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Tera Yates: Good afternoon. We're pleased to welcome you to today's webinar, Set Yourself Up for Success in a New Soul Practice.

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Tera Yates: First, some introductions. I'm Terry Yates, Manager of the Practice Management Team, and I'm here with Practice Management Council Donna Moore and Myra Hassan.

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Tera Yates: Also joining us is Beth Verhalst and Rachel Proventure from the Law Society's communications team.

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Tera Yates: We acknowledge that we live and work on land where Indigenous peoples have lived since time immemorial, and we are honored to share this land with them.

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Tera Yates: We acknowledge the many First Nations, Metis, and Inuit who have lived in and cared for these lands for generations.

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Tera Yates: We are grateful for the traditional knowledge keepers and elders who were still with us today, and those who have gone before us.

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Tera Yates: We make this acknowledgement as an act of reconciliation and gratitude.

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Tera Yates: So today's session will be conducted through Zoom webinar. I want to briefly take you through a few features of this software.

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Tera Yates: First, I want to mention that a version of this webinar will be recorded and posted to our website on a later date.

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Tera Yates: At the bottom of your Zoom window, you should see the Zoom taskbar, which gives you a few options to interact with today's session.

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Tera Yates: If you open the Q&A window, you will see an area where you can type questions. We will be compiling a list of your questions throughout the webinar for the Q&A portion at the end.

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Tera Yates: You will also see a resources section on the side panel, where we will add links and copies of our materials.

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Tera Yates: Finally, live transcription of this event is enabled. If you want to turn closed captioning on or off, select the closed captioning button on your Zoom taskbar.

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Tera Yates: At the end of the webinar, when you close out the window, a brief survey will pop up. We would very much appreciate your completion of the survey, as it will allow us to refine this presentation, as well as determine future webinar and educational offerings.

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Tera Yates: We also wanted to highlight the ability to submit a request for a one-on-one practice management consultation with PM Council.

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Tera Yates: Once we receive your request, we will reach out to you to set up a Teams meeting or telephone call.

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Tera Yates: You can submit your request through the website, and we will provide a link in the resources section as well.

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Tera Yates: We are happy to answer any further questions you may have in relation to opening your own practice, or if you have other practice management questions or topics you would like to delve into, we're happy to chat about those.

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Tera Yates: Although this session is primarily intended for those who are setting up or thinking about setting up a new soul practice, we understand that there are many here who may be at different stages of the soul practice journey. We hope you will all leave with some key takeaways today.

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Tera Yates: As you can see, we have quite the roadmap here, and we will each be covering a few of these topics today.

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Tera Yates: There is a lot of content, but when we were preparing, we discovered we really couldn't leave any items out.

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Tera Yates: The mandate of the Law Society is to protect the public interest.

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Tera Yates: In practice management, we further this mandate by working with and supporting lawyers in their practices. We are committed to our roles, and we will walk you through the considerations and steps for opening a sole practice today.

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Tera Yates: We will try to breathe life into the resources we have, act as interpreters for the Code of Conduct and Rules, and provide context through examples as much as possible.

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Tera Yates: We've included numerous links in the PowerPoint to help guide you after this session.

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Tera Yates: Today is all about highlighting key rules, obligations, and best practices.

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Tera Yates: We want to help you build ethical infrastructure in your practice. A large part of this is creating and maintaining processes to help you meet your obligations.

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Tera Yates: What we are recommending today is a lot of hard work, but we promise it will pay off down the road when your practice is running smoothly.

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Tera Yates: Now, let's start this off by looking at some general considerations for opening your soul practice.

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Tera Yates: What is your why?

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Tera Yates: Before you take this bold step, it's really important to ask yourself a number of honest questions to ensure you are prepared.

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Tera Yates: Being a sole practitioner goes well beyond just being a good lawyer who understands the law. You must also be able to run a business. We all have strengths and weaknesses, and we excel in some tasks and find others unappealing and challenging.

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Tera Yates: In reviewing all of our materials and those from various other law societies across the country, one theme emerges. Ask the right tough questions before you leap.

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Tera Yates: An owner, lawyer will be faced with client demands, time limitations, conflicting deadlines, and non-client demands. You must be an effective leader. Does this land with you?

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Tera Yates: Work will not be placed on your plate in comfortable, consistent bites. Sometimes, you will be drinking from a hose. Are you okay with this?

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Tera Yates: What do you hope to achieve? How will you define success?

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Tera Yates: Cash flow will be uncertain at times. Are you okay with that uncertainty?

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Tera Yates: What is your tolerance for constant pressure, not just on files, but also on the administrative side of a practice?

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Tera Yates: Are you okay missing out on the social aspects of a firm, from coffees to office parties to being able to walk down the hall? Are you prepared to be on your own?

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Tera Yates: Now, weigh this against your why. Why is this important to you? Do you have family obligations or medical issues that you need to balance that make it hard to be in a firm? Do you need more flexibility?

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Tera Yates: Have you found that a firm environment is just not a right fit with your personality?

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Tera Yates: Do you want to choose your own clients and have more control over your decisions?

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Tera Yates: Do you like administrative work?

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Tera Yates: Are you ready to build something hard, but important, on your own?

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Tera Yates: Starting your own firm is an exciting, rewarding adventure if you are prepared properly at the outset. And remember, the first year will be hard, and that's okay. You've gotten this far, you can do this.

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Tera Yates: You'll see we have linked you to a new resource entitled, Opening a New Law Firm. A lot of what we touch on can be found in way more detail here, so do not fear, we have you covered.

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Tera Yates: Once you have decided that this is the right path for you, it's really important to build out a plan.

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Tera Yates: Define a framework for your practice, looking at practice area, target client, and where you want to build your firm.

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Tera Yates: In terms of what you practice, we so often see new firms try the scattergun approach with little or no experience in the areas they're offering.

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Tera Yates: You are code-obligated to be competent in all areas you practice, which is why we recommend sticking to one, maybe two areas of law.

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Tera Yates: We hear some terrible stories of new firms feeling the financial pressure to take on files which they have no business taking on, and that can lead to serious regulatory intervention. You don't want that.

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Tera Yates: Be good at a few narrow areas, rather than being a master of none.

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Tera Yates: You owe a duty to your clients to be competent in the work that you take on, and you must be confident in the services that you are offering.

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Tera Yates: Who is your target client? Visualize this client. What does your chosen practice area, market research, personal interests, skills, previous experience, and professional networks tell you about your market client?

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Tera Yates: Sorry, your target client. What legal services do your target clients want and value? Do you have colleagues, friends, and family who will refer clients to you?

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Tera Yates: Where will you practice? If you're putting down roots, are you starting in a community in which you want to live long-term? If you're moving somewhere to start a firm, does the market have room for you?

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Tera Yates: Are you going to work from home? You will need a confidential private space to ensure you meet code obligations of confidentiality. If you need to meet with clients, where will that be? Do you want a secure meeting space?

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Tera Yates: Do you want to have a physical office? What's easiest for you, your clients, your staff, in terms of location and parking?

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Tera Yates: As you envision your space, how will you set yourself up? Will you use paper files, or operate electronically?

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Tera Yates: Once you have looked at these questions closely, you must take steps to build out a business plan, a formal statement of business goals, and the plan for reaching those goals. This should include, at the very least, a mission statement and a budget.

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Tera Yates: Building a budget shows you how much all of this costs. We've broken this up into immediate startup costs, initial one-time expenditures, and then ongoing costs, which become your overhead.

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Tera Yates: Unless you have savings or another source of funds, you may need to apply for financing as you start up.

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Tera Yates: You'll be paying out a lot, and not a lot might be coming in, until you are settled.

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Tera Yates: It's important to actually build a budget. You need to have a sense of what you are spending versus how much income you will earn.

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Tera Yates: Starting up out of the gate, you will need to think about technology, computers, printers, copiers, scanners, the basics, storage, backup, IT costs, software. You will be committing to practice management and accounting software, equipment, office space, meeting space.

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Tera Yates: And introductory marketing costs. Think about your website.

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Tera Yates: Ongoing expenses are going to include those LSA fees, ALEA fees, possibly civil litigation filing fees, accountant or bookkeeper's fees, rent if you have a space, staff salaries and benefits, equipment leases.

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Tera Yates: Do you want a landline, a cell phone, voice-over internet?

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Tera Yates: You will need Wi-Fi and ongoing subscriptions for research, maybe practice area-specific software, and maybe AI.

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Tera Yates: Consider GST and taxes.

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Tera Yates: Insurance. What other types of insurance will you need?

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Tera Yates: Please note that staff misappropriation is not covered by ALEA, and also consider whether you need excess insurance.

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Tera Yates: Having a good budget, which is nimble and ready for adjustments, will reduce your stress in the early days.

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Tera Yates: Okay, now I'll turn it over to Donna to discuss business structures.

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Donna Moore: Okay, let's talk about how you can get yourself set up.

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Donna Moore: Practice arrangements vary, and you have a number of choices to make when you structure your law firm.

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Donna Moore: But the two primary considerations are, what's the best structure to shield yourself from personal liability, not including professional liability, though, and which structure best addresses the foreseeable tax consequences of the firm.

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Donna Moore: So consider the liability and business implications of the various entity types, and seek accounting advice early on to truly understand the, you know, the best option for you.

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Donna Moore: So, first we're going to talk about sole proprietors.

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Donna Moore: The sole proprietorship

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Donna Moore: Is when you own and operate your business as an individual without incorporating a separate legal entity.

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Donna Moore: Pros.

