Law Times

PAGE 2 NEWS The battle 'continues' Continued from page 1 to restrict access to the electronic registration system, along with new registration requirements for transfers of title and powers of at- torney. Aaron says the new rules will greatly impact lawyers who "farm out" their real estate work to a freelancer. Such practitioners, if unprepared, may have faced "a serious problem" when the March 31 deadline arrived, because they must now personally use their dis- kette, he says. "So lawyers who basically man- age a real estate practice but have somebody in the back end do all the work, they've got a serious problem," he says. "It's going to impact lawyers who don't either have their own disk or who don't do their own work and who farm it out." The change to rule 5.01 will also be acutely felt by lawyers who have what Aaron calls "a volume practice." Such lawyers would previously have had their staff sign electronic documents, but, as of March 31, they began having to walk to their staff's computer, manually insert their diskette, type in their password, and wait for it to register on the system, he says. "They're going to be very busy signing documents electronically where they haven't been before," says Aaron. "There are a number who will be impacted and I don't think they're ready for it yet." Mark McMackin, a real estate lawyer from Ricketts Harris LLP, says members of his firm kept on top of the new guidelines. In fact, he says, they were so eager to make the changes that when they ap- proached Teraview to get in line, they were told to wait for the orga- Ontario Family Legislation Full reference to: • Change of Name Act • Child and Family Services Act • Children's Law Reform Act and regulation • Divorce Act and regulations, including Federal Child Support Guidelines • Family Law Act • Family Law Rules • Family Orders and Agreements Enforcement Assistance Act and regulations • Family Responsibility and Support Arrears Enforcement Act, 1996 and regulations Order your copy today! Perfectbound • 840 pp. • April 2008 • Standing Order $74 P/C 0823140000 • Current Edition Only $84 • P/C 0823010000 Multiple copy discounts available • ISSN 1198-211X For a 30-day, no-risk evaluation call: 1 800 263 2037 or 1 800 263 3269 www.canadalawbook.ca Canada Law Book is A Division of The Cartwright Group Ltd. • Free Shipping on pre-paid orders. Prices subject to change without notice, and to applicable taxes. LT040708 www.lawtimesnews.com 2008 nization to first get its own house in order to deal with the new re- quirements. "We felt there would be a flood of people coming in at the end of the month, so [managing part- ner Robert Preston] was in there as soon as they'd allow him," says McMackin. He says his firm has tradition- ally required clients — including returning clients — to bring in lots of official documentation to ensure transactions are legitimate. "You have to consider your clients to be potential enemies, so you have to make sure that every- thing you do, you've covered your- self from any potential fraudulent activity," says McMackin. Law society Bencher Bradley Wright, who as co-chairman of LSUC's real estate issues working group helped shape the changes that the government mandated, says the new regulations will make it tougher for fraudsters to succeed and easier to detect illegal activity. But he adds that changes could be made as the battle against real es- tate fraud continues. "Rules and other measures are always a work in progress," says Wright. "Nothing's ever fixed in stone permanently . . . No system is perfectly foolproof." And if Aaron's observations are Ontario Family Legislation 4/2/08 2:17 PM Page 1 right, it's likely this round of rule changes won't be the last for On- tario real estate lawyers. "There's still new fraud, and the industry stakeholders, we have to continue to be vigilant to stop this kind of thing," says Aaron. "It may not be on the front page of the newspapers — Susan Law- rence's case is now history . . . — but the police are still getting new ones." Lawyers must keep abreast of the latest headlines detailing new types of real estate fraud and fol- low the new guidelines to best deal with this ongoing challenge, says Aaron. But, he adds, "ultimately, if we have a crooked client, we've got to be one step ahead. And unfor- tunately, my belief is that a lot of the real estate fraud is being per- petrated by organized crime, and they always attempt to be one step ahead of the honest members of our society." There are other regulation changes that real estate practitio- ners should be mindful of. The Mortgage Brokerages, Lenders and Administrators Act will on July 1 supersede the Mort- gage Brokers Act. The law society negotiated an exemption under the act's licensing requirement for lawyers "if they are dealing in mortgages (except for soliciting a person to borrow money on the security of real property), trading in mortgages or administering mortgages as currently defined in the act provided that the lawyer is acting in his or her professional capacity as a lawyer