Society newsTrust Account Regulation Amendments & We're Seeking your Feedback
At the January 2019 meeting, Council adopted several regulatory amendments relating to the operation of trust accounts by lawyers and law firms. We’re also seeking member feedback on the possibility of charging fees for certain services.
Reporting of overdrafts and errors to the Executive Director (Reg’s 10.6 – 10.6.5)
The goal with the proposed revisions to the applicable sections is to reduce the burden on lawyers regarding the frequency and scope of what items (trust account errors, overdrafts, etc.) need to be reported to the Executive Director.
Lawyers are currently required to report almost all errors and overdrafts immediately and there is not a prescribed method for reporting. The amendments require that certain items only need be reported on the annual Trust Account Report instead of each time one occurs. These include:
- Overdrafts of less than $50
- Overdrafts less than $2,500, presuming they have been corrected within seven (7) days
However, a new obligation to immediately report any suspected or confirmed theft from the general or trust account(s) has been added. As well, a prescribed form for reporting errors and overdrafts has been developed.
Trust Account Applications and Assessments (Reg’s 4.10.2 – 4.10.4)
- These regulations have been revised to allow non-practising lawyers to apply for a trust account, take the trust account assessment and perform the steps to open the trust bank account in advance of starting their practice.
Requirements for operating a trust account (Reg 220.127.116.11 (b))
- Revised to require a Licensed Public Accountant (same requirement as the ARTAR) to confirm that the practicing lawyer or law firm has an adequate accounting system in place to operate their trust accounts.
Trust account Signing authority (Reg’s 18.104.22.168 – 22.214.171.124 and 10.3.5.1)
- Revised to require that all lawyers must complete the trust account assessment before they are permitted to be added as a signatory to a trust account.
- Any lawyers already signatories on trust accounts as of December 31, 2018 will not be required to retro-actively meet the requirement of completing the trust account assessment.
- Because these changes were not approved until January 18th, a grace period (up to one month) will be given to any lawyer named a signatory after January 1st
Please note that it is recommended that administrative/financial staff who will be handling trust account financial matters at firms complete the trust account assessment to help ensure that all individuals involved have demonstrable knowledge of how to operate the account.
We need your feedback
We're exploring the possibility of charging fees for certain services, based on the staff time it takes to process these services. This is consistent with law societies across the country and it reflects the time needed to do this work.
Currently, there is no cost to take the trust account assessment (exam), which is required before a lawyer operates a trust account. There are approximately 10-15 assessments per year and they require a significant amount of review and follow-up work by staff. The work includes correspondence with lawyers, marking assessments and communicating results and areas for improvement to the lawyers.
To offset some of these costs, we are proposing that lawyers pay a $200 fee to take the trust account assessment. We recognize that this may not be possible for some members, so we also propose an option for the Executive Director to waive the fee under certain circumstances.
We’re interested in your feedback on whether the fee and approach are reasonable.
Please share your thoughts with us by emailing firstname.lastname@example.org.
Thank you for your input!
Tilly Pillay, QC