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Disclose bank commissions, B.C. law society warns from the investor's cash they are bringing to a financial institution, the Law Society of British Columbia has warned. "The commission is payable only with respect to investor class immigrants, where an accepted investor is required to provide an interest-free loan in the amount of $400,000 to the federal government for a five-year term. Where a Canadian bank is involved in this transaction, the bank's standard practice is to pay a commission to the investor's lawyer, which may be as much as $50,000," says communications officer Lesley Pritchard. The LSBC issued an advisory to its L members warning that such commissions must be disclosed. Pritchard says the issue came to the law society's attention through a number of channels. Compli- ance audit programs showed some law- yers had failed to fully disclose amounts to their clients. (Firms are audited at least once in six years). "If we detect a breach or potential breach of our rules, that information can be referred for investiga- tion of professional misconduct. As well, we have received complaints from clients, as well as calls from lawyers to our prac- tice advisers, asking for advice on this issue," says Pritchard. The LSBC's role is to protect the public and be "proactive about warning lawyers" who fail to fully disclose the amounts of the commission, which "could result in disciplinary action," she says. Canadian banks typically use a stan- dard form for recording these transac- tions and the commission rate varies according to factors such as interest rates and whether the investor is borrowing funds from the bank. "Lawyers don't negotiate the rates and often don't know the exact amount of the commission when the agreement is entered into," says Pritchard, adding the LSBC is letting them know that "they not only have to give the client an estimate of the amount ntitled-3 1 awyers who have immigrant inves- tor clients need to disclose when they are getting a commission of the commission, but they also have to follow up and tell the client the precise amount." Chapter 9 of the LSBC Professional Conduct Handbook sets out conditions WEST in Rule 7 and Rule 8, both of which deal with disclosure and obtaining the client's consent. — JEAN SORENSEN jean_sorensen@telus.net Practice Management LexisNexis® PCLaw® Accounting software that SPEAKS LEGALESE. PCLaw® billing and accounting software combines what you need to track your time and money all in one system — from time and billing to trust accounting, cheque writing, financial statements, client identification and verification, automatic backup, offline file management, advanced reporting tools and more. Best of all, it's easy to use and ready to go to work instantly. Download and Try PCLaw for FREE* For more information, call 1-800-328-2898 or visit www.lexisnexis.ca/pclaw. * Download PCLaw free for 30 days. Certain conditions apply. LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under licence. PCLaw is a registered trademark of LexisNexis Practice Management Systems Inc. © 2011 LexisNexis Canada Inc. All rights reserved. www.CANADIAN Lawyermag.com OCTO BER 2011 11 12/9/10 4:12:40 PM