Law Times

Law Times • December 14, 2015 Page 3 www.lawtimesnews.com Law society to tweak mixed trust account reporting Law Foundation seeks to capture more interest to invest in programs BY NEIL ETIENNE Law Times he Law Foundation of Ontario hasn't been get- ting all the money it is owed so plans are afoot to change the legal financial re- porting process to better ensure the organization gets its proper funding. LFO chairman Paul Schabas says the changes won't be drastic, but the process is being stream- lined to eliminate multiple forms and the changes will be incorpo- rated into the Law Society of Up- per Canada's annual reports start- ing in September 2016. Hopefully, this will provide greater detail about lawyers' mixed trust funds, the interest which the LFO draws on to fund programs and provide better access to justice for Ontarians, Schabas says. "It's not so much we're not get- ting all the funds we need, it's that we are still working hard to capture all the funds that we are entitled to," he says. "We've been investing time and money with the law society so that there's going to be a new format to the reporting starting in 2016 so that lawyers cannot avoid, whether deliberately or inadver- tently — and I suspect it's inadver- tent — reporting the interest." e LFO and law society began working on the new filing pro- gram earlier this year and finalized the new form this past fall. "We've been working with the law society the past year to change the way in which lawyers do their annual returns, because there wasn't full compliance by the pro- fession in filing information about their trust accounts," Schabas ex- plains. "We have not been able to capture, and be sure we're captur- ing, all the interest of those lawyer trust accounts." Starting next September, law- yers and paralegals who operate mixed trust funds will no longer be required to file three separate forms — Form 1: annual report to the Law Foundation of On- tario, Form 2: report on opening a mixed trust account, and Form 3: report on closing a mixed trust ac- count. Rather, all the information will now be incorporated into the LSUC's lawyer and paralegal an- nual reports . Founded about 40 years ago, the LFO uses interest from mixed trust accounts as its main source of revenue to provide a wide va- riety of grants to various legal organizations and schools, and to support access to justice ini- tiatives. Under the Law Society Act, lawyers and paralegals are responsible for providing infor- mation on their accounts so the LFO can claim the interest. "We have an obligation to try and get as much money as we can to further access to justice in Ontario," Schabas says. "at's not to say we haven't gotten most of it, but we are concerned we may have been leaving money on the table, both through the fault of the lawyers not reporting and frankly, in some cases, banks not necessarily being diligent in ensuring that the trust accounts, when they are opened, are prop- erly earmarked so that interest goes to us. But the reporting process is going to be tweaked to ensure that people don't overlook telling us the details of their trust accounts." Schabas says about 75 per cent of the money the LFO receives annually from the mixed trust ac- counts goes to Legal Aid Ontario, while the remainder, aer expens- es, are given out to other legal or- ganizations. e LFO helped fund the creation of the Pro Bono Law- yers Association some 15 years ago and funds it every year along with programs such as the Ontario Justice Education Network, Com- munity Legal Education Ontario, the Law Commission of Ontario, multiple law schools, mentoring programs, articling positions with legal clinics, and more. "We have the ability with the funds we have to be quite creative and nimble and incubate new ideas and innovate through our funding," he says. Schabas says the organization took a serious financial hit around 2007 when interest rates drastically dropped during the recession. He says when the recession started, the LFO had about $77 million in its accounts. However, aer main- taining its funding responsibilities to Legal Aid Ontario and covering expenses, the accounts plummet- ed and two years later had dropped to about $13 million. Until recent- ly, mixed trust accounts were the LFO's sole source of revenue. Its accounts recovered to about $37 million through 2014. In the 42 years the LFO has op- erated, it has made $230 million in grants and provided more than $650 million to Legal Aid Ontario. Now that the markets have stabi- lized, Schabas says the goal is to ensure that as much of the interest due to the LFO is collected so it can continue its work. "It's recovered; through a lot of hard work and negotiation and ris- ing balances," he says of the bounce back from the recession. A relatively new Access to Jus- tice Fund was created by the foun- dation about five years ago with a substantial $14 million cy pres award that has been kept sepa- rate from the general mixed trust fund-supported accounts of the organization. Schabas says that fund is available nationally to sup- port class actions and is supported solely by cy pres awards. He says the account has risen by about $8 million since its creation, and in the coming weeks, the founda- tion will be putting out a new call for grant applications in the areas of access to justice for aboriginal communities, children, youth, refugee and consumer rights, le- gal needs of racialized groups, and public legal education. Since this program first began providing grants in 2010, about $14 million in funding has been handed out. "is is good work that the profession does," Schabas says of the professionals who fund the LFO initiatives. LT NEWS 'We have the ability with the funds we have to be quite creative and nimble and incubate new ideas and innovate through our funding,' says Paul Schabas. T January 2016 Langlois Kronström Desjardins LLP Untitled-1 1 2015-11-12 9:17 AM

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