Legal Agent Account Verification Process
The Department of Justice Act confers upon the Minister of Justice and Attorney General of Canada responsibility for the provision of legal services to individual departments and agencies, and for the legal affairs of the Government as a whole. To carry out this mandate, the Department of Justice relies on in-house counsel located in regional offices, legal services units (LSUs), and litigation divisions across the country, as well as private sector law firms and law practitioners. “Legal agent” is the term used by the Department to describe the status of those private sector law firms and law practitioners retained to provide legal services and to act on behalf of the Minister. Law practitioners include lawyers, law professors, retired judges, and in the Province of Quebec, notaries.
Legal agent appointments are contracts for the provision of legal services that may be entered into only by or under the authority of the Minister of Justice, and that are not subject to the requirements of the Government Contract Regulations or the Treasury Board Contracting Policy. The general policy of the Department of Justice is that in-house counsel should deliver all legal services within the Department’s statutory mandate. However, in some instances certain considerations may indicate that the legal services may be outsourced to legal agents after being duly justified and approved. This is done in consultation with the client department concerned.
In Oct 2005 the Department began implementing a new Legal Services Contracting Framework, and in July 2008 the approach was formalized with the approval of the Policy on Contracting for Legal Services and Legal Agent Appointments. The policy establishes the principles and requirements associated with contracting for legal services by the Government of Canada to ensure that contracting is conducted in a diligent and accountable manner.
Legal agents are primarily engaged to provide legal services where another government department is the client Footnote 1, and occasionally, in matters where the Department of Justice is the client. In general, the following types of activities are considered legal services: providing legal advice and opinions, conducting litigation, drafting legislation and regulations, negotiating and drafting legal documents such as contracts or agreements.
The Litigation Practice Management Centre (LPMC) supports the Assistant Deputy Attorney General (ADAG), Litigation Branch, in the delivery of effective and responsive legal services by legal agents. Among other things, LPMC is responsible for the development and management of the Agent Affairs Program. The overall objective of the Agent Affairs Program is to provide functional direction over contracting for legal services, including decisions to outsource as well as sourcing, assessment, selection, supervision, and management of legal agent activities with a view to enhancing the stewardship of public resources and securing improved value for money.
Payment for Legal Agent services is the responsibility of the client department utilizing the services; whether the client department is Justice Canada or another government department or agency. Coordination and monitoring of the financial obligations and expenditure information is the responsibility of both LPMC and the CFO Branch. As a result of the separation between Justice Canada and Public Prosecution Services Canada (PPSC) in December 2006, the CFOBranch relies on PPSC to provide certain corporate services related to Legal Agents.
Some of the key risk factors that were identified in relation to this audit included: appropriateness of agent billings and rates; integrity of information; adequacy of financial controls including taxing procedures; appropriateness of instructions provided to agents; adequacy of financial monitoring at the local level; completeness of billing information provided to Headquarters; accuracy of billing information forwarded to clients; and adequacy of monitoring, guidance, and direction.
1.2 Audit Objectives and Scope
The overall objective of this audit was to provide assurance that the framework in place for the legal agent account verification process is effective.
The scope of the audit focused on:
- the financial control framework for account verification, including policies, directives, and procedures that support the verification of legal agent accounts;
- the processes in place for verifying and determining the accuracy of legal agent accounts and records;
- consistency of processes and practices for taxing legal agent accounts;
- the process for informing the LPMC of the payment request submitted to client departments;
- linkages with the LPMC;
- compliance with the governing policies for the management of legal agent contracts and the processing of legal agent accounts
The audit included the operations and activities related to legal agents at headquarters and in three regional offices (British Columbia, Quebec, and Ontario). The planning and on-site examination phases of this audit were carried out between July and September 2010.
Details of the audit methodology employed are outlined in Appendix A.
1.3 Legal Agent Account Verification Process
All work performed by legal agents is done through a letter of appointment (LOA). Each LOA specifies the terms and conditions related to the appointment; the Statement of Work; the legal practitioners engaged to do the work; the rate of remuneration; frequency of billing, etc. In accordance with the contract, legal agents submit an account (invoice) for payment for work performed, which may be based on specified milestones/deliverables being achieved or on a frequency basis (i.e. monthly/quarterly). The Department of Justice is responsible for ensuring that the account is accurate, the work performed is complete, and the charges are reasonable for the work performed.
Upon receipt of a legal agent’s account, the instructing counsel’s legal assistant or paralegal taxes portions of the account against the terms and conditions stipulated in the LOA. This includes such tasks as determining that:
- all supporting documents are present;
- computation of charges is arithmetically correct;
- ineligible costs are not included;
- hourly rates are correct;
- approval is on file for days invoiced that exceed 10 hours;
- O&M expenditures over $500 have been approved by Justice Canada;
- expenditures occurred within the period covered by the contract;
- legal agent practitioners billing are those named in the contract;
- travel rates are appropriate;
- the account has not been previously paid.
Upon completion of these tasks, the account is then passed to the instructing counsel who taxes the substantive portions of the account. This consists of a review of the reasonableness, accuracy, and completeness of the account against the contract’s Statement of Work. A taxing stamp is applied to the legal agent account, which the instructing counsel signs and dates. Some instructing counsel use the iCase disbursements module to track the details of the legal agent account. However, this is at the discretion of the instructing counsel. In situations where iCase is used, the legal assistant enters the pertinent information from the taxed legal agent account into the module.
Once the account is taxed, the payment process will follow different steps depending on which organization is the client (i.e. Justice Canada or a client department). (For a graphic overview of the process described, see Chart 1 below.)
Payment process when Justice Canada is the client
When Justice Canada is the client for a legal agent account, the instructing counsel forwards the taxed account to the regional manager who has appropriate FAA Section 34 signing authority for confirmation of the contract performance. This also provides an opportunity for the instructing counsel to discuss the project with the signing authority, as necessary. Once FAA Section 34 approval is granted, the original of the account is forwarded to the Agent Affairs Unit at PPSC (which provides corporate services to Justice Canada) for data entry in the Justice Canada IFMS and payment.
Payment process when a client department is paying the legal agent account
When another government department is the client that is paying the legal agent account, the instructing counsel forwards the taxed account to the client department Footnote 2 for completion of FAA Section 34. In addition, two copies of the legal agent account are prepared. One is filed in the legal agent file in the regional legal portfolio and the other is sent to the PPSC Agent Affairs Unit for input into the Justice Canada IFMS.
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