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Donna Moore: You have full control over the decision-making and management

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Donna Moore: It's also low-cost to start up, and there are fewer formal registrations, like PCs or LLPs.

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Donna Moore: But the cons? The buck stops with you.

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Donna Moore: You're personally liable for claims arising out of the practice, and that puts personal assets at risk.

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Donna Moore: You also have to finance this yourself, or get loans, and that can be tough.

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Donna Moore: Who's this best for?

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Donna Moore: You should be self-reliant, able to market yourself well, and be prepared to manage administrative details.

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Donna Moore: You will also be the responsible lawyer for the firm, for the trust accounting obligations.

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Donna Moore: We'll cover that in more detail later, and you might hear us call it an RL. That's an important term to know. But basically, you're okay with risk, and you like autonomy.

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Donna Moore: Now, If you want to be around other lawyers, but still run your own firm, consider practicing in association.

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Donna Moore: What it is?

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Donna Moore: It's a group of independent soul practitioners who decide to operate their own separate practices from the same location.

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Donna Moore: And this can present in many different situations.

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Donna Moore: Where each lawyer is on a lease, and you share rent or other expenses.

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Donna Moore: Or it may be a lawyer or law firm that rents space to other lawyers or law firms.

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Donna Moore: Or you can rent or, rent in a co-share executive space.

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Donna Moore: But really important to consider is, do you share the same standards, and do you trust the folks with whom you intend to share space?

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Donna Moore: Also, each lawyer will have their own RL, Responsible Lawyer Status, and control their own trust account.

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Donna Moore: The sharing of a trust account is possible, but under very narrow circumstances, and it is not possible if you're practicing real estate.

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Donna Moore: And you must clearly identify your practice relationship for clients.

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Donna Moore: The pros of the association is that you have someone to bounce ideas off of.

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Donna Moore: And while you run your own ship, you're not alone.

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Donna Moore: The cons?

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Donna Moore: Well, you can be exposed to some limitations in your ALEA coverage related to negligence or fraud.

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Donna Moore: You can also be exposed to some public liability, tenants liability, or trade debts.

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Donna Moore: A group of independent practitioners sharing space is technically considered a firm under the code as well, so bear confidentiality and conflicts in mind.

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Donna Moore: This means that you must have a conflict system in place between or among all of you.

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Donna Moore: And you owe a duty of confidentiality to your clients, and you cannot share client information with anyone other than your staff. So if you're in a space-sharing arrangement, you need to ensure that your client's information always remains confidential. As an example.

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Donna Moore: Say I have a practice, and I space share with another lawyer. I do wills and estates. They run a family law practice, but we share a copier and a receptionist.

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Donna Moore: What happens if my wills client is going through a family law proceeding, and my client's former partner is my colleague's client?

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Donna Moore: There's potential for client information to be seen at some point, maybe at the copier.

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Donna Moore: What if they're both in the shared waiting space at the same time? You have to think about how to prevent conflicts and confidentiality breaches in a circumstance like this.

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Donna Moore: Also, if your shared space situation looks and presents like one practice, be careful. Courts will likely treat it as one when determining liabilities to third parties, irrespective of your internal arrangements.

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Donna Moore: But for that reason, you should have really solid internal arrangements, like a written agreement setting out the arrangement, including mutual indemnities in case partner-like obligations are imposed.

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Donna Moore: We have points to consider. It's in that one quadrant on the slide.

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Donna Moore: And in that, in that… there's a link. We have a startup kit with, 31… yeah, 31 considerations when building an agreement for lawyers looking to pursue sharing space. It's really worth a look.

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Donna Moore: Also, if you're sharing space with non-lawyers, confidentiality is key, and remember, you cannot pay referral fees or divide your fees with non-lawyers.

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Donna Moore: So, who is this arrangement best for?

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Donna Moore: If you want the mix of feeling somewhere like a firm, but you still want to be responsible for your own business.

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Donna Moore: Next.

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Donna Moore: PCs, professional corporations. You can… you can structure one. But what is it? It's a separate legal entity through which legal services are paid.

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Donna Moore: But it's not an ordinary corporation, and rules are applicable. Lawyers seeking a PC require articles approved in advance by the Law Society through a permit application.

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Donna Moore: Once you're registered provincially, you'll then pay annual dues to the LSA for your PC.

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Donna Moore: Now, to be clear, you do not require a PC to operate your firm. It's simply a way to structure your own planning, it's not a prerequisite to launch, but the RL, Responsible Lawyer Designation, is.

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Donna Moore: Pros of a PC.

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Donna Moore: Well, it's really more of a tax planning tool, so if you form one, you should truly understand it so that you can best use it to your advantage. There may be tax deferral benefits after income has been generated, that type of thing.

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Donna Moore: But cons.

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Donna Moore: There's administrative and regulatory requirements. There's additional levels of compliance. You have annual returns, you have to file a T-slip for your corporation in addition to your personal return.

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Donna Moore: You need to understand how to withhold when you pay yourself a salary. You need to understand how you document dividends.

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Donna Moore: We've linked more information about PCs, as well as LSA requirements for registration and annual renewal and fees.

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Donna Moore: But again, approval from the LSA must be obtained before you register or amend a PC.

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Donna Moore: And to be crystal clear, lawyers are not permitted to incorporate to escape professional liability.

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Donna Moore: So who's it best for? Probably best for someone who's earning enough to save some income, and earn some tax advantages from the entity.

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Donna Moore: Now, finally, while we're focused largely on operating a sole practice, we're going to touch briefly on partnerships and limited liability partnerships, in case that's where you land.

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Donna Moore: So what it is, a partnership consists of two or more individual lawyers and or PCs jointly carrying on business as a single law practice.

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Donna Moore: An LLP, the Limited Liability Partnership, is a partnership that complies with the LLP provisions of the Partnership Act.

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Donna Moore: and has registered as an LLP with the LSA and the government.

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Donna Moore: The difference is in the name. So, a general partnership exposes partners to more liability, whereas the LLP structure offers some protective limits in certain parts of the business.

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Donna Moore: This matters, and it's why we're seeing more and more LLPs.

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Donna Moore: Now, we could do a whole hour on this, but it's not really our focus, so please access the links, reach out to the membership department if you have questions about any of these options.

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Donna Moore: But the bottom line is, how you organize takes some advanced planning and forethought, and it's always advisable to seek accounting and possibly legal advice when you're making these important decisions.

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Donna Moore: Now, Myra will carry on with the administrative and reporting requirements.

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Maira Hassan: So we'll start by highlighting the critical administrative and reporting requirements. These are the absolute must-dos. You must be an active member of the LSA to practice, and you must have insurance. There are a lot of important dates to remember, and these fall to you.

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Maira Hassan: In this period, when you're leaving a firm where these things are often handled for you, or if this is all brand new to you, you can be at risk of ending up on one of those dreaded administrative suspension lists. But not all of you who are attending today. You are here and learning, and we've got some resources to help keep you on track.

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Maira Hassan: We've provided a link to the Key Dates page. If you go to the link, it allows you to double-check all of your key dates, and if you scroll to the bottom of this page, you can add them to your calendar.

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Maira Hassan: First, get familiar with the lawyer portal. It is imperative that you keep your portal updated with your contact and practice information, and if you need to change your status, you do this through the portal. Please also be aware that there is a part-time status option, which may be helpful to you in the startup phase of a new sole practice.

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Maira Hassan: For LSA membership fees, if you're paying for the full year, your payment date is March 15th every year. If you're paying in two installments, your payment dates are March 15th and September 15th each year.

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Maira Hassan: For ALEA fees, if you're paying for the full year, your payment date is June 30th of every year. If you're paying in two installments, your payments are due June 30th and December 30th.

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Maira Hassan: Also, the quarterly civil litigation filing levy may apply to you, so make sure you understand that. Take time to check out the ALEA website, and contact ALEA with any questions at any time.

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Maira Hassan: Remember, your first step to becoming a responsible lawyer is to apply.

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Maira Hassan: Once you are an RL, you will have a trust safety annual reporting obligation, which is, due March 31st each year. And for your annual CPD plan, the due date is October 1st each year. Now we'll move on to a further discussion about being a responsible lawyer with Terra.

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Tera Yates: Thank you

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Tera Yates: I have included a link to the rules, and I would encourage you to review and become really familiar with Part 5 on trust accounting and client identification and verification.

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Tera Yates: The rules require that all law firms have a responsible lawyer, including sole practices. You must apply and receive approval to be designated the responsible lawyer.

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Tera Yates: Before providing any legal services to clients. You can request a designation to be the responsible lawyer with approval to operate a trust account, or with an exemption from operating a trust account.

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Tera Yates: There are, of course, many more tasks and rules associated with operating a trust account, but it also provides you with the opportunity to take retainers and handle trust funds.

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Tera Yates: It typically takes the Trust Safety team 3-4 weeks to process these applications, so please factor this in when you are planning. You'll want to get your RL application in at the very earliest opportunity.

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Tera Yates: You can use this processing time to purchase equipment and furniture, create templates, set up those processes, determine software options and tech, and generally get organized so that you're ready to open your door.

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Tera Yates: Okay, let's move on to talk about bank accounts.

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Tera Yates: So once you have received your approval letter from Trust Safety, you are good to open your bank accounts and start providing legal services. You should have your general account at the same bank as your trust account, because any bank fees related to your trust account must be directed to come out of your general account.

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Tera Yates: Let's talk a bit about each intern.

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Tera Yates: So your general… your general account is for business use only. This means it may not be used for anything personal.

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Tera Yates: Your general account is your operating account. This is the account that you use to receive payment after legal services have been rendered, and this is the account that you will use to pay business expenses out of, including paying yourself and your staff.

