. to ensure that they have been billed in accordance with the LSS tariff rates and criteria and submits its opinion to the A.G.'s office. However, the Attorney General's office does not reimburse GST, but does reimburse PST.

To summarize, at the outset a lawyer will be billing Legal Services for GST but not PST. Once billable fees on a criminal file exceed $50,000, a firm then bills PST but not GST. For further information contact Corinne Biscaro at the Legal Services Society by telephone at (604) 601-6157 or by email to corinne.biscaro@lss.bc.ca.

Can a bank take funds directly from a lawyer's trust account for a wire transfer?

Question: I have to wire a large amount of money from my trust account to a client in Australia. The bank wants to take the funds from my trust account and do the wire transfer. Is this proper?

Answer: Law Society Rule 3-56(2) makes it clear that, at this time, all withdrawals from a trust account (pooled or general) must occur by way of a cheque.

In this instance, draw the cheque payable to your bank. Have a written letter signed by the responsible lawyer accompany this cheque to direct the bank to wire these funds to the client care of the client's bank, and reference the client's bank account number. Place a record of this letter in the client's file and note the transaction in the trust records. Fax or email a copy of this letter to the client for the client's records.

Be mindful of the bank's service charges and direct the bank to debit those against your general (not trust) account.