Public proceedings of the Board

Meeting of the Board of Directors on May 27, 2015

Attendance

Board members present

John McCamus (Chair); Aly Alibhai; John Liston; James McNee; Derry Millar; James Yakimovich; Robert W. Ward (CEO/Ex Officio)

Staff

Vince Correia; Sue McCaffrey; David McKillop; Stephanie Mealing; Marcus Pratt; Michelle Sguin; Aneurin Thomas

Guests

Laura Bell, Director, Office of the Auditor General; Kathi Aspros, Engagement Associate Partner and Eleanora Reznik, Senior Manager, Ernst & Young

1. Meeting agenda

The meeting agenda was adopted.

2. Disclosure of conflict of interest

No conflicts of interest were identified.

3. LAOs final financial statements for the year ended March 31, 2015

The Vice-President and CAO introduced:

  • Laura Bell, Director, Office of the Auditor General
  • Kathi Aspros, Engagement Associate Partner
  • Eleanora Reznik, Senior Manager, Ernst & Young

The Vice-President and CAO then reported as follows:

The audit went smoothly despite changes in the audit management team at the Auditor Generals office and Ernst & Young.

At year end, the operating surplus was $3.9 million.

The Ministry of the Attorney General (MAG) has recommended that LAO appropriate its accumulated surplus of approximately $13.5 million to internally restricted assets rather than transferring it to LAOs Contingency Reserve Fund (CRF).

The financial statements show an appropriation of the accumulated surplus under net assets on the balance sheet to confirm the following three reserves:

  1. Investment in capital assets (increased this year because of the PeopleSoft upgrade—$7.5 million)
  2. Internally restricted for the specialty clinic co-location project—$3 million
  3. Internally restricted for the unfunded component of the cost of the tariff increases—$2.9 million.

Note 9 sets out MAGs intention, due to government restraint, to require LAO to fund future tariff increases from within its existing resources, pursuant to the Memorandum of Understanding (MOU) between MAG, LAO and the CLA.

LAO has shown Note 9 to MAG representatives, and they have expressed no concern about potential public disclosure of the lack of MAG funding for the tariff increases. MAGs main priority was to safeguard the surplus.

The CRF currently holds a balance of $6.4 million to offset some of the unfunded component of the tariff increase for 2015/16.

The Board discussed Section 66 of the Legal Aid Services Act (LASA) and LAOs entitlement to maintain up to $20 million in a CRF.

3.1 Decisions

  • The Board approved LAOs final financial statements for the year ended March 31, 2015.
  • The Board approved the creation of an internally restricted reserve of $2.9 million to offset the future cost of the unfunded component of the tariff increases.

4. Audit results report

Kathi Aspros, Engagement Associate Partner at Ernst & Young, reported the following:

  • There are outstanding itemsfor which she provided a status update.
  • The Board members were asked whether they were aware of any suspected fraudulent activity. Board members responded that they were not.
  • The structure of the engagement letter will be revised to incorporate LAO as the client and to reference the agency relationship between the Office of the Auditor General of Ontario and Ernest & Young.
  • The audit will include representations to Ernst and Young by LAOs senior management.
  • The auditors will review the draft annual report for 2014/15 to ensure consistency with the financial statements.
  • LAOs IT systems perform efficiently from a financial reporting perspective; LAOs internal controls could be strengthened, but overall, the audit is very satisfactory.

The Vice-President and CAO noted that an engagement letter between LAO and the Auditor General will be considered for next years audit.

Eleanora Reznik reported as follows:

  • The audit was a very positive and professional experience, with full cooperation from LAOs financial department, particularly the Director, Finance.
  • There was open communication with members of the executive management team.

Laura Bell, Director, Office of the Auditor General, noted that next year, the Auditor General will introduce some new processes, but they will likely have little or no impact on LAO.

The Chair noted that, in his view, LAO is very well served by the members of its senior management, and thanked the audit team for that confirmation.

The Board then met in camera with the audit team.

4.1 Decision

The Board received the audit findings report covering the fiscal period ending March 31, 2015.

5. LAOs final employee pension financial statements for the year ended December 31, 2014

The Vice-President and CAO reported as follows:

  • Only the assets are audited
  • The defined benefit component, which only applies to a very small number of staff, is fully funded at this point; there will be no actuarial evaluation again until January 2017
  • The financial statements report an increase of $10 million in the defined contribution component, primarily as a result of an increase in contributions
  • The employers contribution percentage has moved from 5 per cent to 7 per cent
  • Approximately 90 per cent of staff have opted for the higher level of contribution.

