January 16, 2018
When the issue of bartering for legal services first arose in 2016, the Law Society of Alberta took the approach that prohibited the provision of legal services through Tradebank or similar institutions. Since then, we have had the opportunity to conduct additional research. As well, we have reviewed best practices across various jurisdictions and countries, and sought the advice of counsel. Based on the work we’ve done over the past 12 months our position on this matter has changed.
This notice is to revise the communication from September 6, 2016 regarding Bartering Legal Services. The business decision with respect to whether you can benefit from utilizing Tradebank or other bartering systems to receive payment for legal services rendered rests with each individual member. While you may want to accept payment for legal services rendered in a barter credit/arrangement, you cannot accept pre-payment of legal services or any other trust funds into a Tradebank or other barter arrangement.
To assist you, we strongly recommend that you consider the following:
- A barter ‘account’ cannot be used to receive trust funds. This is prohibited by the Law Society of Alberta.
- The terms of the barter arrangement must be reasonable and fair.
- Good and valuable consideration – the value of legal service and value of the service received must be commensurate, with no credit remaining.
- A lawyer, when completing work on barter can only take possession of the goods (direct barter) or credits (barter through an exchange) after completing the work.
- Retainers (i.e. prepayments toward future legal services) are prohibited barter arrangements.
- Written agreement – if you are going to enter into a barter arrangement the Law Society of Alberta strongly recommends the terms of the arrangement should be outlined in an agreement, that includes, but is not limited to the following:
- written and informed consent of the client;
- details of the legal services that will be provided;
- the value of the service;
- details of how and when the legal service will be paid; and
- a statement of account will be provided to the client.
- Good record-keeping – Lawyers must provide a statement of account that sets out the breakdown of the value of legal service that has been provided.
- Any good or service received in payment is considered income and must be reported to Canada Revenue Agency.
- The lawyer’s professional judgment should not be compromised by such an arrangement. The lawyer should ensure that the marketing of legal services complies with Section 4.2 of the Code of Conduct.
- The lawyer has a duty to uphold solicitor-client privilege at all times.
For lawyers who choose to embark on this practice, we want to set you up for success and these recommendations are designed to help prevent a breakdown in lawyer/client relationship.
If you have any questions on this subject, please contact Trust Safety.