On average, $150 billion flow through Alberta lawyers' trust accounts per year
The benchers of the Law Society of Alberta approved amendments to the rules of the Law Society of Alberta covering the approval and management of trust accounts by Alberta lawyers.
The updated trust safety rules, agreed to at the society’s annual meeting, are mostly contained in part five of the rules. They will take effect on Jan. 1, 2022, with the timing designed to lessen confusion by enabling lawyers and firms to complete their annual filings for 2021 pursuant to the old rules.
Lawyers have the responsibility of addressing the risk involved in holding and managing their clients’ funds, for which they require the proper controls, processes, and oversight mechanisms, according to the law society’s news release.
The amendments aim to make the rules easier to comprehend and follow, to lessen the administrative burden on lawyers, to emphasize the accountability and oversight required of lawyers for tasks delegated to employees at firms, to reflect modern banking practices and technologies and to enable lawyers to adapt their practice to be more digital and less paper-based.
The changes also seek to rework the flow of the rules to align with a trust account’s life cycle so that lawyers know what steps they should take to comply with the rules. The steps of a trust account’s life cycle include the designation of a responsible lawyer and the operation, reporting and closure of the trust account.
The amendments will generally not impact the daily operations of most legal practices and will not alter the current reporting obligations, which include annual filings and additional filings based on the trust account’s life cycle.
The law society, in early 2021, spoke with stakeholders that included responsible lawyers, bookkeepers and accountants from firms of various sizes and practice areas, with a view to reviewing important parts of the rules and balancing the reporting requirements with the practice of law. Lawyers reported that the current trust safety rules were hard to interpret and navigate.
The law society said that it would release tools aiming to ease the transition to the new trust safety rules, which would include an FAQ, a chart for cross-referencing between the current rules and the new rules and webinars in January and February 2022, which will provide a detailed breakdown of the amendments and a Q&A portion. The law society’s trust safety team will work to assist lawyers and support staff in understanding and adapting to the new rules.
On average, $150 billion dollars flow through Alberta lawyers’ trust accounts per year, with a balance of $2 billion per day and with the funds divided among almost 4,000 pooled trust accounts.