This is an official version.

Copyright © 2005: Queen’s Printer,
St. John's, Newfoundland and Labrador, Canada

Important Information
(Includes details about the availability of printed and electronic versions of the Statutes.)

Statutes of Newfoundland and Labrador 2005


Statutes of Newfoundland and Labrador 2005 Chapter 20 Statutes of Newfoundland and Labrador 2005 Chapter 20

CHAPTER 20

AN ACT TO AMEND THE LAW
SOCIETY ACT, 1999

(Assented to May 19, 2005)

Analysis

1. S.2 Amdt.
Definitions

2. S.18 Amdt.
Powers of benchers

3. S.19 Amdt.
Special funds

4. S.23 Amdt.
Executive committee

5. Part II title R&S
DISCIPLINE PROCEEDINGS

6. S.41(d) R&S
Definitions

7. S.55.1 Added
Application of Part to professional law corporations

8. Part III title R&S
CLIENT'S PROPERTY

9. S.56 Amdt.
Definitions

10. S.56.1 Added
Order against a professional law corporation

11. Part III.1 Added

PART III.1
PROFESSIONAL
LAW
CORPORATIONS

63.1 Definitions
63.2 Professional law
corporation
63.3 Authority of law
corporation to
practice law
63.4 Corporate license
63.5 Liability of
shareholders and
employees
63.6 Voting agreements
with non-members
prohibited
63.7 Application of Act or
rules unaffected
63.8 Solicitor-client
relationships
preserved
63.9 Effect of discipline
63.10 Liability for
misconduct of
corporation
63.11 Interpretation

12. S.68 R&S
Liability for trust money

13. S.69 Amdt.
Duty to maintain trust account

14. S.70 Amdt.
Saving

15. S.70.1 Amdt.
Unclaimed trust funds

16. S.74 Amdt.
Recovery of fees

17. S.75 Amdt.
Fees, levies, assessments, etc.

18. S.76 Amdt.
Authority to practise law

19. S.77 R&S
Employment of suspended or disbarred member

20. S.78 Amdt.
Branch offices

21. S.81 Amdt.
Notice of standing

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:


SNL1999 cL-9.1
as amended

1. (1) Paragraph 2(1)(e) of the Law Society Act, 1999 is repealed and the following substituted:

(e) "law firm" means a partnership, professional law corporation or another joint arrangement carrying on, or holding out to the public its willingness to carry on, the practice of law;

(2) Subsection 2(1) of the Act is amended by adding immediately after paragraph (e) the following:

(e.1) "licence" means a licence issued to a professional law corporation under section 63.4;

(3) Subsection 2(1) of the Act is amended by adding immediately after paragraph (f) the following:

(f.1) "professional law corporation" means a corporation that is licensed under this Act;

 

2. (1) Subsection 18(2) of the Act is amended by adding immediately after paragraph (k) the following:

(k.1) make rules governing professional law corporations;

(2) Paragraph 18(2)(l) of the Act is amended by adding immediately after the word "members" the words "and professional law corporations".

(3) Paragraph 18(2)(m) of the Act is amended by striking out the words "members and students" and by substituting the words and comma "members, students and professional law corporations".

(4) Paragraph 18(2)(o) of the Act is amended by adding immediately after the word "member's" the words "or professional law corporation's".

(5) Paragraph 18(2)(w) of the Act is repealed and the following substituted:

(w) establish and operate compulsory or voluntary professional liability insurance programs for the benefit and protection of members, professional law corporations and the public and to provide for the recovery of the costs from members or classes of members and professional law corporations;

(6) Paragraph 18(2)(x) of the Act is amended by adding immediately after the words "employees of members" a comma and the words "professional law corporations".

(7) Paragraph 18(2)(y) of the Act is amended by adding immediately after the words and comma "former members," the words and comma "professional law corporations,".

 

3. (1) Subsection 19(1) of the Act is repealed and the following substituted:

Special funds

19. (1) The benchers may maintain and augment by the levy of an annual assessment of the amount that may be fixed by them on members, students, professional law corporations, or a category of either of them, a special fund for the purpose of reimbursement of persons sustaining monetary loss because of the misappropriation or conversion by a member, student or professional law corporation, of money or other property entrusted to or received by the member or student in his or her professional capacity, or by a professional law corporation while engaged in the practice of law.

