The Benchers have approved the 2024 practice fee and indemnity fee, as recommended by the Finance and Audit Committee. The total annual fee for full-time practising, indemnified lawyers for 2024 will be $4,103, unchanged from 2023. The practice fee stays at $2,303, supporting the strategic plan, along with key operational priorities. The full-time indemnity fee also stays the same at $1,800.
Practice fee
The Benchers have set the 2024 fees pursuant to the Legal Profession Act based on a thorough review of the Law Society’s finances by the Finance and Audit Committee. The Finance and Audit Committee met with senior management to review the proposed 2024 fees and budgets for the General Fund and the Lawyers Indemnity Fund. The Finance and Audit Committee also reviewed the fee proposals from a number of organizations and programs supported by Law Society fees, including Courthouse Libraries BC, the Lawyers Assistance Program, The Advocate, the Federation of Law Societies of Canada, the Canadian Legal Information Institute and the delivery of pro bono and access to legal services. Based on these meetings and reviews, the Finance and Audit Committee made recommendations to the Benchers regarding the amounts from the practice fee that should be allocated to each of these organizations and programs. These recommendations were approved by the Benchers at the September 22, 2023 Bencher meeting.
The overall objective when setting the fees is to ensure that operations are appropriately funded to enable the Law Society to efficiently and effectively fulfill its statutory mandate of protecting the public interest in the administration of justice.
Law Society operations
The focus of the 2024 General Fund budget, in addition to delivering the strategic plan and core regulatory programs, and meeting key performance measures, is supporting regulation to ensure that the Law Society remains an innovative and effective professional regulatory body.
There are several key initiatives in 2024 including: 1) the development of a framework to consolidate the regulation of all legal professions under a single legal regulator 2) the review of alternative pathways to lawyer development and licensing 3) Innovation Sandbox initiatives to improve access to legal services 4) the review of regulatory processes to implement continuous improvement initiatives 5) implementation of indigenous engagement initiatives 6) continued focus on anti-money laundering initiatives 7) enhanced practice support and online courses, and 8) continued implementation of the diversity action plan.
2024 Operating Revenues
General Fund operating revenues in 2024 are projected to be $35 million, $2.6 million (8%) over the 2023 budget due primarily to an increase in the number of lawyers year over year, and an increase in interest revenue. The budgeted revenue is based on estimates of 14,807 full-time equivalent practising lawyers and 603 PLTC students. Interest income will be much higher due to the steep increase in interest rates, and other revenues are projected at similar levels to historical actual figures.
2024 Operating Expenses
General Fund operational expenses are expected to be $35.6 million, a 7.4% increase in expenses over 2023, or an increase of 5.3%, not including one-time expenses funded from net asset reserves related to one-time initiatives (Single Legal Regulator, Lawyer Development, principal training) ($450,000) and contributions to external organization funding ($263,000). Expense increases are primarily related to market-based salary increases and the addition of a select staff positions. Other areas that have increased include costs for course development and practice support for lawyers, computer technology, and travel, meetings, and events. The 2024 budget projects a modest deficit of $640,000, which will be funded from net asset reserves.
General Fund Net Assets
The General Fund remains financially sound, with $36.7 million in net assets at the end of 2022 (excluding the TAF net assets). The net assets consist of capital assets, primarily the 845 Cambie Street building, the capital plan, and a working capital reserve of $17.4 million.
Trust Administration Fee
The goal of the Trust Assurance program is to ensure that law firms comply with the rules regarding proper handling of clients’ trust funds and trust accounting records. This is achieved by conducting trust accounting compliance audits at law firms, reviewing annual trust reports, and providing member advice and resources. The compliance audit program ensures that all firms are audited at least once within a six year cycle, and includes audits of higher risk practice areas at least every four years. For 2024, the trust administration fee (TAF) will remain unchanged at $15 per transaction.
The Federation of Law Societies of Canada
For 2024, the allocation in the practice fee will remain at $24 per lawyer and $93,000 of Law Society net asset reserves will fund the remainder of the Federation costs. The Federation provides a national voice for provincial and territorial law societies on important national and international issues.
The Canadian Legal Information Institute
The Canadian Legal Information Institute (CanLII) fee will remain at $42 per lawyer. CanLII is a not-for-profit organization initiated by the Federation of Law Societies of Canada, with the goal to make primary sources of Canadian Law accessible for free on its website at www.canlii.org. All provincial and territorial law societies have committed to provide funding to CanLII.
Courthouse Libraries BC
Courthouse Libraries BC (CLBC) provides lawyers and the public in BC with access to legal information, as well as training and support in accessing and using legal information. Through its information services, curation of print and digital collections, website content and training, the library provides practice support for lawyers and access to justice support to the public across the province, through its 31 physical locations. CLBC has requested $3,191,000 to support increasing costs and information technology needs. The allocation of the practice fee will remain at $204 per lawyer in 2024, and $170,000 of Law Society net asset reserves will fund the remainder of the increase in the CLBC operating cost budget.
The Advocate
The Advocate per lawyer funding will remain at $25 per lawyer to fund $440,000 for their 2024-2025 operating budget. The Advocate publication is distributed bi-monthly to all BC lawyers, including practising, non-practising and retired lawyers.
Lawyers Assistance Program
The Lawyers Assistance Program (LAP) provides confidential outreach, education, support and referrals to lawyers and other members of BC’s legal community. LAP funding has been set at $1,140,000 for 2024, funded through a practice fee allocation of $77 per lawyer.
Pro bono funding
The Law Society of BC contributes funding to support pro bono and access to legal services. The 2024 funding is set at $404,000 and is sent to the Law Foundation for distribution. This is funded through a practice fee allocation of $27 per lawyer.
Lawyers Indemnity Fund Fee
The indemnity fee will remain at $1,800 (full-time) and $900 (part-time) for 2024. The number of claim reports has increased, and annual claim reserves have been trending up over the past five years. Moreover, there are additional risks to be considered. While the pandemic minimally impacted the indemnity program as the direct cause of 37 new reports, other practice areas have experienced a growth in claims. Civil Litigation practice on the plaintiff side continues to generate significant numbers of indemnity reports and payments, and changes in Real Estate practice including the foreign buyers tax, property transfer tax issues, and the new Land Owner Transparency Act requirements have resulted in increased claims activity. Wills and Estates, Family law, and Administrative practice areas have also seen an uptick, and tax planning claims have resulted in increased costs to the program. We expect that all of these risks, coupled with the negative investment returns in 2022, will require an increase to the fee in the coming years.
Total fee comparison with other law societies*
*Fees for most law society fees are based on 2022-2023 mandatory fees, as that is the most current data available.
For more information
If you have questions about the financial information in this notice, please contact Jeanette McPhee, Chief Financial Officer and Director of Trust Regulation, by email to jmcphee@lsbc.org.
