In the October 1, 2021 Board Meeting, the Benchers approved amendments to the Rules of the Law Society of Alberta regarding the approval and management of trust accounts by Alberta lawyers. The amended Rules will go into effect on January 1, 2022. This timing allows lawyers and firms to complete their annual filings for 2021 under the existing Rules to reduce confusion.
On average, $150 billion dollars flow through Alberta lawyers’ trust accounts annually, with an average daily balance of $2 billion. These funds are divided between nearly 4,000 pooled trust accounts. The considerable amount of funds flowing through Alberta trust accounts highlights the level of risk associated with holding and managing client funds. Lawyers are responsible for managing this risk, and need appropriate controls, processes and oversight mechanisms in place.
Feedback from lawyers on the current Trust Safety Rules (largely contained within Part 5 of the Rules) indicate that the Rules can be difficult to interpret and navigate.
The effect of Trust Safety rule changes on the practise of law
There is little in the rule changes that should affect the day-to-day operation of most legal practices. These changes are designed to make them easier to understand and follow.
The enhanced Rules highlight the accountability and oversight required by lawyers for any tasks delegated to firms’ employees. As well, the Rules have been updated to align with modern banking practices and allow lawyers to shift their practices to a less paper-based, more digital environment.
The changes will not increase the administrative burden placed on Alberta lawyers. If anything, these Rules are intended to reduce the administrative burden by making the Rules easier to follow. Existing reporting obligations for lawyers will remain unchanged with the new Rules. Responsible Lawyers will still have reporting obligations including their annual filings and any additional filings based on the trust account’s lifecycle.
The flow of the Rules has been reworked to align with the lifecycle of a trust account, ensuring that Responsible Lawyers who are operating a trust account know what steps are required for them to remain in compliance with the Rules based on where they are in the lifecycle.