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How does the LFO get the interest?

Section 57(1) of the Law Society Act (LSA) states, "Every licensee who holds money in trust for or on account of more than one client in one fund shall hold the money in an account at a bank listed in Schedule I or II to the Bank Act (Canada), provincial savings office, credit union or a league to which the Credit Unions and Caisses Populaires Act, 1994 applies or registered trust corporation, bearing interest at a rate approved by the trustees [of The Law Foundation of Ontario]."

Section 57(2) of the LSA states, "The interest accruing on money held in an account referred to in subsection (1) shall be deemed to be held in trust for the Foundation." This legislation applies only to mixed trust accounts. The lawyer or paralegal provides a standard Letter of Direction (29KB) to the financial institution when opening a mixed trust account which directs the financial institution to calculate the interest on the mixed trust account on the approved basis, to forward the interest to the Law Foundation, and to provide specific information respecting each interest payment to the licensee and The Law Foundation of Ontario. If more than one mixed trust account is maintained, a separate direction must be given for each one.

The Law Foundation of Ontario has agreements with most approved financial institutions respecting the rates of interest to be paid and the procedure to be followed when remitting interest on mixed trust accounts. The Law Foundation of Ontario will negotiate such interest agreements with any approved financial institution as the need arises.

Lawyers and paralegals are required by Regulations made under the Law Society Act to report annually (Form 1 / Report to The Law Foundation of Ontario (27KB)) to the Law Foundation on each mixed trust account open at any time during the licensee’s fiscal year. Please note that only one Form 1 for each mixed trust account need be filed by an individual licensee or firm. Form 1 can be electronically filed along with the Lawyer Annual Report or the Paralegal Annual Report at  The Law Society of Upper Canada’s E-file portal https://portal.lsuc.on.ca/wps/portal and is due at the same time as Annual Filings (March 31st).