Practice Management Q & As

The Practice Management Advisor

David J. (Dave) Bilinsky is the Society's new 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.

Can a departing associate write to our firm's clients?

An associate of ours is leaving the firm. It is a term of our associate agreement that all clients are clients of the firm. Now our departing associate wants to send letters to the clients on all the files on which the associate is the responsible lawyer informing them that he or she is leaving. The partners do not agree with this course of action. What do you suggest?

This is a common question. Chapter 11 of the Professional Conduct Handbook, Rules 16-21, sets forth the guidelines in these circumstances.

First, it is the right of the client to determine who will continue to handle a legal matter for the client following the departure of the lawyer. "Matter" is interpreted as being a "file" — in other words, while the client overall may choose to stay with the firm, the client may also elect to have a particular matter or file continue with the departing lawyer due to the substantial time invested in the file or for other reasons. Many firms become very proprietary and regard the clients as firm assets — which misses the fact that the client has the last word in this regard.

Second, a letter should be sent to the clients informing them of the departure of the lawyer and setting forth the alternatives open to the client, namely: 1) to have the matter stay with the existing firm, 2) to have the matter follow the departing lawyer or 3) to have the matter go to a new lawyer. The only circumstance that would obviate the need for this letter is where both the firm and the departing lawyer, acting reasonably, know of circumstances that make it obvious that the client will continue with the firm notwithstanding the departure of the lawyer. If the firm and the departing lawyer cannot agree on a joint form of letter, then letters substantially in the form of Appendix 4 to the Professional Conduct Handbook may be sent by either the departing lawyer or the law firm.

Third, it does not matter how long the associate has been with the firm — it was raised once that the associate was with the firm for "only" five years. The Handbook only speaks of whether or not the departing lawyer was the responsible lawyer for the matter as being the pertinent issue.

Fourth, it should not matter whether the associate is departing of his or her own accord or for other reasons.

Fifth, the right of the client (it is always a right of the client) to choose his or her own solicitor cannot be curtailed by any contractual or other arrangement.

Sixth, the departing lawyer and the firm need to be mindful of the use of proprietary information and the possible interference with contractual and professional relations between the firm and its clients. Professional courtesy would have callers informed of the new place of business and contact information for the departing lawyer. The departing lawyer must also extend all professional courtesies to the old firm in attending to the wrap-up of affairs.

All of this emphasizes that, of all the challenges in practice, having a lawyer leave the firm is one of the more traumatic. It is precisely in these stressful times that our professional courtesy and ethics override any feelings of ill nature, since we all know that "breaking up is hard to do."

Should law firms charge PST on invoices for preparing and filing corporate annual returns?

The question has been raised by some law firms whether accounts for annual corporate services (drawing the annual resolutions and acting as the registered and records office) are PST taxable.

In March, 1992 the Consumer Taxation Branch issued Bulletin 061, which was subsequently revised in March, 1993 (www.fin.gov.bc.ca/ctb/publications/bulletins/061.htm). In that bulletin, legal services are described as services that come within the meaning of the "practice of law" under the Legal Profession Act and services described in section 15 (now section 18) of the Notaries Act.

In Law Society of British Columbia v. Julie M. Siegel (Respondent) and Society of Notaries Public (Intervenor) 2000 BCSC 875 the Law Society sought a declaration that a notary public is engaged in the unlawful practice of law when he or she offers, for a fee, to be the registered and records office, draw up the minutes of the annual directors' and shareholders' meetings and prepare any special resolutions and documents to transfer the registered and records office to the office of the notary public. (The Law Society did not challenge the fact that a notary public can be the registered and records office of a company.)

The Hon. Mr. Justice Sigurdson held that the preparation of these corporate documents fell within the practice of law in section 1(b)(i) of the Legal Profession Act, RSBC 1996, c. 255 and was not the lawful practice of a notary public. In light of the decision in Siegel, it would appear that lawyers' invoices for the preparation and filing of corporate annual returns should include a charge for PST for remittance to the government in the usual course, unless a lawyer is acting for a purchaser or recipient of legal services provided in British Columbia who neither resides nor carries on business in this province or supplies those services specified in section 2.01(6) of the Act.

What insurance coverage should a lawyer / firm secure to cover off-premises file storage?

Recently a lawyer had an unfortunate circumstance of having closed files suffer water and fire damage when they were stored in a rented off-site building that was partly destroyed by fire. Notwithstanding that the lawyer had taken steps to secure insurance coverage, there was in fact little insurance coverage to cover the cost of recreating and/or recovering the damaged or lost files — other than a single clause that covered a tiny amount of loss.

Firms should take steps to check that their insurance covers files in remote storage sites, including full reproduction or restoration coverage. In this case, the firm found that such coverage was not automatically a part of its office insurance coverage.

Aside from the question as to whether or not failing to obtain this type of coverage could be considered negligence for what is essentially a criminal act or an act of God, the message needs to be spread so that lawyers avoid the problems and costs now faced by this unfortunate firm. A related isssue is proper storage of tape or computer data backups, which allows a firm to re-create lost documents and other information from its computer system. Storage of these tape backups in a different off-site location from the paper files mitigates against the potential loss of both at the same time.