Rule Changes Approved at the April / June Board Meetings
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The Rules of the Law Society of Alberta (Law Society) and our guidelines help the Law Society and lawyers navigate the system. From time to time, updates and changes are necessary. This eBulletin contains Rule amendments that were approved at the April and June Board meetings.
To read the updated Rules, visit the Law Society
website.
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Anti-Money Laundering and Client Identification Rule Amendments
The Law Society has adopted amendments to its client identification and verification rules, as well as accounting rules governing the receipt of cash and the permitted use of lawyers’ trust accounts. The changes take effect in Alberta on September 30, 2019.
The Federation of Law Societies of Canada (the Federation) and its member law societies have been actively engaged in fighting money laundering and the financing of terrorist activities for over 15 years.
The Federation has approved a
Model Code of Professional Conduct
that has been implemented by a number of law societies and is under review by others.
Within the Model Code, there are Rules that seek to limit the handling of cash by lawyers and ensure that legal counsel engage in due diligence in identifying their clients. These measures have been the cornerstone of legal regulators’ anti-money laundering and anti-terrorism financing initiatives.
In October 2018, the Federation approved amendments to the
model client identification rules,
which govern client identification and verification, cash transactions and permitted uses of lawyers’ trust accounts. These amendments formed the basis for changes to our Rules in Alberta (Rules 118.1 through 118.10, 119(1), 119.17 and 119.38), which were approved at the April Board meeting.
The Law Society’s Rules and Code of Conduct address the conduct of lawyers and prohibit them from assisting anyone to commit an illegal act, including money laundering and terrorist financing. By adhering to these fundamental principles, lawyers help prevent crime and maintain public trust in the justice system.
We will provide resources to Alberta lawyers to assist them in implementing the Anti-Money Laundering and Client Identification Rule amendments in their practices. More information is available on the Law Society
website
with additional tools and resources to support you. If you have further questions, please contact the
Practice Advisors
; we are here to help.
Anti-Money Laundering Education Sessions
We have scheduled several opportunities for in-person or virtual discussion on the Anti-Money Laundering Model Rules to answer any questions that you may have. These opportunities include the following:
- Amendments to Anti-Money Laundering & Anti-Terrorist Financing Model Rules Webinar: July 17, 2019 at 12 p.m. - Register here
- Edmonton Anti-Money Laundering Session: Aug. 15, 2019
- Calgary Anti-Money Laundering Session: Aug. 21, 2019
- Lethbridge Anti-Money Laundering Session: Aug. 23, 2019
- Anti-Money Laundering Final Q&A Webinar: Sept. 19, 2019
Details for the in-person sessions and the final webinar will follow. We recognize that the in-person session dates and locations will not work for everyone, so please tune in to the webinars or see our
website
if you are unable to attend.
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New Approved Legal Services Provider (ALSP) Program
Amendments were made to expand the definition of "law firm" to include Approved Legal Services Providers (ALSPs) and to clarify the insurance exemptions for lawyers who volunteer with pro bono organizations.
As of July 1, 2019, the Law Society may regulate pro bono organizations as ALSPs. The changes to the Rules streamline the process for ALSPs to provide legal services and will allow new pro bono clinics to be established. These rules also make it easier for lawyers who work in house or in government, and who are otherwise exempt from insurance, to provide volunteer services through ALSPs.
Pro bono organizations wanting to become ALSPs must meet the
eligibility criteria
to be listed as an official ALSP on our website. To streamline this process and avoid any disruption, organizations previously listed under former Rules 148 (2) and 148 (2.1) will receive conditional approval upon request. For continued approval as an ALSP, these organizations will complete the online application form and submit it to the Executive Director of the Law Society by March 1, 2020.
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Disclosure of Business Contact Information
Amendments were approved to add clarity around the disclosure of business contact information (Rule 45.1), including email addresses, for Alberta lawyers. Changes were also made to restrict the business contact information shared with Bencher election candidates. These amendments were effective April 25, 2019.
During the last Bencher election, candidates had, for the first time, access to email addresses for Alberta lawyers. Following the election, we revisited our obligation as the regulator to minimize the disclosure of business contact information, so the Rule was changed to remove access for Bencher election candidates. Alternative methods for sharing Bencher candidate materials will be developed for the 2020 Bencher Election.
The other amendments now allow the Law Society to share business contact information for Alberta lawyers with the Courts, the Federation of Law Societies of Canada and the approved digital signature provider for business purposes only:
- The Courts and the digital signature provider require lawyer business contact information because they often need to verify credentials for access to the court or for e-filing and other technological changes to the way the law is practised today. An example of this is the Alberta Land Titles Online Project (ALTO), which aims to move to a digital e-filing process using credentialled and verified digital signatures for lawyers.
- The Federation requires lawyer business contact information for purposes of mobility and other regulatory requirements.
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Trust Accounting Rule Amendments & Expanded Law Firm Definition (for Audit Purposes)
The Rules permit a lawyer, with approval, to use another lawyer’s trust account. The most common scenario is where sole practitioners work together in one location but practice independently. Another scenario is when a Responsible Lawyer exempt from operating a trust account receives trust funds, but the funds are required to be held by another law firm approved to operate a trust account on the lawyer’s behalf.
In these types of situations, the Law Society runs into challenges with routine audits of lawyers’ trust accounts because audit orders are typically granted by the firm. This means we may not have access to all accounts necessary to “follow the money” for compliance with Part 5 of the Rules.
The amendment
s
to Rule 119.33, which defines “law firm” to expand the scope of practice types captured by audit provisions, was approved to provide the Law Society with more flexibility when conducting audits of lawyers. These amendments were effective April 25, 2019.
Going forward, when issues are raised during an audit, the expanded definition of law firm allows the auditors to review a trust account used but not held by the lawyer. It will also permit the auditors to review the accounts of other lawyers working within a co-located office arrangement, as necessary, to address office-wide concerns.
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Changes to the Bencher Vacancy Process
Changes to the Bencher (Board) vacancy process were approved that could see the vacancy filled by applicants who did not run in the last election but are assessed and appointed by the Board using a competency matrix.
While these changes were effective as of June 6, 2019, this new process will not be used to fill any vacancies that arise before the 2020 election. The announcement of these amendments is intended to be well in advance of the next Bencher election so that all lawyers are aware of the expanded considerations in filling a vacancy at the Board table between elections.
Twenty of the 24 Board members are elected by the profession. Currently, when a vacancy occurs, the vacancy is filled by the next candidate with the greatest number of votes in the previous election. This amendment gives the Board an additional option to appoint the next lawyer on the election results list. The Board can now also appoint lawyers who did not run in the previous election looking at diversity, skills and competencies required at the Board table at the time of vacancy.
More information on this topic is coming soon in a Board meeting recap video with Kent Teskey, President-Elect. Watch for the recap video in the next eBulletin.
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Mandatory Conduct Advisory Guideline
The newly drafted 2019 Mandatory Conduct Advisory Guideline was approved and it replaced the 2014 Mandatory Conduct Advisory Guideline as of June 6, 2019.
A Mandatory Conduct Advisory (MCA) is a tool used by the Law Society and the Conduct Committee to further investigate a matter. This is done under section 56 of the
Legal Profession Act
and sub-Rule 88(6) of the
Rules of the Law Society of Alberta
to gather more information about a matter from the lawyer involved. The results of the MCA provide guidance to the Conduct Committee regarding next steps toward resolution of the matter.
The new 2019 MCA Guideline provides clarity and will assist those referencing the guideline to better understand its purpose, the process, its requirements and any potential further use of a report issuing from the MCA process.
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