Dear Editor:

I write in response to Ms. Frampton’s commentary of 26 November 2011 entitled “The Unjust Tax” and to answer questions posed to the Law Society about the Transaction Levy.

The Law Society is a regulatory body governed by Benchers who are charged under The Law Society Act, SNL 1999, c. L-9.1 with regulating the practice of law and the legal profession in the public interest. In carrying out that mandate, the Benchers of the Law Society oversee a number of public protection initiatives, including maintaining and managing an Insurance Program that provides for the protection of the public. The Transaction Levy was implemented to assist in the proper funding and sustainability of this Insurance Program. The Transaction Levy, along with several other fees, including an Insurance Premium, is charged to practicing insured members of the Law Society and it is the members’ responsibility to remit it to the Law Society. Unlike the Insurance Premium, the Transaction Levy is required to be paid by members only when they engage in particular matters, those being litigation and real estate.

Benchers have the authority to impose the Transaction Levy upon members of the Law Society, as acknowledged in the Canadian Bar Association report of 17 May 2005 to which Ms. Frampton referred. Members can choose whether to pass this cost along to their clients. The Law Society does not have clients and has no role to play in that decision. If a client refuses to pay, the member is still responsible for remitting the Transaction Levy to the Law Society. Also acknowledged in the Canadian Bar Association’s report is the fact that the Transaction Levy charged in a similar regulatory regime in Ontario has been accepted in Ontario as a disbursement in taxation decisions, and by the public. In Newfoundland, while there were some initial concerns expressed by some members of the Law Society and the public, there have been relatively few complaints or inquiries (we estimate fewer than 20) made by the public to the Law Society about the Transaction Levy since its inception on 1 May 2005. Most of those complaints/inquiries resulted from a lack of understanding about the purpose of the Transaction Levy.

The Benchers of the Law Society are not all practising members of the Law Society. There are a number of public representatives named by government sitting as Benchers and they, along with all of the other Benchers, continually monitor the need for and the appropriate use of the Transaction Levy. Over the years, the revenue from the Transaction Levy has allowed a gradual reduction in the insurance fees charged to practicing insured members in order to bring those fees to a level more in line with that charged in other provinces. This is a factor identified by Benchers (including the public representatives) in ensuring that there are sufficient numbers of lawyers able to practice to fulfill the public’s need for access to justice, throughout the province. As indicated in the Benchers’ Notes edition of December 2009, some funds from the Insurance Program (which is funded by both Insurance Premiums and the Transaction Levy) have also been used for loss prevention activities which are carried out by the Law Society in the public interest.

Benchers will continue to monitor the need for the Transaction Levy and will determine from time to time whether the Transaction Levy will continue to be charged to members, and if so, at what level. The Transaction Levy continues to be charged to members of the Law Society for the same purpose, that is, to assist in the proper funding and sustainability of an Insurance Program that protects the public interest. As a result of this Insurance Program, the Benchers of the Law Society were able to ensure that, during the Parsons-Bursey crisis referred to by Ms. Frampton, no member of the public suffered a loss. The Benchers of the Law Society strive to ensure that that will always be the case, by overseeing the Insurance Program and seeking expert advice as to the level of funding required to fulfill their legislated mandate of protecting the public. It is anticipated that funding of the Insurance Program will be adjusted as required to meet changing needs and demands from time to time.

Ms. Frampton noted that some documentation was missing from the Law Society’s website. That was an oversight which has now been rectified. There was a hiatus in the preparation of Benchers’ Notes from 2006 to 2009 and the last edition was published in 2009. The Law Society is in the process of revamping its website, and the publication of Benchers’ Notes is an initiative that Benchers had already decided to reinstate. It is anticipated that this will begin early in 2012.

Brenda B. Grimes
Executive Director
Law Society of Newfoundland and Labrador