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Tera Yates: General accounts do not have client funds. This is because all funds in the general account have stopped being client funds when they entered the general account.

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Tera Yates: You must reconcile your general bank account each month.

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Tera Yates: This reconciliation will form part of your monthly prescribed financial records, which we will talk more about.

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Tera Yates: By way of example of how you need to keep your personal expenses out of your general operating account, if you go to Costco and you have groceries, and also office supplies for your law firm, you will need to separate your order at the cashier such that your groceries are paid for from your personal account.

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Tera Yates: And the office supplies for your law firm are paid from your general operating account.

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Tera Yates: Trust Safety implemented the business-only, nothing personal rule on January 1st, 2022. They introduced this rule because there was too much mixing, and they wanted to make these boundaries clear.

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Tera Yates: Okay, moving on to trust accounts.

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Tera Yates: Lawyers are fortunate to be allowed to keep funds and trust on behalf of our clients. This allows us to be paid for the legal services we provide as we can request a retainer, and it enables us to handle client matters which involve financial payments and settlements.

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Tera Yates: Because we are entrusted with our clients' money, there are also a lot of rules and reporting obligations that go along with this rather weighty responsibility and privilege.

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Tera Yates: Trust accounts are pooled accounts, which are comprised of client funds held for a variety of clients.

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Tera Yates: Think of your trust account as a pie, and all of your client's trust monies are inside this pie together.

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Tera Yates: Each deposit must be associated with a legal service for a client. Conversely, each withdrawal must be also related to a legal service for a client.

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Tera Yates: Each client has their own trust ledger to keep track of that client's funds being held in trust.

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Tera Yates: So we've talked about client funds being included in the pooled trust account pie. I thought we should also talk about what should not be in the pie. In a nutshell, any funds that are not related to client legal services should not be in the trust account pie.

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Tera Yates: Should you keep monies for your office lease payment in trust?

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Tera Yates: No, these funds are not related to client legal services and should not be in trust. These payments should be paid out of your general operating account.

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Tera Yates: Should you pay for court filing fees directly out of trust?

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Tera Yates: No, you should not. These payments should be paid out of your general account, and then included as a disbursement on your statement of account for the client the disbursement was incurred for.

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Tera Yates: What else should not be in the trust account pie? Interest. The interest that our trust accounts earn is redirected to the Alberta Law Foundation.

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Tera Yates: As mentioned, bank fees must never come out of your trust account, and you need to instruct your bank very clearly that they should come out of general.

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Tera Yates: Unfortunately, even if you are very clear in your instructions, it is almost inevitable that the bank will take bank fees out of your trust account.

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Tera Yates: What happens when they do?

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Tera Yates: They are actually taking these fees from your clients, and inadvertently creating a shortage.

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Tera Yates: To help counter this type of shortage, or any inadvertent shortage, you are allowed to have a maximum $500 float in your trust account for situations such as these.

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Tera Yates: If, when, the bank mistakenly takes bank fees from your trust account, they aren't taking it from your clients. They would then be taking it from your float.

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Tera Yates: When you straighten this out with the bank, they should put the bank fee back into your trust account, and then the bank should proceed to take the fees out of the correct account, which is your general account.

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Tera Yates: When you receive a retainer for your trust account, or really any funds destined for your trust account, you must deposit that retainer, or those trust funds, into your trust account on the same day it is received, or by the end of the next day.

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Tera Yates: Then you must tell your software, such as Clio, Cosmalex, Leap, or Easy Law, that you have deposited a retainer to the credit of X client.

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Tera Yates: This will be recorded on the client's trust ledger that we spoke about earlier.

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Tera Yates: After you have performed services for your clients, and after you have provided your client with a statement of account for those services, only then can you pay yourself by moving that retainer from your trust account to your general account.

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Tera Yates: It is a requirement to actually provide the statement of account to your client before you move funds from trust.

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Tera Yates: Your statement of account will include your fees for the services you performed, any disbursements that you incurred and paid from general on behalf of your client, and applicable GST.

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Tera Yates: Your statement of account cannot include anything that is prospective or will occur in the future. It must only include those fees for services rendered and disbursements that have been incurred.

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Tera Yates: We recommend that you use the electronic banking withdrawal form each time you withdraw or transfer funds from trust in order to capture all of the information you need. By using this form, you create a paper trail.

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Tera Yates: Where should a copy of this electronic banking withdrawal form go? Well, one copy should go into your client's file, and then one copy should be moved into your monthly prescribed financial records subfolder as well. And we're going to talk about this soon.

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Tera Yates: So, for example, if you provide your client with a statement of account in the amount of $2,000, and you have $3,000 retainer in trust.

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Tera Yates: After you issue the statement of account to your client, you can then transfer the $2,000 from Trust to General in order to pay the account.

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Tera Yates: And you can track the transfer by using the electronic banking withdrawal form.

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Tera Yates: You will still have a retainer of $1,000 remaining in trust in this instance.

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Tera Yates: Another example is if your statement of account is for $1,500, and you only have a retainer of $1,000 in trust. After you have issued your statement of account to your client, you can then transfer the $1,000 from trust

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Tera Yates: to general, and track it with the electronic banking withdrawal form.

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Tera Yates: In this case, there is a $500 accounts receivable.

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Tera Yates: When your client makes the payment for the $500 remainder, this can be deposited directly into your general account, because it is a receivable that's connected with a statement of account that has already been issued to your client, and is now owing and payable to you.

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Tera Yates: If you do not operate a trust account, or if you do not have a retainer in trust for the client, and you issue a statement of account to your client for services rendered.

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Tera Yates: When they pay the account, that payment can go directly into General.

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Tera Yates: Once you have received payment for your services into your general account, this money is now available for you to use to pay for business expenses, to pay your staff, and also to pay yourself.

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Tera Yates: As with your general account, you must reconcile your trust account each and every month. This reconciliation also farms part of your prescribed monthly financial records.

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Tera Yates: Trust reconciliations are very specific, and I have linked a really helpful resource in this slide deck.

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Tera Yates: In trust safety language, trust bank reconciliations are a key internal control. A reconciliation compares what should be in trust based on what you have posted or told your accounting software, such as Clio or Cosmalex, in comparison to what is stated in the bank statement.

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Tera Yates: When you perform your monthly reconciliation and make those comparisons, they should match up, and if they don't, you will need to dig deeper to figure out what's going on.

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Tera Yates: If you discover a trust shortage, you may have to report the shortage to the Trust Safety Department. It's important to understand the reporting rules.

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Tera Yates: If you have a shortage in excess of $2,500, you must report it to Trust Safety immediately.

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Tera Yates: If you have a shortage that is less than $2,500, and you correct it within 7 business days, you do not have to report it to Trust Safety.

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Tera Yates: But if you have a shortage of $1, and you discover this on day 8,

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Tera Yates: you must report it to Trust Safety.

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Tera Yates: There are also special rules relating to transfers between trust ledgers, or from matter to matter. It is when you have money in trust for your client relating to one legal matter, and they direct you to transfer some or all of those funds in trust to another of their legal matters.

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Tera Yates: You must create that paper trail for this, which is the case, which in this case is called a transfer document.

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Tera Yates: This transfer document must be signed by you, the lawyer.

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Tera Yates: and show the date the transfer was approved, the date of the transfer, the source file, and the destination file. You'll maintain the transfer document in your client file, and also put a copy in that prescribed Financial Records subfolder.

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Tera Yates: Every transaction relating to your trust account must be clear and documented.

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Tera Yates: I also wanted to quickly mention that there are also specific rules relating to receiving cash from clients. If you're planning to accept cash, from clients, the client and the person

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Tera Yates: Providing the cash on behalf of the client must sign the receipt.

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Tera Yates: You, or a person from your firm that is accepting the cash must sign the receipt.

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Tera Yates: And also, there's a $7,500 limit on the amount of cash that you can receive for any one matter.

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Tera Yates: Please note, there are also exceptions.

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Tera Yates: Okay, lastly, let's turn to the Canada Deposit Insurance Corporation, or CDIC, requirements relating to insurance for your trust funds.

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Tera Yates: If you bank with a major bank that is not a credit union, you need to…

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Tera Yates: Designate all of your CDIC-insured trust accounts as professional trustee accounts.

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Tera Yates: You need to complete the required attestation at your bank that you qualify as a professional trustee.

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Tera Yates: And then you annually need to reattest to your status as a professional trustee.

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Tera Yates: We have provided a link that provides further and helpful information on this as well.

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Tera Yates: Okay, I'm not going to say too much about separate interest-bearing accounts or CEBAs, except to tell you that they exist as an option in very specific circumstances when you might be holding significant funds in trust for a client for an extended period of time.

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Tera Yates: Your client is entitled to interest, and you will also need to reconcile it each month.

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Tera Yates: Okay, moving on to anti-money laundering obligations.

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Tera Yates: One of the primary AML obligations is knowing your client by obtaining client identification and possibly verification.

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Tera Yates: We have included a link to the CIV flowchart in the resources section.

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Tera Yates: I'm going to go through this really quickly right now, but please do reach out if you have any further questions.

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Tera Yates: So, starting at column 1 on the left-hand side of the flowchart, are you providing legal services? If the answer is yes, you can move on to column 2, which says that you must identify your client, and it tells you what information you must collect in order to do so.

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Tera Yates: We must always identify every client that we are providing legal services for.

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Tera Yates: Then we move on to column number 3. Will you be receiving or directing trust funds? If you answer yes to that question, and none of the exceptions listed apply, then you must verify.

