Q: My friend’s lawyer apparently absconded with or spent money that his clients had left in his trust account. How could he get away with this and what happens to lawyers who do this?
A: This is a rare occurrence, but there are numerous steps taken to prevent such things from happening. Like any safeguards, they are not perfect and a few fish wriggle through the net. As a result, there are also procedures in place to detect such events and deal with them on a regulatory, civil and criminal law basis.
Read Also
Nutritious pork packed with vitamins, essential minerals
Recipes for pork
Lawyers are regulated by law societies found in every province and territory in Canada. The rules are different from province to province, but the broad principles and big concepts are the same. It is unethical and illegal to take money that doesn’t belong to you.
People trust lawyers with their money and future. Maintenance of that trust is essential.
In each province, lawyers have trust reporting duties. They must keep rigorous track of other people’s money and issue reports to their provincial or territorial law society. Failure to do so can result in sanctions such as suspension or disbarment.
Failure to report on time or at all is seen as a red flag, which will invite an audit or investigation.
Law societies have the power to audit and investigate their members. The law society accountant can go through lawyers’ books.
Once fraud is detected, law societies move quickly to suspend a member on an interim basis. A full investigation ensues and discipline charges follow that could lead to disbarment. Other factors may apply to change that, but this is a serious breach of trust and is regarded in a serious manner by the law society.
Civil claims are dealt with as well. Many law societies also maintain funds to compensate aggrieved parties. These funds only deal with breaches of integrity, not allegations of solicitors’ negligence.
As much as possible, law societies strive to compensate victims of unscrupulous lawyers without forcing the clients to go through a civil court process, which will take time and cost money. This is not automatic and all claims go through a verification process, but the idea is to help people who have been damaged by their lawyer’s dishonesty.
Finally, criminal sanctions apply. A lawyer taking other persons’ trust money and using it for his or her own purposes is theft or fraud. Criminal charges can result from such misconduct and lawyers have been sent to prison for serious breaches.
Rick Danyliuk is a lawyer with McDougall Gauley LLP in Saskatoon.
