Practice Management Q & As

Tips on trust accounts, cell phones
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.

I do a lot of cross-border legal work and work for U.S. citizens. Can I maintain a U.S. dollar pooled trust account?

All pooled trust accounts must be kept in a "designated savings institution" under Law Society Rule 3-52(1)(a). To be a "designated savings institution" under Rule 3-49(2), a bank, trust company or a wholly owned subsidiary of a bank or trust company must be insured by the Canada Deposit Insurance Corporation (CDIC) and have a branch office in B.C. accepting demand deposits. A credit union must be insured by the Credit Union Deposit Insurance Corporation (CUDIC) of British Columbia and approved for deposit of trust funds by Credit Union Central of B.C.

CDIC does not insure foreign currency accounts, including U.S. dollar accounts. This means that pooled trust accounts with banks and trust companies in other than Canadian currency would not meet the requirements of the Rules.

Credit unions do in some cases extend CUDIC deposit insurance coverage to foreign dollar accounts. Prior to opening a U.S. or other foreign dollar pooled trust account, lawyers are well advised to confirm in writing any limits on deposit insurance for foreign currency pooled trust accounts with each credit union.

This is not the end of the matter though. A client may authorize the deposit of funds to other than a pooled trust account (for example, a separate, interest-bearing, foreign currency trust account), provided that the client instructs the lawyer in writing. It would be advisable to include on your written client authorization form a notice to the effect that the client has been advised that these funds are not deposit-insured and that the client assumes any risk in this regard.

How do you interpret Rule 3-57(5) when a lawyer has money in trust and a client disputes the lawyer's right to receive payment from trust?

From my reading of this Rule and discussions with staff regarding the intention of the Benchers when the Rule was first adopted in September, 1993, it would be the case that all four provisions (Rule 3-57(5)(a) to (d)) have to be fulfilled before the trust money can be transferred. So the four conditions that must be fulfilled before funds can be transferred from trust in a disputed payment situation would be:

1. The client has acknowledged his or her agreement in writing to the transfer of the funds or the lawyer has confirmed this consent in a letter delivered to the client;

2. A bill has been delivered to the client (whether or not the client had previously instructed the lawyer in writing not to deliver a bill);

3. The lawyer has given written notice of the intention to transfer the fees from trust unless, within a month, the client commences a fee review or an action disputing the lawyer's right to the funds; and

4. The client has not commenced a fee review or an action within at least one month after written notice under paragraph (3).

What concerns should I as a lawyer have when using a cellular telephone or other wireless device?

Lawyers may communicate with their clients in many ways: traditional hard-wired telephones, analog cell phones, digital cell phones, cordless telephones, pagers, wireless devices such as the RIM Blackberry, web-enabled cell phones or combo cell-phones and PalmPilots and, of course, in-flight telephones. How secure are these, and what precautions should a lawyer take when using these devices?

There are really two issues to look at. First, what legal protection is afforded to communications that take place over these different devices? Second, notwithstanding the legal protections and practically speaking, what should a lawyer do when using these devices?

Section 184(1) of the Criminal Code creates an indictable offence for the wilful interception of a private communication. Section 184.5 creates an indictable offence for the wilful interception of a radio-based telephone communication. This would appear to extend the Criminal Code provisions respecting the interception of private communications to cellular-based devices. Section 183 defines a "radio-based telephone communication" as being one within the definition of the Radiocommunication Act that is made over apparatus used primarily for connection to a public switched telephone network.

R. v. Cheung (1995) 100 CCC (3d) 441 (BCCA) held that conversations over a cellular telephone were private communications. R. v. Solomon (1996) 110 CCC (3d) 354, 139 DLR (4th) 625 (Que CA) held that there is an expectation of privacy in the use of a cellular phone, provided that the parties to the conversation take the necessary care to isolate themselves and only talk when they are alone and that the expectation would be non-existent if those same persons were in a crowed restaurant. Interestingly, R. v. Lubovac (1989) 52 CCC (3d) 551 (Alta CA) held that pager communications were not private communications, since the pager simply broadcasts a message to those who may happen to hear or overhear it.

Given this legal background, it would be fair to state that there is a reasonable expectation of privacy when using a land-based telephone or a cellular telephone. Communications that take place over the new generation of devices, especially those that combine pager services with e-mail such as the RIM Blackberry, are an open issue. It would be expected that a court would extend privacy protections to these communications since textual messages are delivered over a public communication network as compared to pager prompts as in Lubovac.

Notwithstanding that there is a certain degree of legal protection for today's high-tech communications, let us deal with some practical considerations. While you as a lawyer may avoid using anything but a hard-wired telephone to communicate with your clients, there is no certainty that your client will be as cautious or aware of the issues involved.

As any criminal lawyer knows, even a hard-wired land telephone is not that secure — the communications are not encrypted or scrambled and can be overheard or recorded by someone (legally or illegally) tapping into the connection. Analog cell phones and cordless phones are "clear" — the communications are transmitted in a form that can be instantly comprehended (clear speech) and receivers and scanners within range can intercept and overhear the conversation. Airplane telephones have the additional problem that anyone seated nearby can overhear the conversation. Digital phones and devices have the advantage that the communication stream is transmitted in digital form, which is not instantly comprehensible. However, they are not immune to interception, although this would appear to require a deliberate act, unlike cordless or analog phones, which are susceptible to inadvertent interception.

Can you achieve secure cell-phone communications? First a bit of background. Currently there are three types of cellular services available in B.C: CMA and CDMA (Code Division Multiple Access), which is Telus Mobility and Bell; TDMA (Time Division Multiple Access), which is ATT/Cantel; and GSM (Global System for Mobile communications), which is FIDO and MicroTel. Unless you are using a single mode digital phone (one that does not have the ability to flip to analog if the digital signal fades) and you are talking to a single mode digital phone, then there is always the possibility that a digital phone will switch to analog and you will lose your digital service. This reduces your digital call to an analog one, and as a result your call will be just as susceptible to interception as an analog cell phone. In most cases you will be unaware that this has happened.

The TDMA telephones in digital mode use a three-digit random number to encode the transmission. This is a very weak form of encryption.

The GSM service can work with phones with a SIM card (Subscriber Identity Module). This is a "smart" card that allows encryption to be embedded on the card, which allows the communication to be more secure than an ordinary digital cell signal.

High-powered encrypted cell transmissions are several years away — awaiting the adoption of 3G (3rd generation) cell service. This will allow wide band wireless service and, I am told, allow encryption on the dataset itself.

Accordingly, it must be assumed that, at present, any cellular call is capable of being overheard and cannot be assumed to be secure in any fashion.

What about RIM Blackberrys and wireless Palm Pilots? How secure are these? I am advised that, when these devices use ECC (Elliptic Curve Cryptography), the data is encrypted and transported directly to the enterprise or content server, passing through any networks as if it were in a sealed envelope. To be totally secure, the transmissions must pass through all stages of communication (from the originator, through the land lines to the wireless service and onto the Blackberry) in an encrypted form (not undergoing de-encryption and re-encryption, for example, when being converted to a wireless signal) to remain secure. Unless you can be assured that this is happening at every point along the path, you cannot take the security of the communication for granted.

In these circumstances, it may be prudent for lawyers to develop explicit policies on the use of communication devices for contact with clients, expert witnesses and others. Furthermore, it may also be prudent for lawyers to consider, not only the content of their communications, but also the medium over which the communication is taking place and exercise judgement on the appropriateness of the media relative to the context of the message.

In the meantime, let us all recall that, for truly private communications, there is still nothing equal to saying something directly into the ear of the listener..