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Tera Yates: If you are only receiving a retainer from your client for fees and disbursements.

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Tera Yates: This is an exception, and in this situation, you would not need to verify.

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Tera Yates: But if you must verify because you said yes to column 3, and there are no exceptions, then you move on to column 4, and you verify your client.

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Tera Yates: The flowchart handout provides the methods for verification.

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Tera Yates: So, as an example.

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Tera Yates: If you are retained to complete an uncontested divorce for a client where you receive a retainer for the service, but no settlement funds are involved, you would only need to identify the client. You would not need to verify because you only received a retainer for fees, and this is an exception.

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Tera Yates: Another example is if you are retained to act on behalf of a civil litigation client, and you receive settlement funds and trust. You must both identify

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Tera Yates: And verify your client in this circumstance.

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Tera Yates: When you are the responsible lawyer with approval to operate a trust account, or with an exemption from operating, you will also have reporting obligations throughout the year and annually.

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Tera Yates: If you are a responsible lawyer with approval to operate a trust account, you must provide a startup report to Trust Safety 4 months from the date of your approval letter.

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Tera Yates: This is the only time you will have to provide this startup report. Trust Safety wants to see how you are handling your trust transactions. If you have approval to operate, but haven't had any trust transactions in the first 4 months, you can request an extension of time to provide your 4-month startup report to Trust Safety.

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Tera Yates: If you have an exemption from operating a trust account, you will not need to provide a 4-month startup report at all.

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Tera Yates: We always recommend thinking about your trust safety accounting responsibilities in terms of daily, weekly, monthly, and annual tasks.

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Tera Yates: On the daily tasks, remember we've already spoken about the rule requiring that trust funds must be deposited the same day they are received, or by the end of the following day.

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Tera Yates: Posting matters to your Trust Safety software should be a daily task as well. As soon as that deposit has been made, you will want to tell your software that you've made it.

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Tera Yates: There is no rule in relation to posting within a certain amount of time, but this is a best practice because you want your records to be as up-to-date as possible.

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Tera Yates: One of the reasons to have up-to-date posting is if you need to turn around and use those trust funds soon.

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Tera Yates: I would be remiss if I didn't mention the importance of also knowing your bank's clearance rules.

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Tera Yates: This is especially important when transactions are moving quickly, as is the case for real estate.

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Tera Yates: Even if you have deposited trust funds into your trust account, and you have posted the deposit in your accounting software.

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Tera Yates: to the credit of that specific client, this still does not necessarily mean those funds are now available for your use.

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Tera Yates: Before you can use those funds and transfer those funds out, you must ensure that they have cleared through your bank.

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Tera Yates: Bank clearance timelines differ from bank to bank, and it also depends on the type of deposit received, whether it was a paper-based

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Tera Yates: Such as a trust check or a bank draft, or whether it was a bank, so pardon me, a wire transfer or a bank transfer.

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Tera Yates: If they have not… if you do not know that those funds have cleared.

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Tera Yates: You are at risk of creating a shortage.

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Tera Yates: Because if they have not cleared, but you have used them anyway, you have just taken those funds from other clients in your pool trust account.

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Tera Yates: As an example of a situation that I found myself in long ago, I received a trust check for settlement funds for a family law client from another law firm.

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Tera Yates: I was very anxious to turn this around and provide a trust check to my client for the settlement.

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Tera Yates: My office manager at the time said, hold on, you can't do that yet because those funds haven't cleared. I had no idea about the importance or existence of clearance until she explained it to me.

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Tera Yates: I then had to go back to my client and explain the delay because of this clearance issue.

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Tera Yates: Once I understood the issue, I could better set up my clients' expectations in terms of timelines for receiving those settlement funds.

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Tera Yates: Okay, getting back to daily tasks. One of the other daily tasks we recommend is to review your trust account statement each day. This helps you to just stay on top of it, and you would identify anything amiss in a timely manner.

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Tera Yates: On a weekly basis, you might want to carve out some time to make sure that all of the daily tasks were completed.

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Tera Yates: Maybe you will also need to take care of some payables from your general account, and it would provide you with another opportunity to review your trust account statement, as against your trust ledger.

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Tera Yates: You might also use some of this time for billing, so that you're keeping up with this as well.

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Tera Yates: Your monthly prescribed financial records are another key trust accounting control.

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Tera Yates: Your prescribed financial records must be kept for a period of 10 full years, and every month you must pull together and print or digitally capture the prescribed financial records, including several reports

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Tera Yates: And your trust account reconciliation, and your general account reconciliation.

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Tera Yates: If you do not operate a trust account and have an exemption.

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Tera Yates: These monthly prescribed financial reports will be far fewer, but you will still have to prepare some each month.

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Tera Yates: Your prescribed financial records are due by the end of the following month.

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Tera Yates: The resource we have linked provides a list of the reports, reconciliations, and materials that make up your monthly prescribed financial records. We suggest you use this resource to create that checklist.

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Tera Yates: Prescribed financial records will include, as I said, your bank reconciliations, a copy of your trust listing, trust journal, general journal, client trust ledger, billing journal, accounts receivable ledger, and trust transfer report.

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Tera Yates: We also recommend that you set up individual subfolders for each month of each year, and this is where you can save a PDF of your prescribed financial records each month.

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Tera Yates: When you review your prescribed financial records, create a practice of digitally capturing your initials and the date of review on your reconciliations, because this provides evidence of your review.

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Tera Yates: As I mentioned earlier, this is the subfolder where you can place those duplicate copies of the electronic withdrawal forms.

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Tera Yates: This is where your paper trail, or your digital trail, is collected, so that when you are preparing your monthly financial records, including your reconciliations, everything is together, and it makes tracing these transactions that much easier.

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Tera Yates: You could also place a copy of the checklist in each month's folder so that you can run through it and make sure you have captured the right contents each month.

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Tera Yates: Your annual task is submitting your annual trust safety reporting for the calendar year of January 1st to December 31st. This annual reporting is due by March 31st each year, so in essence, you have 3 months to report on the previous year.

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Tera Yates: The annual reporting consists of completion of a self-report through the lawyer portal. This will be for those who operate a trust account, and also those with an exemption from operating.

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Tera Yates: And if you also operate a trust account, then you must also provide your trust safety accounting upload through the Connect tool.

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Tera Yates: Each responsible lawyer will receive an email with instructions for the upload, and there are guides and tutorials available on our website as well.

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Tera Yates: So remember how we talked about the importance of creating and maintaining processes?

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Tera Yates: Thoughtful processes manage risk, and as a result, having reliable processes can truly take some weight off your shoulders, and we want this to be the situation for all of you.

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Tera Yates: In terms of creating trust safety processes, we strongly encourage you to create an opening file process.

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Tera Yates: This will include using a consistent intake form to capture that client identification information and potentially verification, as well as ensuring the source of funds is documented as applicable.

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Tera Yates: You will also want to create a process for receiving trust funds.

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Tera Yates: Including depositing checks or bank drafts, and receiving funds electronically by way of transfer or wire.

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Tera Yates: You will want to create a process for outgoing trust funds, including trust checks and transfers. This would be a trust fund withdrawal process.

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Tera Yates: We recommend that you review your client's trust ledger as part of this process, and you will also need to consider your bank's clearance rules to ensure that the funds are cleared and usable.

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Tera Yates: We also encourage use of the electronic trust withdrawal form in order to create a digital trail.

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Tera Yates: These processes are simple, and if they are used consistently, they will provide you with a lot of peace of mind.

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Tera Yates: Another process we encourage creation of is a billing process. You want to make sure that you are capturing your time on files, you are capturing the disbursements, and you are also billing your clients consistently.

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Tera Yates: You need to bill for the services that you have provided in order to generate that cash flow that you need to run your business and pay yourself every month.

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Tera Yates: Now I'll turn it over to Donna for a discussion about support teams.

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Donna Moore: Okay.

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Donna Moore: Now we're moving into support teams.

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Donna Moore: These are the people and the services that can help you build out your soul practice.

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Donna Moore: Support teams aren't about building a big firm type of roster. Rather, they're about making sure that your time and attention are best used towards your practice and legal work.

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Donna Moore: It's not an operational choice, and it's not always tied to expenses, although that can factor in, but think about support as part of your risk management, client service, of course, practice growth and sustainability, and your professional responsibilities.

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Donna Moore: So, when people hear the word term, support team, they often imagine, like, you know, full-time internal staff. But in reality, support can be internal, external, part-time, virtual, and it will likely evolve over time.

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Donna Moore: You might want to consider getting some assistance, or paralegals, a reception, but you can get remote for that. Researchers, conveyancers, it's all going to depend on your practice areas and the volume of work that you have.

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Donna Moore: Now, many sole practitioners rely on an external accountant or bookkeeper and IT support, and consider that if you're able to acquire those. The financial and tech systems are your foundation.

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Donna Moore: But any or all of your team can be contractors, rather than traditional hires, and this might be a good way to get staffing underway.

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Donna Moore: Using contractors means you don't have to worry about source deductions, remittances, and it keeps, it helps manage overhead.

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Donna Moore: As an aside, but worth noting, if you're exiting on your own and you have a student at law at your team, that comes with specific obligations and requires a plan around execution and supervision as well, based on the LSA requirements that go with the articles.

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Donna Moore: In building your team, though, do a needs assessment. What do you have? What do you need? Consider which tasks must occur daily, weekly, or monthly.

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Donna Moore: Consider which tasks require specialized knowledge, maybe those that you don't have.

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Donna Moore: And, which ones take away time from legal work?