on behalf of a client and does not hold himself or herself out as carrying on these activities," according to the LSUC web site. Lawyers who don't meet the exemption requirements must ap- ply for a licence. An advance ap- plication process started in March. Other recent changes involv- ing real estate lawyers include the requirement to hold fraud insur- ance coverage and changes to the Rules of Professional Conduct dealing with disclosure require- ments and reports on mortgage transactions. Reduce your research time with these useful features: • concise Table of Contents with detailed Table for each Act • a thorough subject index • legislative history for each provision • bleed tabs to help you locate exactly what you need • Fraudulent Conveyances Act • Intercountry Adoption Act, 1998 • Interjurisdictional Support Orders Act, 2002 and regulations • Marriage Act and regulation • Partition Act • Pension Benefits Division Act and regulation • Spousal Support Advisory Guidelines: A Draft Proposal by Prof. Carol Rogerson (Faculty of Law, Univ. of Toronto) and Prof. Rollie Thompson (Dalhousie Law School) APRIL 7, 2008 / LAW TIMES Lawyers draw line in sand Continued from page 1 tions that exempt legal counsel from the requirement to report suspicious transactions or transactions for which they are provid- ing legal services. It also contains a section that says the financial- reporting provisions do not require lawyers to "disclose any com- munication that is subject to solicitor-client privilege." But the federation says the new attempt to list lawyers and legal firms with entities still covered by the act poses a new threat. Of particular concern are existing compliance measures listed under s. 62 of the act, which allow FINTRAC investiga- tors access, without search warrants, to "any premises" except a dwelling-house where they suspect there are records relevant to "ensuring compliance" with the act. The investigators may also search computer systems and data-processing systems and copy any records they want. "The federal regulations would authorize government of- ficials to come into law offices without a warrant and look through confidential client information," Michael Milani, the federation's president, tells Law Times. "That's not acceptable and it's also not constitutional." To maintain the claim of privilege, the law provides that the lawyer would have to seal the documents or information and ask a judge to confirm the claim of privilege within three weeks. The judge could inspect the information if he or she thought it necessary to determine whether privilege applied, and could either confirm the privilege existed or order the lawyer to hand the document over the FINTRAC. If the lawyer did not ask a judge to confirm privilege, FINTRAC would automatically have access to the information. Milani tells Law Times that unless something changes before December — and he and government officials say discussions continue — any lawyer who is asked to provide information after the regulations pass will claim privilege and refuse to do so. "Unless something else is resolved between now and then, the lawyer would know to take a position that he or she objects to that [intrusion] occurring," says Milani. "I expect the matter would then go to the courts for a determination." Another federation official, who did not want to be quoted, LT says the requirements to provide solicitor-client privilege in cas- es where FINTRAC sought access to client information could result in chaos for most large law firms. The "model rule" the federation council approved on March 20 would allow law societies to regulate their own members to meet the requirements of the law, Milani says. The rule requires lawyers to record all cash transactions involving clients, infor- mation about the clients that is as stringent as the requirements of the act, as well as identity verification that is similar to the requirements of the act. Each of the 14 law societies have agreed to adopt similar ver- sions of the federation's model rule. Meanwhile, two lawyers who are knowledgeable about the money laundering and terrorist-financing law declined to com- ment on the regulations and the federation's position. A spokes- man for the Department of Finance would only say discussions continue between the government and the federation. The Justice Department declined to comment, saying the Finance Depart- ment and FINTRAC were the lead agencies. LT Marketplace COUNSELING Dr. Valentin Shulman - Helping legal professionals to overcome depression and stress since 1989. Individual sessions, telephone coaching. Call (416) 766-6185. EMPLOYMENT WANTED Services - Available law clerk. Proficient in estates, real estate, litiga- tion, ADR, corporate/commercial and labour Part/full time. Messages (416) 621-2485. and employment. To advertise call 905-841-6481 DON'T COURT DISASTER Keep up-to-date on the latest judicial developments by reading Law Times CaseLaw on pages 14-15 Consulting Editor: Elliot S. Birnboim

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