(2) Subsection 19(6) of the Act is repealed and the following substituted:

(6) The society may annually contribute an amount to a fund established by the Federation of Law Societies of Canada for the purpose of compensating claimants who sustain a financial loss arising from the misappropriation or conversion of money or property by a member while engaged in the practice of law outside the province or by a professional law corporation arising out of the practice of law outside the province.

(3) Section 19 of the Act is amended by adding immediately after subsection (6) the following:

(7) Where a grant is made from the special fund, the society is subrogated to the amount of the grant to a right or remedy to which the person receiving the grant was entitled on account of the loss in respect of which the grant was made against a member, professional law corporation or other person, or, in the event of the death or insolvency or other disability of the member, or other person, against the personal representative or other person administering the estate and, in the event of the winding up or insolvency of the professional law corporation, the liquidator, receiver or trustee.

 

4. Paragraphs 23(4)(e) and (f) of the Act are repealed and the following substituted:

(e) that an investigation be conducted of the member's practice or the conduct of a professional law corporation of which the member is a voting shareholder;

(f) that an application be made under Part III for the appointment of a custodian of the member's practice or of a professional law corporation of which the member is a voting shareholder; and

 

5. The title of Part II of the Act is struck out and replaced by the title "DISCIPLINE PROCEEDINGS".

 

6. Paragraph 41(d) of the Act is repealed and the following substituted:

(d) "respondent" means a member, former member, law firm, former law firm, student, former student or a person referred to in subsection 39(1) or (2) whose conduct is being inquired into under this Part.

 

7. The Act is amended by adding immediately after section 55 the following:

Application of Part to professional law corporations

55.1 (1) This Part applies, with the necessary changes, to a professional law corporation as if it was a member.

(2) Rules made by the benchers respecting the discipline of members under this Part may be made applicable to professional law corporations as if they were members.

 

8. The title of Part III of the Act is struck out and replaced by the title "CLIENT'S PROPERTY".

 

9. Section 56 of the Act is amended by renumbering it as subsection 56(1) and by adding immediately after that subsection the following:

(2) This Part applies, with the necessary changes, to a professional law corporation and a former professional law corporation as if the corporation were a member.

 

10. The Act is amended by adding immediately after section 56 the following:

Order against a professional law corporation

56.1 An order that may be made by a judge of the Trial Division in the case of a member under this Part may, in the case of a professional law corporation, be made in one or more of the following cases:

(a) where the licence of the professional law corporation has been revoked;

(b) where the conduct of a voting shareholder of a professional law corporation is the subject of proceedings under Part II and there is reason to believe that the conduct involves the misappropriation or conversion of money or other property entrusted to or received by the professional law corporation;

(c) where all the voting shareholders of the professional law corporation have died or become mentally incapacitated;

(d) where for any reason the professional law corporation is unable to engage in the practice of law;

(e) where all the voting shareholders of the professional law corporation have absconded or are otherwise improperly absent from the professional law corporation's place of business;

(f) where all the voting shareholders of the professional law corporation have neglected their practice for an extended period;

(g) where there are reasonable grounds for believing that trust money held by a professional law corporation is not sufficient to meet its trust liabilities; and

(h) where in the opinion of a judge of the Trial Division other sufficient grounds exist.

 

11. The Act is amended by adding immediately after section 63 the following:

PART III.1
PROFESSIONAL LAW CORPORATIONS

Definitions

63.1 In this Part

(a) "child" means

(i) a child of which a member is the natural parent, whether the child was born within or outside marriage, and

(ii) an adopted child of a member;

(b) "non-voting share" means an issued share of a professional law corporation that is not a voting share;

(c) "spouse" means a person who is a member's spouse or common law partner and who is not living separate and apart from the member, and a person is not living separate and apart from a member unless the person was living separate and apart because of a break down of the marriage or common law partnership for a period of at least 90 days;

(d) "voting share" means an issued share of a professional law corporation with the right to vote at a meeting of shareholders attached to it; and

(e) "voting shareholder" means a person who has the legal and beneficial ownership of one or more voting shares of a professional law corporation.