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Donna Moore: From there, think about sourcing and hiring, and how you'll approach onboarding and retention, because even an excellent hire can dramatically stabilize a practice, but staff departures can have even more significant impacts. So you want to be sure to sustain the staffing, maybe consider benefits, CPD for your staff.

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Donna Moore: Flexible work options. Again, what you have, what you need, what you can accommodate.

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Donna Moore: And then consider how you should work with your team in a way that meets your professional responsibilities.

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Donna Moore: So the working together stuff.

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Donna Moore: You know, whenever you bring support into your practice, you become a lawyer, but you also become the employer manager as well. So, this goes for whether they're in with you daily, or whether they're remote and virtual. You need to think about things like clearly creating and communicating duties.

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Donna Moore: Roles and expectations, keeping people informed, and then building that culture of consistency and also accountability.

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Donna Moore: It's also important to link staff work back to your professional framework, including how the code of conduct intersects with them and what they do.

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Donna Moore: Maybe have them review relevant code provisions so that they get some clarity around how what they do supports you or can cause you to be in breach of one of your obligations.

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Donna Moore: As well, consider confidentiality agreements with staff and contractors.

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Donna Moore: As part of your working with your support team, create and implement an office procedure manual.

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Donna Moore: It's a practical tool for more than just the job descriptions and the HR type of considerations, although those matter.

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Donna Moore: But it's an effective way to make sure that your systems and all those processes that Tara outlined are contained, right? You reduce them to writing, you house them in this manual, and that way you know that the processes are run the same way every time.

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Donna Moore: It's also a living document that you can add to or update for everything.

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Donna Moore: But when it goes to processes, you want to create invariable processes, so that things are done the same way every time, record them, implement them, and this helps with training and onboarding new staff members, but it also means that the existing staff have a place to go rather than coming to you constantly.

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Donna Moore: Overall structure prevents problems, and when things are done in this way, you'll have fewer errors, better delegation, better client service, more compliance with your professional obligations, and you'll have less stress.

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Donna Moore: Also, get clarity around what non-lawyer staff may do, and what they must not do, and this includes your student at law.

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Donna Moore: Now, this brings us to a core concept.

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Donna Moore: While delegation to team members is available and encouraged, supervision and accountability remain with you.

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Donna Moore: So, delegation and supervision. The framework here lies within the code, also legislative requirements, and the rules of court, as well as all of your professional responsibilities.

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Donna Moore: Now, when you say delegation and supervision, it kind of comes out in one breath. It's like they're the same thing. And while they're related, they are not the same. They're partners for effective practice.

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Donna Moore: They're also squarely your responsibility.

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Donna Moore: And so while you're encouraged to delegate, you are responsible for the outcome.

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Donna Moore: Effective delegation means you oversee, instruct, review, and remain accountable. It's not just handing something off.

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Donna Moore: Delegation is accompanied by supervision.

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Donna Moore: But neither are passive, and they both require that level of instruction, availability, and review. So a good example is your bookkeeper.

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Donna Moore: Their role is supportive.

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Donna Moore: And you delegate tasks, you can delegate tasks, but you must have supervision and oversight. You need to understand the trust safety rules.

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Donna Moore: You need to understand the related processes, and regularly and diligently review the trust and general accounts and all activity.

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Donna Moore: But in this way, also consider how you're going to review and supervise remote staff work.

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Donna Moore: Finally, proper delegation and supervision includes being aware of the risks related to misappropriation and fraud, because ultimately, not only are you responsible for staff errors, but you're on the hook if money or client property disappear.

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Donna Moore: So the processes and the controls help you attend to all of these duties and obligations.

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Donna Moore: But they're also really key practice management skills. Getting a solid foothold regarding how to lead, delegate, supervise, maintain oversight with confidence helps you build your practice and set you up for long-term success.

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Donna Moore: Now, they also tie integrally with your professional responsibilities.

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Donna Moore: And looking at the… slide,

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Donna Moore: I'm gonna pull a lot of threads here, but not so many that, will get overwhelmed, because we could go on with this for a very long time. It's a great conversation.

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Donna Moore: Basically, your professional and ethical obligations and responsibilities must remain top of mind all the time. Doesn't matter what's on your task list, what time pressures are mounting, these are your professional guardrails.

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Donna Moore: And they tie to every practice decision and every business decision, and there will be plenty of both, often with split-second timing needed.

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Donna Moore: They're gonna manage your team for you, they're gonna help you implement technology, they're gonna help you with client and file management and marketing.

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Donna Moore: Now, each button on this slide links to key LSA resources on point.

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Donna Moore: But they're all grounded in the code, and you need to be ultra aware of everything in the code.

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Donna Moore: And because of this, and, you know, it might seem obvious, but ask yourself, when was the last time you read the code?

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Donna Moore: Like, really read it. And even if it was recently, read it again.

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Donna Moore: Sit down, maybe in the evening, turn off Netflix, have a cup of tea, read the code.

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Donna Moore: Think about what it says, and why it's… why it's there. Think about the commentary. Think about what's happening in your practice, has happened, what could happen, and try and contextualize it that way. Some of it might still be abstract to you, but it will likely come across your desk at some point, so have a handle on it.

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Donna Moore: Now, going back to some of the key responsibilities, let's start with competence.

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Donna Moore: You need to be competent in your practice areas. That… we know that.

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Donna Moore: But competence is more than knowing the law. It also means ensuring that you have the capacity to do the work you do. And that means the time, systems, and ability to serve clients properly.

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Donna Moore: And capacity is more than just workload. It's about your systems and your supports, that team that we just talked about, and whether they allow you to provide competent and timely client service.

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Donna Moore: Now, capacity in that sense is a major issue in Seoul practice.

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Donna Moore: It's easy to say yes to every file, or maybe it isn't, but maybe you think you have to take every file, especially early on.

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Donna Moore: But don't.

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Donna Moore: Unmanaged volume is a significant risk factor, and it can undermine all the hard work that you're doing otherwise.

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Donna Moore: Don't take on more than you can competently handle.

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Donna Moore: And, you know what? You can and should say no to clients and files that aren't a fit for you.

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Donna Moore: Related to this is Continuing Professional Development, CPD. And as we mentioned, you have to have your plan declared by October 1st annually, or you'll face administrative suspension.

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Donna Moore: But as you prepare your plan, look to the year ahead and beyond.

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Donna Moore: Create a roadmap, not just a checklist that's aligned to your practice areas, but also think about your clients and files, potential risk, but moreover, where do you want to take your practice? What coursework do you need? What processes and systems do you need to get there? And who do you need to support you?

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Donna Moore: As a point to consider.

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Donna Moore: With potential legislative reform around automobile insurance, some lawyers may be considering a pivot in their practice.

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Donna Moore: But ensuring competence in those new particular areas is paramount. If a lawyer is considering a shift from MVA PI work to, say, for instance, real estate, it's incumbent on them to be fully competent in real estate law, and to build out the systems and processes for client and file management.

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Donna Moore: But competence here also means building out substantive awareness around all the attendant risks around fraud, as well as bank holds, check clearing, remote signing, and so on.

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Donna Moore: So all of this is to say, don't do work for which you're not sufficiently experienced or equipped.

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Donna Moore: There are ways to build all of that out, but it takes time and thought.

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Donna Moore: And one final point about CPD. Don't forget that your plan must incorporate your own well-being and managing your health in all respects.

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Donna Moore: I want to mention tech competence. Technological competence, and including around artificial intelligence, is really important. And in the slide, we've linked our generative AI playbook, and I encourage you to take a look at that.

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Donna Moore: But the underpinning message here is if you use technology, you must understand its limits and ensure that it and your use of technology align with your professional obligations.

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Donna Moore: Then, be constantly alive to your obligations around confidentiality and conflicts. It's imperative to build out and adhere to consistent processes for these, both at intake and throughout the life of the file, because those are evergreen

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Donna Moore: And supervision and delegation show up again, because your obligations don't change once the file is underway, or team change… team members change, or the file takes a turn.

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Donna Moore: This links to your duties as well around preventing fraud and implementing measures around loss prevention.

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Donna Moore: Then, there are the duties of civility and courtesy. And yes, these are professional obligations and core values that we hold as lawyers, but they're also practice protection issues, and critical for your success.

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Donna Moore: Civility and courtesy, and we've linked resources, they create and support your reputation with other members of the bar and your reputation with the bench, which is so important.

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Donna Moore: Finally, marketing considerations.

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Donna Moore: This is a reminder that marketing is professional communication, and it must comply with code and other applicable requirements. But above all, be truthful and ethical in your marketing.

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Donna Moore: Okay, next we're going to move on to business continuity and succession planning.

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Donna Moore: So, a business continuity and succession plan is a written, proactive plan that explains how your practice will be continued, managed, transferred, or wound down if you're unavailable, either temporarily or permanently.

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Donna Moore: Business continuity and succession planning are related, but they're distinct concepts, but they're usually addressed in a single integrated plan.

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Donna Moore: Business continuity means, how does my practice keep running if I'm temporarily unavailable, or something disrupts operations?

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Donna Moore: Succession planning means, what happens to my practice if I retire, become incapacitated, or die?

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Donna Moore: So the plan includes coverage for both expected and unexpected events.

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Donna Moore: Planning matters so that client matters, trust obligations, deadlines, office operations are handled appropriately in your absence.

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Donna Moore: So what do you need? You need at least a designated lawyer or lawyers who are a fit for your circumstances.

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Donna Moore: You need written agreements providing them with clear authority to access files, calendars, trust and general accounting information, passwords, and office systems and records. Also, provide instructions on how client matters are handled, and how financial continuity operates, such as payroll, rent, insurance.

