By: Keith Hill Jr.
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As of January 1, 2025, lawyers in Ontario face a significant regulatory update: the new Client Contingency Planning Requirement. This article offers an overview of this new annual obligation and practical guidance for preparing the plan.
What is a Client Contingency Plan?
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A Client Contingency Plan is a comprehensive written document detailing the necessary steps to safeguard, transition, or wind up a legal practice if a licensee is unexpectedly unable to provide services. The plan must include:
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The appointment of an Administrator.
Details about client files, trust accounts, property, and passwords.
Procedures for notifying stakeholders, transferring files, and returning any necessary client property and trust funds.
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Who must Comply?
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The requirement applies to:
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Lawyers in private practice, including sole practitioners, partners and associates.
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Exemptions include:
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Lawyers employed by The Government of Canada or Legal Aid Ontario.
In-house legal departments.
Non-practicing licensees.
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Key Dates
January 1, 2025: The requirement became effective on this date.
December 31, 2025:Â The Contingency Plan is to be completed by this date.
March 31, 2026:Â The plan must be reported as part of the Annual Report Filing.
Going forward, licensees are required to review and file their Client Contingency Plan yearly.
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Why is This Requirement Essential?
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When a legal professional is unexpectedly unable to practice due to illness, disability, death, or other reasons, active matters may be jeopardized. Possible risks include:
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Missed court appearances or filing deadlines for clients.
Inaccessible trust funds.
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A contingency plan minimizes these risks, safeguards clients, and facilitates the orderly management, transition, or closure of the licensee’s practice.
How to Develop Your Client Contingency Plan
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Step 1: Preparation
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Familiarize yourself with the plan’s requirements. (See resources provided at the end of this article)
Create a list of qualified candidates for the role.
Step 2: Appointing an Administrator
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Ideally, you will select a trusted licensed colleague, who is familiar with your practice or with expertise in the same area.
Obtain their written consent and clarify their responsibilities.
Decide on compensation, if applicable, and discuss terms. Â
Step 3: Developing Your Plan
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To assist, the Law Society provides a Client Contingency Plan Template. Alternatively, you may create a customized plan, ensuring it meets all necessary criteria.
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Ensure your Administrator has access to critical resources, including:
Passwords for systems and accounts.
Access to your trust accounts.
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Step 4: Finalization
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Safeguard your plan by storing it securely (e.g., in a locked safe for physical copies or an encrypted digital file).
Share a copy with your Administrator to ensure they have immediate access if ever needed.
Notify at least one other trusted person about the plan's location and how to access it in case of an emergency.
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Conclusion
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When a lawyer is unexpectedly unable to provide legal services, clients with active matters face significant risks to their legal interests. The primary purpose of a Client Contingency Plan is to safeguard the public interest. Additionally, the plan helps alleviate the burden on licensees and their families, who might otherwise need to navigate the complexities of managing or closing a practice during an already challenging time.
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Although the plan isn’t due until March 31, 2026, as part of the 2025 Annual Report Filing, it requires careful development and collaboration. As this is the first time Ontario lawyers are required to implement such a plan, and given the effort already involved in preparing the annual report, adding this new obligation could quickly become overwhelming especially if left until the last minute. Starting early will help you avoid unnecessary stress, ensure a smoother process, and achieve the best possible outcome.
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Resources
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LSO Templates: https://tinyurl.com/4uh3f3yr
Contingency Planning Resource: https://tinyurl.com/y7ux9pvk
Practice Management Helpline: https://tinyurl.com/26b48h43
Trustee Services through LSO Connects: https://tinyurl.com/bkyhwjr6
Licensees who are considering acting as an administrator can review the following:
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Keith Hill Jr. is the Principal of Bookkeeping Matters Inc. (BMI), a leading provider of legal bookkeeping services for over a decade. Serving lawyers across Ontario and beyond, BMI has established a reputation for excellence in legal accounting. Drawing on his experience as a former Legal Accounting professor, Keith has also positioned BMI as a premier source of online legal accounting education. Specializing in various practice management software, BMI is dedicated to helping law firms optimize their financial operations.
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Contact BMI at info@bookkeepingmatters.ca, 1-800-893-2820 or visit www.BookkeepingMatters.ca.
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©2025 Bookkeeping Matters Inc. All rights reserved. Reproduction with credit is permitted.
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