The Advisory: Volume 8, Issue 2, April 2010
A New Trust Strategy Builds on Public Confidence
By Steve Raby, QC, Bencher and Chair, Trust Safety Implementation Task Force, Law Society of Alberta
In Canada, lawyers enjoy the reputation of being trustworthy to hold the money of others.
There have been occasions when this trust has been compromised by individual lawyers. Through the regulatory work of the Law Society and the financial commitment of all lawyers to the assurance fund which is used to reimburse clients for losses of trust money, the profession continues to enjoy this reputation of trustworthiness.
The Law Society’s new strategy to ensure continued safety of trust property and the continued reputation of the profession to safely hold trust money will introduce new control techniques and new audit measures. These new measures will be applied to lawyers based on demonstrated success in complying with trust rules and maintaining adequate books and records.
The Law Society’s strategy will be reviewed by the Benchers at the April 2010 meeting. The new regulatory controls and audit regime is on track to be rolled out in the coming months. Currently, a new LESA course is being developed to help lawyers learn about and understand the new rules. The key focus is to maintain and enhance public confidence in placing their money in trust with lawyers.
The Safety of Trust Funds Implementation Task Force is recommending new regulatory rules to update the Law Society’s controls:
- Designating a Responsible Lawyer: A law firm will be required to identify a lawyer who will be accountable to the Law Society for implementing controls to keep trust money safe. Only after a lawyer has taken on this responsibility and the firm has demonstrated that adequate controls are in place, will a firm be entitled to maintain a trust account.
- Conditions to maintain a trust account: If concerns exist regarding the adequacy of controls, a firm may have conditions imposed on its entitlement to maintain a trust account.
- New Controls: New controls will be responsive to risks identified from the Law Society’s experiences and from a comprehensive review of risks experienced in other jurisdictions.
- New Audit Regime: New reporting requirements will incorporate efficiencies made possible by automating data collection and new computerized audit techniques.
- New Enforcement Regime: A new enforcement regime will reflect the commitment of the Law Society as a regulator to closely monitor compliance with the rules and to hold members accountable for all rule violations on the basis that those violations undermine the strategy to maintain the safety of trust property.
Ongoing communications will provide prompt and useful warnings to lawyers of fraudulent activities focused on lawyers’ trust accounts. These notices will also ensure the continued understanding by lawyers of the importance of complying with accounting and audit rules to protect the public interest.
These audit and control measures will enable the Law Society to quickly respond to emerging risks to lawyers and their clients.
With all this, the confidence the public places in lawyers to hold trust money on their behalf will continue to be well-founded.
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