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Donna Moore: You need estate planning documents, too.

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Donna Moore: EPAs, etc, so that the successor lawyer can handle the firm files and accounts, because your family members and your personal rep or executives… executors, they don't automatically have legal authority for this.

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Donna Moore: So think about what kind of practice you have.

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Donna Moore: The volume and complexity of files, your trust or other account activity, are your files able to speak for themselves? Should someone have to come in and run with them? And how will urgent matters be immediately addressed?

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Donna Moore: Then think about who your successor lawyers are, but maybe think about some alternates as well.

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Donna Moore: And going back to your team and your staff, what roles can and should they take on during your absence or a transition?

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Donna Moore: And again, in terms of other documentation you might need, there might be the EPA, but there might be other inclusions or changes to your estate planning documents that need to be amended to facilitate your plan.

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Donna Moore: We have sample documents in our materials to get you started, and they're linked here.

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Donna Moore: Failure to plan can result in Law Society intervention, such as the appointment of a custodian.

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Donna Moore: This results in increased costs to you or your estate, but ultimately, it's also about avoiding client harm and enabling your compliance with professional obligations around competence and client service.

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Donna Moore: Now, Myra will take you through the life cycle of a file.

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Maira Hassan: Thanks, Donna.

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Maira Hassan: So, practice management, the life cycle of a file.

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Maira Hassan: Practice management refers to the strategic and operational activities undertaken by legal professionals to effectively and efficiently manage their practice. It encompasses various aspects of client, file, financial, time, and technology management.

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Maira Hassan: Practice management is a competency in and of itself to be honed and developed, and requires lawyers to run their practice in compliance with all legislative requirements.

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Maira Hassan: So the first aspect of the life cycle of a file is at the intake stage, your initial contact with the prospective client.

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Maira Hassan: You or your designated intake person are required to obtain enough information about the client and other parties involved to perform a conflict check.

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Maira Hassan: The conflict check must be done prior to obtaining confidential information and prior to the first meeting with your client.

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Maira Hassan: You should have a process to document that the conflict check was done, either by printing this, a record of the conflict check, or by saving it digitally. This process should be followed when the conflict check comes back positive as well as negative.

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Maira Hassan: If the conflict check comes back positive, you may still be able to take on this client if certain steps are taken. You'll want to carefully read the commentary in the code, and if necessary, contact a practice advisor for direction if you remain unsure.

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Maira Hassan: So once you've established that you can move forward, you need to now gather information from your client. Client screening ensures that you are minimizing risk by taking on only clients and matters that are compatible with your practice.

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Maira Hassan: Some questions for you to consider when screening a potential client are, does the client's matter fit into your areas of practice and competency?

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Maira Hassan: Do they know why they are seeking a lawyer, or what they are trying to achieve? Do they have a case?

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Maira Hassan: Will this matter require more resources and time than you can commit?

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Maira Hassan: Are they able to pay your fees? Do they have the capacity to instruct counsel? Do they have reasonable expectations about timing, outcome, and fees?

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Maira Hassan: How many lawyers have they retained before coming to you? And what do your instincts generally tell you about this potential client?

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Maira Hassan: During the screening process, it is acceptable to advise potential clients that you require a couple of days to think about their case before making a decision about representation.

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Maira Hassan: If you make the decision to decline representation, then you want to ensure you confirm this in writing by sending a non-engagement letter. This step serves to ensure there is no confusion on the part of the client about representation.

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Maira Hassan: Now, if you decide to accept the client's matter.

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Maira Hassan: We are also going to confirm this in writing, in a retainer agreement or engagement letter. This is essential to setting out the terms of your representation and compensation.

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Maira Hassan: The client's obligations and expectations, and circumstances that govern termination of your relationship. We'll delve into what should be outlined in your retainer letter in more detail shortly.

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Maira Hassan: The next step in your intake process involves identification and verification of your client. Now, Tara's covered in detail how to navigate this step, and for ease of reference, we've included links to both the flowchart as well as the forms on our website for ID and verification of both individual and organizational clients to this slide also.

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Maira Hassan: Now, on to retainer agreements. A retainer letter or agreement sets out the scope of services to be performed, billing matters, and your authority to act.

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Maira Hassan: The retainer letter will govern the relationship with the client for the lifetime of the matter, unless it's amended.

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Maira Hassan: So what purpose does your retainer letter serve? In most cases, your client will give you a specific retainer for the purpose of performing a specific task.

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Maira Hassan: A specific retainer serves a number of valuable purposes. It sets out what services you will perform and confirms your authority to act on the client's behalf.

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Maira Hassan: It outlines how your services are to be built, including frequency of billing, disbursements, tax issues. This is key to managing the client's expectations, and also key to your getting paid.

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Maira Hassan: It provides a mechanism for replenishing retainer funds, and alerts the client to methods by which the lawyer-client relationship may or will be terminated.

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Maira Hassan: It confirms crucial information that you discussed with the client at the first meeting, and it also clarifies who the client is, which can be different from who is paying your fees.

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Maira Hassan: The importance of having a retainer letter cannot be overstated. It is the first document a review officer asks for in the case of a fee dispute. It protects both you, the lawyer, and the client in case of a dispute or litigation, and provides valuable evidence about the intended terms of your relationship.

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Maira Hassan: It is important to remember that in the absence of a written agreement, uncertainty as to the scope of the retainer will likely be construed in the client's

449
01:07:16.390 --> 01:07:17.410
Maira Hassan: Favor.

450
01:07:18.390 --> 01:07:28.330
Maira Hassan: The third step in the file opening process will be entering the client into your practice management software. Most law firms obtain accounting and practice management software to assist them in their practice.

451
01:07:28.340 --> 01:07:41.620
Maira Hassan: As mentioned earlier, the LSA's Trust Safety Department has approved several accounting software vendors for the purpose of generating the electronic data upload to meet annual reporting requirements, and we have linked a current list of approved vendors to this slide.

452
01:07:41.970 --> 01:07:52.539
Maira Hassan: Differing accounting software vendors include practice management elements to varying degrees, so it's important to consider the practice management features you need when deciding on the appropriate software for your firm.

453
01:07:53.550 --> 01:08:07.570
Maira Hassan: And lastly, we want to add the new file to our master file list. Now, a master file list is an easy and effective file tracking and file management tool. Accounting and practice management software packages offer various features for file tracking.

454
01:08:07.980 --> 01:08:23.220
Maira Hassan: accounting summaries and so on, but they typically do so on a file-by-file basis. You can find information about a particular file by accessing it in the software, or you can access a report of all active files and generate some specific batched information.

455
01:08:23.220 --> 01:08:30.010
Maira Hassan: The master file list, however, summarizes all of your active files, and the status of each, in one comprehensive document.

456
01:08:30.130 --> 01:08:43.010
Maira Hassan: This also allows you to perform an ongoing assessment about next steps, retainer refreshment, and so on for specific files, such as whether or not it's time to hold off on taking new files, or if efforts to generate more work are needed.

457
01:08:43.279 --> 01:08:59.619
Maira Hassan: An added benefit is that it's simple, and it can be accessed in a variety of ways. You can create a master file list as a Word or Excel document, keep it on a computer or another device, and update it as needed. Or it can be printed, annotated, and modified later, so it's always current.

458
01:08:59.770 --> 01:09:07.919
Maira Hassan: The key is to create and adhere to a consistent process so that the master file list is always current, reflecting the status of each file at any given time.

459
01:09:08.270 --> 01:09:28.239
Maira Hassan: We recommend that you have a weekly meeting with your assistant, or go through each and every file, yourself. This master file list provides you with key pieces of information about each of your active files, such as your file number, client name, the nature of the matter, the last step taken, the next step to be actioned, and a financial column.

460
01:09:28.359 --> 01:09:38.199
Maira Hassan: And last but not least, you need to include your next diary date for the file. Again, we've linked sample master file lists for different practice areas to this slide for you to review.

461
01:09:38.960 --> 01:09:55.170
Maira Hassan: Now that we've opened the file, we need to work the file. This is where you will see the intersection of those five practice management elements we saw in the earlier diagram slide, and we will now review how to effectively manage time, files, clients, documents, and billings.

462
01:09:55.790 --> 01:10:05.080
Maira Hassan: So, the ability to manage your time is key to having a successful practice. It leads to improved efficiencies, less stress, and you feeling more satisfied with your day-to-day practice.

463
01:10:05.380 --> 01:10:13.249
Maira Hassan: Email with opposing counsel and clients can be a large consumer of time, and you need to tackle that constant stream of emails with a system.

464
01:10:13.370 --> 01:10:19.469
Maira Hassan: We recommend setting aside specific time to address email, as it allows you to focus on that task.

465
01:10:19.580 --> 01:10:23.429
Maira Hassan: When giving thought to how much of your day is spent on email correspondence.

466
01:10:23.580 --> 01:10:33.450
Maira Hassan: If your email volume is really high, or if your practice entails the possibility of receiving urgent email, your strategy might be to set more than one time each day to manage it.

467
01:10:33.590 --> 01:10:39.060
Maira Hassan: Maybe allocating time at both the beginning and the end of the day is the most effective strategy for you.

468
01:10:39.300 --> 01:10:45.550
Maira Hassan: How much time you may need in each session is up to you, but you need to allow enough time to action on emails completely.

469
01:10:45.680 --> 01:10:54.249
Maira Hassan: Actioning means that you respond, delegate, or delete the email. Whatever you did not get to in that email session, you can deal with in your next session.