Professional law corporation

63.2 (1) One or more members may incorporate a professional law corporation to engage in the practice of law.

(2) The corporation shall be incorporated under the Corporations Act.

(3) A corporation shall not engage in the practice of law unless it is licensed under this Act.

(4) A professional law corporation shall not carry on a business or activity other than the practice of law as authorized by its licence and other activities incidental to the practice of law.

(5) Subsection (4) does not prohibit a professional law corporation from investing its own funds in real property, other than for development purposes, or in stocks, mutual funds, debt obligations, insurance, term deposits, or similar investments.

Authority of law corporation to practice law

63.3 (1) A professional law corporation may engage in the practice of law in its own name.

(2) A partnership consisting of 2 or more professional law corporations or of one or more members and one or more professional law corporations may engage in the practice of law.

Corporate license

63.4 (1) The executive director shall issue a licence to a corporation that, in accordance with the rules,

(a) files an application in the form prescribed by the benchers;

(b) pays the fees prescribed by the rules;

(c) satisfies the executive director that the corporation has been incorporated under the Corporations Act and is in good standing under that Act;

(d) satisfies the executive director the name of the corporation is in accordance with the rules and contains the words "professional law corporation" or the abbreviation "PLC";

(e) satisfies the executive director that all the voting shares of the corporation are legally and beneficially owned by and registered in the name of one or more members in good standing or professional law corporations holding a valid licence;

(f) satisfies the executive director that all the directors and officers of the corporation are practicing members in good standing;

(g) satisfies the executive director that the legal and beneficial ownership of all issued non-voting shares of the corporation is vested in one or more practicing members in good standing who are also voting shareholders, a professional law corporation holding a valid licence or a spouse or child of a practicing member who is also, directly or indirectly, a voting shareholder;

(h) satisfies the executive director that the persons who will carry on the practice of law on behalf of the corporation are

(i) practicing members in good standing,

(ii) persons referred to in section 39 who comply with the rules applicable to them,

(iii) employees of the corporation, when acting under the supervision of a practicing member in good standing, and

(iv) students, when acting under the supervision of a practicing member in good standing and to the extent allowed by the rules; and

(i) satisfies the executive director that the articles of incorporation restrict the corporation to the practice of law and activities incidental to the practice of law.

(2) The executive director may revoke a licence where a condition referred to in subsection (1) no longer exists.

(3) Where a shareholder ceases to qualify as a shareholder of a professional law corporation, the corporation has a period of 60 days from the date of cessation of qualification in which to meet the qualification after which the corporationís licence is automatically cancelled on the expiry of the 60 day period.

Liability of shareholders and others

63.5 (1) Notwithstanding the Corporations Act, a member who is a voting shareholder of a professional law corporation or another person employed by the corporation

(a) while it is the holder of a licence; or

(b) while it acts in contravention of section 76

is liable to the same extent and in the same manner as if the member or other person were, during that time, carrying on the practice of law as a partner in a partnership or, if the member is the only voting shareholder and only employee, as an individual engaged in the practice of law.

(2) The liability of a person in carrying on the practice of law is not affected by the fact that he or she carried on the practice of law as an employee of, or otherwise through, a professional law corporation.

(3) A person is jointly and individually liable with a professional law corporation for claims made against the corporation in connection with the practice of law by the person through the corporation.

(4) In this section "member" or "person" includes a former member.

Voting agreements with non-members prohibited

63.6 A voting shareholder of a professional law corporation may only enter into a voting trust agreement, proxy or other type of agreement vesting the authority to exercise the voting rights attached to the shareholder's shares with a practising member in good standing or a professional law corporation holding a valid licence.

Application of Act or rules unaffected

63.7 The relationship of a person to a professional law corporation, whether as a shareholder, director, officer, employee or otherwise, does not affect, modify or diminish the application to the person of this Act or the rules.