5.1 Decision

The Board approved LAOs final employee pension plan financial statements for the year ended December 31, 2014.

6. Presidents report

The President and CEO reported as follows:

  • On May 15, 2015 the Pay Equity Commission dismissed a complaint filed by the Society of Energy Professionals (SEP), on behalf of the lawyers organizing committee.
  • The organizing campaign members have issued a statement to the effect that they are in the process of preparing a Charter challenge to LAOs decision not to recognize the SEP as collective bargaining agent on their behalf.
  • A Brydges duty counsel lawyer had been summoned by a Provincial Court Judge to explain his unprofessional conduct toward a client, which resulted in the clients acquittal due to a lack of access to adequate legal advice.
  • Some non-lawyer employees in the GTA have voted in favour of being represented by the Ontario Public Service Employees Union (OPSEU), primarily to focus on the issue of job security, given the recent restructuring of the unit.
  • The Chair received an email request from the President of the Criminal Lawyers Association (CLA), asking for permission to attend this Board meeting to express concerns about aspects of the enhanced financial eligibility allocations that the Board is being asked to approve. The CLA was advised that permission to attend and make representations would not be granted, that the financial eligibility process is flexible and ongoing, that the decisions to be made at todays meeting were the first round of decisions that others would be made in the future, and that the CLAs views will be considered in upcoming consultations. The Chair also received a letter from the Refugee Lawyers Association expressing similar concerns with respect to financial eligibility allocation.
  • LAO also received a letter from the Association of Community Legal Clinics of Ontario (ACLCO). The ACLCO requested increased financial capacity for some corporate supports, e.g. Clinic Research Office and Provincial Learning Action Committee, etc. LAO will take the time to consider how these types of services can be best delivered going forward. Clinics have not yet increased staff and the ACLCO proposal may be premature.

7. Financial eligibility report

The Vice-President, Policy, Research and External Relations, reported that the financial eligibility expansion has been a massive initiative for the organization, and this report reflects the next stepexpansion of financial eligibility through the certificate program.

Staff are requesting approval of a number of specific financial eligibility/service expansion proposals to be implemented on an expedited basis. These proposals were developed following a very extensive consultation process (the largest ever undertaken by LAO), including over 50 meetings with stakeholders. Although the CLA and RLA have recently offered criticism, there appears to be universal enthusiasm for the proposals. The Family Lawyers Association (FLA) and the County and District Law Presidents Association (CDLPA) have made positive and constructive submissions.

Further consultations will take place and additional ideas for expansion in the certificate program will be explored and presented to the Board for approval.

There are three fundamental aspects to this initiative:

  1. The new financial eligibility funding is intended for new services for new clients and not to pay for present services.
  2. Priorities must be established; but not everything can be implemented at once.
  3. These proposals are the beginning of the process, not the final word, and stakeholder groups have been so advised.

The Director General and Deputy Director, Policy and Strategic Research, made an immense contribution to this project. He reported that the draft proposals were delivered to the stakeholder groups on May 19, 2015, with an invitation to provide feedback. He noted that the tone and substance of each stakeholder groups response was substantially different. Further consultation sessions will be arranged in the very near future. While the proposals have the support of all stakeholder groups, the CLA and RLA have expressed the view that these proposals do not go far enough.

7.1 Decision

The Board approved budget allocations for new financial eligibility funding for 2015/16 as follows:

Funding

Amount

Total certificates $17.1 million
Total clinic $9.8 million
Duty counsel and staff services $1.5 million
Administration $3.2 million

8. Domestic violence consultation paper

The Director General, Policy and Strategic Research reported as follows:

LAO has developed, or is in the process of developing, justice strategies for the four main groups that comprise the bulk of LAOs client base:

  • An Aboriginal justice strategy, which is in place
  • A Mental health strategy, which is in place
  • A racialized communities justice strategy, currently in development
  • A domestic violence strategy, currently at the consultation stage.

LAO is constantly adapting and updating services to these client groups.

LAO has shared an early draft of its domestic violence justice strategy with select participants in the criminal and family law areas, including members of the judiciary. The tone and substance of the strategy were very well received.

There will be wider consultation with stakeholders over the next few months. After that, a more formal version of the strategy will come back to the Board for approval.

8.1 Decision

The Board approved the domestic violence consultation paper.

9. New Business: Toronto police carding policy

A Board member asked whether LAO is allocating resources to the carding issue. The Vice-President and General Counsel reported that:

  • carding will be included in the mandate of the upcoming racialized communities justice strategy
  • a number of community legal clinics and Student Legal Aid Services Societies are engaged in this issue.