470
01:10:54.670 --> 01:11:00.310
Maira Hassan: The key to being efficient in these email sessions is to only review an email once, and action on it fully.

471
01:11:00.420 --> 01:11:16.929
Maira Hassan: You may need to review the client's file, give it some thought, and then respond and process both the incoming and outgoing email to completion. You want to ensure that no email gets pushed further down your inbox without a meaningful response, so establishing a set routine for email makes it much more manageable.

472
01:11:17.790 --> 01:11:29.070
Maira Hassan: Now, we know there's only so much time in a workday, so managing your calendar in accordance with your priorities is also critical. You must ensure you have uninterrupted time that is just yours to do the legal work required.

473
01:11:29.140 --> 01:11:44.610
Maira Hassan: You must ensure that you also have time for the supervision of staff and colleagues, as Donna mentioned, to assist them with their work. And you must also ensure that you leave time to manage the administrative side of your business. We recommend that you regularly block off time in your calendar for each of these items.

474
01:11:44.720 --> 01:11:51.760
Maira Hassan: In summary, what we want is to make sure that you are in control and in the driver's seat when managing your calendar and controlling your own time.

475
01:11:53.020 --> 01:12:08.509
Maira Hassan: Now, when interacting with your clients, having effective communication skills will keep you in compliance with your obligations. Some examples of how effective communication skills are applied in practice are realistically and clearly advising your client of potential outcomes and costs.

476
01:12:08.750 --> 01:12:15.430
Maira Hassan: Establishing an understanding with your client about the preferred method of communication and your timeframe for responding to communication.

477
01:12:15.640 --> 01:12:21.169
Maira Hassan: Using plain language when possible, and allowing space for your client to ask questions or seek clarification.

478
01:12:21.450 --> 01:12:25.130
Maira Hassan: Responding promptly to communications from your client and other lawyers.

479
01:12:25.210 --> 01:12:43.929
Maira Hassan: Ensuring that the tone of every communication is civil, and content is limited to relevant matters. Avoiding delay in billing and ensuring that bills are fully explained. And last but not least, keeping your client informed of progress on the matter, even if only to explain why the matter has been delayed or is in a holding pattern.

480
01:12:43.930 --> 01:12:52.569
Maira Hassan: We recommend that you diarize your file every 4-6 weeks to keep your client informed on progress, and this ensures that you're also moving the file forward.

481
01:12:53.530 --> 01:12:58.759
Maira Hassan: Now, good file management also ensures the progression of files. What does that entail?

482
01:12:58.930 --> 01:13:14.430
Maira Hassan: Well, first, you've got to know your limitation dates and deadlines. There can be several limitation dates and deadlines to address in a matter, depending on the facts and issues to be resolved. It is imperative to have a thorough understanding of the legislation and rules, and know where to access this information when needed.

483
01:13:15.030 --> 01:13:18.120
Maira Hassan: You then have to diarize those limitation dates and deadlines.

484
01:13:18.250 --> 01:13:35.500
Maira Hassan: The diary schedule you implement should consider repetition and timing. When to diarize a matter involves considering how long it may take you to review the matter, prepare draft documents or pleadings, provide those drafts for your client to review, make any necessary revisions to finalize the document.

485
01:13:35.500 --> 01:13:38.389
Maira Hassan: Or pleading, and possibly file the pleading with the court.

486
01:13:38.460 --> 01:13:45.340
Maira Hassan: Also, consider circumstances out of your control, such as illness, tech issues, and emergencies on other files that may arise.

487
01:13:45.510 --> 01:13:51.799
Maira Hassan: Give yourself ample time so you do not find yourself in the stressful situation of trying to conclude something at the last minute.

488
01:13:52.400 --> 01:14:07.600
Maira Hassan: So while the diary schedule you implement should be personal to your practice and circumstances, consider at minimum having a reminder that is 6 months, 3 months, and 1 month prior to the deadline or limitation date. In the last month, consider weekly and or daily reminders.

489
01:14:07.870 --> 01:14:17.689
Maira Hassan: In terms of diary systems, limitation dates and deadlines can be tracked using a manual system, electronic calendar application, or software designed to track dates.

490
01:14:17.990 --> 01:14:29.709
Maira Hassan: Manual systems involve entering the limitation date and deadlines into a physical diary, or calendar. This requires someone manually calculating the various dates for entry, which increases the chances of errors.

491
01:14:29.780 --> 01:14:40.019
Maira Hassan: It also does not allow for ease of sharing information among staff or backup. A manual system can still serve as a backup, but it's not recommended as your primary diary system.

492
01:14:40.340 --> 01:14:49.849
Maira Hassan: Now, most lawyers have already an electronic calendar application by virtue of having Microsoft Outlook, for example, but any electronic calendar application can work.

493
01:14:49.950 --> 01:15:02.369
Maira Hassan: This system allows for recurring reminders to be automatically set. It allows other staff to access the same calendar on their devices and to jointly manage dates, and the data can be backed up to your server or the cloud.

494
01:15:02.650 --> 01:15:14.650
Maira Hassan: We suggest you avoid relying on just one system to manage your deadlines and address them in multiple places. This will prove invaluable in the unfortunate event that your server or internet is down, or your office is inaccessible.

495
01:15:14.770 --> 01:15:23.219
Maira Hassan: Creating and maintaining that master file list we spoke about earlier also serves as an essential tool as you are reviewing the status of each of your files regularly.

496
01:15:24.160 --> 01:15:43.950
Maira Hassan: Next, we want to manage documents effectively by managing and handling the organization of files. Organized files help you run an organized practice. We refer to our client files every day. Whether they are digital files or physical paper files, it is imperative that any portion of the file can be easily accessed and kept confidential.

497
01:15:44.330 --> 01:16:03.519
Maira Hassan: Regardless of the organization method you choose, it is helpful to create a standardized system for file organization and use it consistently. We suggest that you plan… your plan should include a separate file folder in your paper files for correspondence. This includes incoming and outgoing correspondence in chronological order.

498
01:16:03.520 --> 01:16:08.939
Maira Hassan: A separate folder should be maintained for ethical and financial considerations, such as the conflict check.

499
01:16:08.940 --> 01:16:21.310
Maira Hassan: The client's intake information, statements of account, the retainer letter, your client's ID and verification documents, copies of checks or electronic banking withdrawal forms, and any receipts of payments on account.

500
01:16:21.410 --> 01:16:36.930
Maira Hassan: You should have a folder for each of draft documents and pleadings, and you may wish to have subfolders for draft, final, and filed versions. You will also want to separate out client documents, disclosure, research, and also have a miscellaneous folder to catch anything else.

501
01:16:37.200 --> 01:16:52.710
Maira Hassan: We recommend that you maintain one true file that you can rely on. This could mean that you save everything digitally, without fail, so that you always know that every document and piece of information that should be on the file has been digitally saved. But this does not prevent you from having a working copy that is paper.

502
01:16:52.750 --> 01:17:07.090
Maira Hassan: Or you may prefer a hybrid paper file and digital file system. If this is the case, it's important to determine exactly what is contained on the paper file and what is contained on the digital one. This is a little more difficult to track, but it can be done, as long as there is consistency.

503
01:17:07.430 --> 01:17:20.009
Maira Hassan: Now, there are obvious advantages to having digital files. They are easier to find, and more people can access them, making collaboration easier. You're saving money on printing and physical storage of closed files, and you have greater mobility.

504
01:17:20.120 --> 01:17:26.249
Maira Hassan: Your office is more organized and environmentally friendly, and digital files support your disaster plan.

505
01:17:26.320 --> 01:17:46.299
Maira Hassan: If you're going to make a switch to digital files, or if you are just creating your processes and file organization systems for the first time, we recommend that you digitize all incoming documents in the same format, such as a portable document format or PDF that is searchable. And this is also the current requirement of the courts in Alberta for digital filing.

506
01:17:46.670 --> 01:18:00.809
Maira Hassan: And finally, on the issue of document management, irrespective of whether you're using a paper filing system or a digital one, you must have backup, security, and client confidentiality at the forefront of your mind when handling client files.

507
01:18:01.520 --> 01:18:07.740
Maira Hassan: Now, the last section to be reviewed in working the file relates to billing, retainer replenishment, and collections.

508
01:18:07.980 --> 01:18:21.869
Maira Hassan: Billing clients for the work we have done is important to both us lawyers and our clients, and you must ensure that you create fee transparency regardless of how you bill. That could be hourly rates, fixed fee, monthly retainer, or even contingency fees.

509
01:18:21.930 --> 01:18:30.300
Maira Hassan: Put yourself in your client's shoes and think about how often you would want to be built. Think about asking for a retainer replenishment with each statement of account.

510
01:18:30.390 --> 01:18:36.249
Maira Hassan: Try to stay ahead of the retainer, which can be done through regular review of your ever-so-important master file list.

511
01:18:36.520 --> 01:18:48.640
Maira Hassan: You may have specified this in your retainer agreement, so there is certainty from the client's perspective on how often they will be billed, or in what increments, expectations around retainer replenishments, and options for collections.

512
01:18:49.150 --> 01:19:05.119
Maira Hassan: We also encourage you to enter your time contemporaneous to the task, and do not move on to the next task until you have entered your time. Entering your time in your accounting software allows you to have control over the timing and the content of the description, and it also minimizes the risk that time is missed.

513
01:19:05.180 --> 01:19:12.830
Maira Hassan: We don't recommend that you write down your time on paper and enter it later. This is a duplication of effort and an inefficient use of time.

514
01:19:13.610 --> 01:19:19.899
Maira Hassan: So now that you have the tools to master working your file, you also need to develop an appropriate file closing system.