Solicitor-client relationships preserved

63.8 (1) Nothing in this Part affects, modifies or limits an Act or other law applicable to the fiduciary, confidential or ethical relationships between a barrister or solicitor and a person provided with legal services by the barrister or solicitor.

(2) A person who engages in the practice of law through a professional law corporation is, notwithstanding his or her relationship to the corporation, or the relationship between the client to whom the legal services are provided and the corporation, subject to

(a) the application of this Act as if he or she were providing the services as an individual engaged in the practice of law; and

(b) the same duties and responsibilities in connection with his or her dealings with clients of the corporation as if he or she were providing legal services directly to those clients.

(3) The rights and obligations pertaining to a communication made to or information received by a barrister or solicitor, or advice given by a barrister or solicitor on the communication or information apply to the shareholders, directors, officers and employees of a professional law corporation and to another person acting on behalf of the corporation.

Effect of discipline

63.9 (1) Where a member is disbarred and the member is the sole voting shareholder of a professional law corporation, the licence of the corporation is revoked by the disbarment.

(2) Where a member is suspended and the member is the sole voting shareholder of a professional law corporation, the licence of the corporation is suspended for the same period for which the member is suspended.

Liability for misconduct of corporation

63.10 (1) A person is liable to discipline under Part II for the actions or conduct of a professional law corporation while the person was a shareholder, director, officer or employee of the corporation.

(2) A person is not liable to discipline under Part II where the person proves that he or she did not know and could not reasonably have known about the actions or conduct of the professional law corporation.

(3) A power of inspection, investigation or inquiry that may be exercised in respect of a person under Part II may be exercised in respect of a professional law corporation or its records in connection with a disciplinary proceeding against a person who is a shareholder, director, officer or employee of the corporation.

(4) A professional law corporation is jointly and individually liable with a person for all fines and costs the person is ordered to pay in connection with a disciplinary proceeding under Part II.

(5) In this section "person" includes a former member.

Interpretation

63.11 In an Act of, or otherwise in force in, the province, or a regulation, order or by-law made under an Act of, or otherwise in force in, the province, a reference to a person authorized to carry on the practice of law, whether referred to as a member, a barrister and solicitor or otherwise shall be read as including a professional law corporation unless the Act, regulation, order or by-law states otherwise.

 

12. Section 68 of the Act is repealed and the following substituted:

Liability for trust money

68. A member, student or professional law corporation is not liable, by virtue of the relation between the member, student or professional law corporation and a client or the relation between the member, student or professional law corporation as trustee and a beneficiary, to account to a client or beneficiary for interest received by the member, student or professional law corporation on money

(a) deposited in a bank, trust company or other depository approved by the board; and

(b) deposited with other money received or held for or on account of his or her clients generally.

 

13. (1) Subsection 69(1) of the Act is repealed and the following substituted:

Duty to maintain trust account

69. (1) A member or a professional law corporation shall maintain a regular interest-bearing trust account in a chartered bank, a trust company or other depository approved by the board, into which the member or corporation shall deposit all money received or held by the member or corporation for or on account of clients upon trust.

(2) Subsection 69(2) of the Act is amended by adding immediately after the word "member" the words "or professional law corporation".

 

14. Paragraph 70(a) of the Act is amended by adding immediately after the word "member" the words "or professional law corporation".

 

15. Section 70.1 of the Act is amended by adding immediately after the word "member" wherever it occurs the words "or professional law corporation".

 

16. (1) Subsections 74(2), (3) and (4) of the Act are repealed and the following substituted:

(2) A member or professional law corporation may sue for and recover the member's or professional law corporation's reasonable and lawful fees arising from services performed by the member or professional law corporation while engaged in the practice of law.

(3) A bill of fees may be taxed before the Registrar of the Supreme Court or a master of the Supreme Court.

(4) Notice of taxation of a bill of fees may be given

(a) by the member or professional law corporation claiming payment to a person from whom payment is claimed;

(b) by a person from whom a payment is claimed to the member or professional law corporation claiming payment; or

(c) by the benchers to the member or professional law corporation claiming payment where the benchers receive a complaint concerning the bill from the person from whom the payment is claimed.

