Law Society of B.C. to carry out more law firm audits

The Law Society of B.C. is stepping up audits of law firms that handle trust accounts in practice areas it deems high risk.

Law Society of B.C. to carry out more law firm audits

The Law Society of B.C. is stepping up audits of law firms that handle trust accounts in practice areas it deems high risk.

Every B.C. law firm that handles trust accounts is audited at least once every six years; however, the LSBC announced in the recently released 2018 annual report that it is shortening the cycle to four years starting in 2019 in areas of practice deemed “to be at elevated risk.”

“Lawyers who practise primarily in real estate and wills and estates will be included in the more frequent audit cycle,” said David Jordan, LSBC communications officer, via email. “However, our added audit resources will also be allocated wherever deemed necessary.”

The LSBC’s annual report indicates 2018 was an average year for trust account audits with 463 carried out, compared with 460 in 2015 and 457 in 2016. However, the 2018 number was greater than the 402 carried out in 2017 but lower than the 2014 high of 510.

Since 2015, the number of trust accounts and audits referred for professional investigation has been steadily climbing. In 2015, there were 41, while, in 2016, the number was 57. A year later, there were 67 cases with 2018 projected to finish with 69 cases referred. As a percentage of audits for the years starting in 2015, the percentage of investigated cases were 8.9, 12.4, 16 and, in 2018 — a slight drop — 14.9.

The year 2018 also saw a rising number of complaints against lawyers that were not withdrawn, resolved or dismissed and made it through to the discipline committee. There were 120 in 2018 compared with 68 in 2014 — an increase of 52 more. Of those 120, there were 43 authorized citations and 41 issued, up from a low of 20 in 2015 over the past five years. The report also noted that “77 per cent of lawyers cited had previously been involved with regulatory proceedings.”

There were seven suspensions and five disbarments, the highest number of disbarments in nearly a decade with the majority relating to misappropriated funds. In October 2018, the LSBC released disbarment figures that showed four lawyers had been disbarred so far that year. LSBC figures going back to 2009 showed B.C. had limited disbarments — only 12 over the previous nine years. The years with the highest number of disbarments were 2014 and 2015, with three lawyers shown the door each year. The figures released by the LSBC did not include those individuals who resigned rather than faced disciplinary action.

There were also tougher standards for those taking the professional legal training course in 2018. The numbers of students taking the course have risen to 537 in 2018 from 460 in 2014, with the increase coming from more National Committee of Accreditation referrals and the first graduating class from Thompson Rivers University. In 2014, the pass rate for students writing the exam for the first time was 88 per cent, rising to 90 per cent in 2015 before starting a downward slide. In 2018, only 75 per cent of students made it through the first time as the PLTC administrators have tightened pass criteria.

Figures for new lawyers entering the profession indicate a sharp rise, going to a high of 731 in 2018 from 630 in 2017, a significant increase over five years ago when the figure was 569. The figures also point to a rise in the number of new women lawyers entering the profession. In three of the previous five years, the numbers of female new entrants were lower or close to those of male counterparts. In 2017, there was the beginning of a shift as new female lawyers led the march into the profession. It continued and deepened in 2018, with 378 women and 353 men becoming members of the LSBC.

While there were 731 new entrants to the professions in 2018, the number of members within the profession climbed by only 376, moving the tally to 12,280 in 2018 from 11,904 in 2017.

Women are still leaving in later years faster than their male counterparts, according to the 2018 annual report. Demographics for 2018 showed that women (2,133) in the 20-39 age bracket outstrip men (2,051) in numbers, but their numbers then start dropping from the profession with a sharp decline in later years. In the 40-54 age group, there are 2,327 men and 1,938 women practitioners. In the 55-64 age group, there are 1,638 men and only 731 women. In the 65 years and plus category, 1,265 men remain while there are only 197 women.

The 2018 report shows that the Lower Mainland of B.C. remains the main practice location for lawyers, with Vancouver housing 55.4 per cent and New Westminster 14.3 per cent. The figures show 9.9 per cent of lawyers practise in Victoria, four per cent in the Okanagan, 3.3 per cent in Nanaimo, 2.1 per cent in Kamloops and the remainder either out of province or spread throughout the rural B.C. communities.

The 2018 distribution figures, compared with 2017, show no marked change of lawyers moving into the rural areas where more lawyers are needed to replace exiting baby boomers. The only shift noted are out-of-province practitioners, with the figure dropping to 7.9 per cent in 2018 from eight per cent in 2017. Nanaimo also dropped to 3.3 per cent in 2018 from 3.4 per cent in 2017, showing a loss of legal talent. The largest shift came in the suburban area of New Westminster, where the percentage rose to 14.3 from 14. Northern B.C., the Kootenays and the Okanagan registered no change in the distribution of lawyers. 

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