515
01:19:20.050 --> 01:19:34.410
Maira Hassan: How you close a file also requires focused attention. You can meet your obligations and make it easier and more cost-effective for your future selves by creating and maintaining thoughtful closed file retention, storage, and disposal processes.

516
01:19:35.420 --> 01:19:49.469
Maira Hassan: So, it is a good practice to develop a file closing procedure and checklist to capture all of the steps you need to take to close a file. Many of these steps also include obligations under the rules and code, and we've linked a sample checklist to this slide.

517
01:19:49.900 --> 01:19:57.390
Maira Hassan: Now, we know the most about a file right at the time we close it, which is why going through those steps in your checklist at that time is so important.

518
01:19:58.150 --> 01:20:07.730
Maira Hassan: So, what do we have to do as we prepare to close the file? Well, first, you want to provide a closing letter to your client advising them that you're closing their file and returning original documents.

519
01:20:07.900 --> 01:20:16.729
Maira Hassan: Then, we must also ensure that there is a zero trust balance, and print the client trust ledger and accounts receivable ledger for the closed file.

520
01:20:17.110 --> 01:20:27.939
Maira Hassan: Next, you will consider whether you need to file and serve a notice of withdrawal or change in representation. It's important to take this step where necessary so that you don't face unexpected obligations in the future.

521
01:20:28.240 --> 01:20:41.870
Maira Hassan: You will then close the file in your practice management or trust accounting software, remove it from your master file list, and add it to your closed file list. And lastly, you will note and diarize the destruction date or review date.

522
01:20:42.710 --> 01:20:47.879
Maira Hassan: So that leads us to the next consideration, which is what must we as lawyers keep, and for how long?

523
01:20:48.290 --> 01:21:03.479
Maira Hassan: Generally speaking, we keep closed files for no less than 10 years, as specified in the rules. You are obligated to keep a copy of the client trust ledger and accounts receivable Ledger both in the closed file and in a central file maintained for closed ledgers.

524
01:21:03.640 --> 01:21:11.199
Maira Hassan: You're also required to retain the client's identification information and verification documents for at least 6 years following completion of work.

525
01:21:11.440 --> 01:21:27.209
Maira Hassan: So generally speaking, if you practice in criminal law, real estate, family law, or civil litigation, you will likely be retaining these closed files for 10 years. But there are exceptions to that that may require us to retain closed files, contents for longer, or almost indefinitely.

526
01:21:27.600 --> 01:21:42.939
Maira Hassan: If your practice involves wills and estate planning, you won't know anything is wrong until the subject of your will has passed. In this instance, you are obligated to retain these files for 10 years after probate is granted to address the limitations period for any potential claim.

527
01:21:43.310 --> 01:21:54.740
Maira Hassan: If a file involved a minor, the limitation period doesn't commence until the miner reaches the age of majority, and files where discoverability or capacity concerns may apply will also need to be kept longer.

528
01:21:54.940 --> 01:22:01.490
Maira Hassan: Keep in mind that you may also need to use the contents of a closed file to respond to a complaint or negligence claim in the future.

529
01:22:01.740 --> 01:22:21.630
Maira Hassan: You can view more in detail about your obligations around the retention of closed files through the link on this slide. And really, the takeaway for you on this is that file closing checklist is just your starting point. You'll want to carefully assess the contents of each file to determine how long you need to keep it and diarize review and destruction accordingly.

530
01:22:22.490 --> 01:22:32.389
Maira Hassan: So where are these closed files to be stored? At all stages of practice, you should keep storage issues in mind. What happens when a firm dissolves, or a lawyer leaves the practice, or passes away?

531
01:22:32.430 --> 01:22:45.989
Maira Hassan: Lawyers leaving or retiring from larger firms may have fewer concerns, as the remaining firm members continue to arrange for file storage. But who will want to take on responsibility for client files when a sole practitioner retires? And who will pay for storage?

532
01:22:46.270 --> 01:22:57.709
Maira Hassan: Electronic storage is now more secure and more reliable than maintaining hard copies of files. For those of you who are considering maintaining only electronic copies of file materials, you need to keep the following in mind.

533
01:22:57.850 --> 01:23:01.539
Maira Hassan: Maintaining confidentiality, accessibility.

534
01:23:01.700 --> 01:23:10.659
Maira Hassan: the format and future readability of the documents, and cloud storage, noting that consent is to be obtained if files are stored outside Canada.

535
01:23:11.370 --> 01:23:25.700
Maira Hassan: And lastly, you will require a process to bring the files in need of destruction to your attention. You can maintain them in your diary system, or a process whereby the closed file listed is reviewed at regular intervals to identify those that are ready for disposal.

536
01:23:25.960 --> 01:23:36.000
Maira Hassan: When the day comes for the file to be destroyed, additional processes will be necessary. The most common process, or method for destruction of paper or hard copy files is shredding.

537
01:23:36.040 --> 01:23:49.319
Maira Hassan: A professional shredding service, a student or assistant can do this, or even a lawyer themselves can shred the file. The most important consideration with this process is exercising due diligence to protect confidentiality throughout the shredding process.

538
01:23:49.750 --> 01:23:58.730
Maira Hassan: Firms that store closed files digitally on hard drives, USB sticks, or in the cloud will need to create a process for the complete deletion or destruction of the digital file.

539
01:23:58.990 --> 01:24:08.950
Maira Hassan: Hard drives and USB sticks cannot simply be dumped into the trash or repurposed, because programs exist to reformat hard drives, extra care and attention must be taken.

540
01:24:09.060 --> 01:24:18.930
Maira Hassan: If files are deleted from the cloud, attention must be paid to ensure that they have not been backed up to another server, and if they have, the backup must also be deleted.

541
01:24:19.150 --> 01:24:25.100
Maira Hassan: Now, that concludes the formal part of our presentation, and I'll now turn it back over to Tara for closing comments.

542
01:24:28.290 --> 01:24:45.099
Tera Yates: Thank you. So we are now at the end of our presentation, and ready to begin answering some of the questions we received. If we don't get to your question in this session, please feel free to request a practice management consultation, which you can find linked in the resources section of the Zoom panel.

543
01:24:45.290 --> 01:24:47.899
Tera Yates: Okay, so for the first question.

544
01:24:48.650 --> 01:24:57.259
Tera Yates: This question says, the slide says, must provide a statement of account to the client before moving retainer funds from trust to general.

545
01:24:57.500 --> 01:25:11.779
Tera Yates: My understanding is that the account must be rendered, not necessarily provided, to the client. Do I have to wait until the mail is delivered, or I personally provide the account to the client before transferring the funds from trust?

546
01:25:12.340 --> 01:25:17.710
Tera Yates: What if the mail delivery of the account is late or denied by the client?

547
01:25:18.200 --> 01:25:27.140
Tera Yates: So this, the answer to this, all of this, is found in Rule 119.28 sub 3.

548
01:25:27.330 --> 01:25:35.300
Tera Yates: Trust money may be withdrawn or transferred if the law firm has prepared a billing for the client.

549
01:25:35.510 --> 01:25:44.330
Tera Yates: And delivers the billing, or forwards the billing, to the client concurrently with the withdrawal or transfer.

550
01:25:44.510 --> 01:25:54.620
Tera Yates: So hopefully, that sums it up for you, and it also has further information in 119.28, which might be, interesting to take a look at as well.

551
01:25:54.780 --> 01:26:04.529
Tera Yates: And another question we received is, can I pay LSA and ALEA fees directly from the general account?

552
01:26:04.740 --> 01:26:12.589
Tera Yates: The answer is yes, you can, because this is a business expense. It is an expense related to the business.

553
01:26:14.810 --> 01:26:25.310
Tera Yates: And I will turn it over to… Myra to take a look

554
01:26:25.460 --> 01:26:36.370
Tera Yates: At, this question, which is, are we to give retainer agreements to legal aid clients to sign?

555
01:26:39.960 --> 01:26:41.080
Maira Hassan: Thank you.

556
01:26:41.220 --> 01:26:42.190
Maira Hassan: So…

557
01:26:42.580 --> 01:27:01.229
Maira Hassan: lawyers in Alberta should provide a retainer letter or agreement, or some kind of term of engagement to legal aid clients. So while the client isn't paying, private fees, a written agreement is best practice that clarifies the scope of work and sets expectations and manages your solicitor-client relationship.

558
01:27:01.450 --> 01:27:06.119
Maira Hassan: So it's a good idea to put something in writing, in terms of client expectations.

559
01:27:08.620 --> 01:27:15.360
Tera Yates: And I guess just to add a little bit to that one, too, is that there's no requirement that it be signed.

560
01:27:15.810 --> 01:27:19.269
Tera Yates: But you do just have to let them know that information.

561
01:27:22.330 --> 01:27:36.179
Tera Yates: Okay, so I think that concludes our session for the day. We want to sincerely thank you all for joining us. We hope that you have many key takeaways, and please do reach out to us.

562
01:27:36.180 --> 01:27:48.529
Tera Yates: to Trust Safety, to Membership, and ALEA with any questions at all. A version of this webinar will be posted to our website at a later date, so you can rewatch it if you wish.

563
01:27:48.540 --> 01:28:04.810
Tera Yates: And before we sign off, I just wanted to give another quick reminder to please take a couple of minutes to complete the webinar exit survey. It really does help us improve our… today's presentation, and also determine future education topics.

564
01:28:04.860 --> 01:28:07.680
Tera Yates: Thank you again very much for joining us today.

565
01:28:09.100 --> 01:28:09.620
Donna Moore: Nope.