(2) Subsections 74(11), (12) and (13) of the Act are repealed and the following substituted:

(11) A person is not entitled to recover fees as a member or professional law corporation or to tax a bill of fees as a member or professional law corporation unless he or she was a member in good standing or professional law corporation holding a valid licence at the time that the fees were incurred.

(12) Where a person receives money or other consideration in payment of fees as a member or professional law corporation that were incurred at a time when that person was not a member in good standing or a professional law corporation did not hold a valid licence, other than by way of an amount actually reimbursed to another person entitled to receive it, the money or other consideration shall be refunded to the person from whom it was received and the person from whom it was received may recover it by action in a court.

(13) Subsection (3) does not apply to the retention of fees paid or agreed to be paid by a client to a member or a professional law corporation in advance of his or her or the corporation's undertaking or providing a professional service, where the service is rendered.

(14) For the purpose of asserting a solicitor's lien, a professional law corporation is considered to have the same privileges as a member.

 

17. (1) Subsection 75(3) of the Act is amended by adding immediately after the word "member" the words "or professional law corporation".

(2) Subsection 75(4) of the Act is repealed and the following substituted:

(4) Fees, levies, assessments, costs, expenses, fines or other money payable by a member, former member, student or former student, professional law corporation, former professional law corporation, or one of its directors, officers, employees or agents, under this Act or the rules or a decision or an order under this Act or the rules are the property of the society and unless otherwise ordered shall be paid to the society.

 

18. (1) Subsection 76(1) of the Act is repealed and the following substituted:

Authority to practise law

76. (1) A person, other than a member in good standing or a professional law corporation holding a valid licence, shall not engage in the practice of law, except

(a) an individual acting on his or her own behalf in a proceeding to which he or she is a party other than a person to whom a debt has been assigned for collection only;

(b) a person drawing, preparing, revising or settling a testamentary document or a document pertaining to real or personal property or a document that is intended to be enforceable by law or to have a legal effect for his or her own use, or for others without receiving or expecting to receive a fee, gain, reward or benefit;

(c) a person appearing as an agent for another person before a Provincial Court judge when authorized to do so by an Act of the Parliament of Canada or the Legislature or before an administrative tribunal where permitted by the practice of the tribunal; and

(d) students, to the extent authorized by the benchers.

(2) Subsection 76(3) of the Act is amended by adding immediately after the words "a firm of members" a comma and the words "a professional law corporation".

(3) Section 76 of the Act is amended by adding immediately after subsection (5) the following:

(6) A person shall not engage in the practice of law under a name containing the words "professional law corporation" or "PLC" unless the professional law corporation is incorporated or continued as a corporation under the Corporations Act and the corporation is the holder of a licence which has not been suspended or revoked.

 

19. Section 77 of the Act is amended by renumbering it as subsection 77(1) and by adding immediately after that subsection the following:

(2) A professional law corporation shall not employ a suspended member or a member whose name has been struck off the roll of the society except under the authority of a resolution of the benchers and in accordance with those rules that may be made by the benchers.

 

20. Section 78 of the Act is amended by renumbering it as subsection 78(1) and by adding immediately after that subsection the following:

(2) A professional law corporation shall not open or maintain a branch office in the province unless the office is under the personal and actual control and management of a member in good standing.

 

21. (1) Section 81 of the Act is amended by adding immediately after subsection (1) the following:

(1.1) A notice of the issuance of a licence to a professional law corporation and the suspension, revocation or reinstatement of a licence shall be given in the manner prescribed by the rules.

(2) Section 81 of the Act is amended by adding immediately after subsection (2) the following:

(3) A certificate purporting to be signed by the executive director and stating that a professional law corporation was or was not on a specified day or during a specified period engaging in the practice of law while its licence was suspended or after it had been revoked is admissible in evidence as, in the absence of evidence to the contrary, proof of the facts stated without proof of the executive director's appointment or signature.

 

 

 

 

 

 

 

 

 

 

 

©Earl G. Tucker, Queen's Printer