Our Revenue Sources
The Law Foundation of Ontario’s main source of revenue is interest received from lawyers’ and paralegals’ mixed trust accounts. Other sources of revenue are cy-près awards and investment income.
What are Mixed Trust Accounts?
The Law Foundation of Ontario is entrusted by law with the interest from mixed trust accounts held by lawyers and paralegals. These professionals routinely hold money in trust for clients – in connection, for example, with the sale of a house or the settlement of a law suit. If the funds are small in amount, or will be held in trust for a short time, and are unlikely to generate any net interest for the individual client, the funds may be placed in a mixed trust account.
Programs that use income from the professions’ trust accounts to advance access to justice exist throughout Canada and the United States and in several other jurisdictions.
How Much Money Does the Foundation Receive?
While the interest generated by any single deposit is typically very small, the total interest earned by mixed trust accounts averaged $38 million annually between 2005 and 2014 in Ontario.
The Law Foundation of Ontario’s revenues can be highly variable, primarily due to fluctuations in interest rates. Two broad factors determine revenues in any given year.
Economics and Interest Rates
When the economy is healthy, there are more and bigger real estate and business transactions, and balances in mixed trust accounts are therefore higher. Interest rates in turn determine how much those balances earn.
While interest from mixed trust accounts makes up by far the biggest portion of regular revenue, additional income is earned by investing funds that have been set aside for specific purposes and longer-term allocations. Again, economic conditions and interest rates impact these returns.
Agreements with Financial Institutions
The Law Foundation of Ontario negotiates agreements with major banks and other institutions authorized to hold lawyers’ and paralegals’ mixed trust accounts. The agreements take into account the significant monetary value of mixed trust accounts and the societal value of the Foundation’s work. Terms can vary significantly over time and further influence the Foundation’s revenues.
What Are Cy-près Awards?
Courts make cy-près awards when it is not practical to distribute all the proceeds of all class action to individual plaintiffs. In such a case, courts have the power to direct the money to meritorious organizations. The Law Foundation of Ontario was the first law foundation in Canada to receive funds from a cy-près award.
Cy-près awards to the Foundation have been a relatively recent and significant source of funds for access to justice projects.
Reporting Mixed Trust Accounts
Information for lawyers and paralegals on reporting mixed trust accounts.
Courts make cy-près awards when it is not practical to distribute all proceeds of a class action to individual plaintiffs. The Foundation’s Access to Justice Fund is a permanent fund available to receive cy-près awards.