LSO 2023 annual fees increasing, pivot to in-person licensing exams cost around $3.8 million

By Amanda Jerome

Law360 Canada (October 27, 2022, 5:27 PM EDT) -- Annual fees for Ontario lawyers and paralegals will be increasing in 2023, as “high inflation rates,” increased adverse claims against legal professionals as well as “unexpected” costs associated with candidates allegedly cheating on the barrister and solicitor licensing exams have driven up the Law Society of Ontario’s (LSO) expenses.

At the Oct. 27 Convocation, benchers approved the budget, which included the annual fee increase, with 28 benchers voting in favour, five against and 15 abstentions.

Next year, lawyers’ fees will increase by $168, to a total of $1,981, and paralegal fees will increase by $80, to a total of $1,035.

Audit & Finance Committee Chair Sidney Troister

Audit & Finance Committee Chair Sidney Troister

Sidney Troister, chair of the Audit & Finance Committee, presented the budget, breaking down the increase to lawyers’ fees into “three baskets.”

Basket number one, he said, accounts for $89 of the increase and would go toward protection of the compensation fund.

“When lawyers steal clients’ money, we call it misappropriation. But let's be clear, it is theft,” he explained, noting that the LSO may “compensate the clients to the extent of up to $500,000 for the theft.”

According to Troister, the LSO has “seen an increase in claims or potential claims arising from the conduct of both lawyers and paralegals” in the past year.

“In fact, three lawyers in the past year have given rise to what might be in the order of $5 million in claims; much more than is typical in any year for the fund,” he stressed, noting that a “substantial number of thefts have created great exposure to the compensation fund.”

“These three lawyers have done tremendous damage to our profession, and we have to be prepared for the claims,” he added.

Basket number two, he said, consists of a $17 increase for the Legal Information and Resource Network (LiRN), bringing the LSO’s contribution from “$183 to $200 per lawyer.”

LiRN, Troister emphasized, “benefits all lawyers at the grassroots of practice” and “all benchers care about sustaining our libraries and library services across the province.”

The third basket, which accounts for $62 of the increase, “covers everything else,” he said, including “all law society programs, professional regulation, professional development, competence, spot audits, practice reviews, [and] general administration.”

In this third category, Troister also emphasized the “unexpected” expenses, which occurred in 2022.

“We took an unexpected hit on finances as a result of the improper access by some candidates to examination content, which forced us to pivot to in-person examination delivery to mitigate the impact on all other candidates and to protect the integrity of our license process,” he said, noting the financial “hit is projected to be about $3.8 million” that wasn’t budget for in 2022.

(The Lawyer’s Daily asked the LSO for an update on the exam cheating investigation, including how many candidates have been impacted. However, no update was provided at this time.)

In his remarks to Convocation, Troister also stressed that financial market “volatility is leading to unrealized losses” in the LSO’s “long term investment portfolio.”

“We have taken a hit on market values which affect our revenue and fund balances,” he explained, highlighting the fact that “things cost more.”

“The law society, like many other organizations and all of us personally, are feeling the effects of high inflation rates. We know it's running at about seven per cent and we're not immune from it. Costs are going up for basics, contracted services, maintenance, [and] modest salary increases,” he said.

In a statement, LSO treasurer Jacqueline Horvat, said “this budget strikes a good balance between expenditures on priority objectives and the implementation of new policies and programs that will move the legal professions forward, while at the same time ensuring financial stability for the organization over the long-term.”

The 2023 budget “includes funding of $9.6 million to support LiRN Inc. and the operation of the 48 county law libraries in the system. The LiRN network is an integral source of legal information and law library services across Ontario,” a LSO press release explained.

Prior to voting on the budget, Convocation voted on a motion, brought by bencher Chi-Kun Shi and seconded by Cheryl Lean, requesting that “Law Society management, in consultation with the Audit and Finance Committee,” develop “forthwith a draft annual budget for 2023 which requires no increase in annual dues compared to 2022.” However, the motion failed 23-25, with two abstentions.

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