Words Fail

A Hearing Panel of the Law Society of British Columbia found these words to describe how words could not describe an attorney’s practice in the course of finding misappropriation and other entrusted funds irregularities

The Panel begins with an appreciation that the state of the financial records of the Respondent at all material times was beyond description. The English language has insufficient adjectives to pay proper respect to the mess that was the financial records of the Respondent for the period of time from the commencement of the private practice to the date of the completion of the Law Society visits to gather records and information.

The record of these proceedings establishes that the Respondent successfully completed the Small Firm Course on two occasions. In this result, two possibilities emerge for consideration. Either the Course is ineffective and easily passed without comprehension or the Respondent had assistance with the testing sections of the course to establish a passing status. The anecdotal evidence available to the Panel disproves the first option.

What is manifestly clear to the Panel is that the substantive information intended to be communicated in the Course to prospective or actual small firm practitioners did not make it from the Course to the knowledge of the Respondent. During the material time covered by the citation, there are simply far too many specific examples of a blatant misunderstanding by the Respondent of the foundations of elementary trust accounting practices to accept the premise that the Respondent understood his trust accounting obligations. He did not.

As a consequence

For example, after many months of engagement with the Law Society on these trust accounting issues, all the while being chastised for financial misbehaviour, the Respondent provided a trust cheque to a client when he had no money in trust to cover it. This approach was adopted by the Respondent on the basis that the client had apparently agreed to await advice from the Respondent as to when the trust cheque could be cashed.

This substantially unconventional approach to trust account management was adopted by the Respondent because the client was a single mother without convenient transportation to the Respondent’s office and the Respondent expected the covering funds would be provided by an Alberta lawyer in the near future. Contrary to arrangements made with the client, the trust cheque was cashed before the covering deposit was made. The trust account was overdrawn.

There are many such examples of similar mistakes made leading to trust shortages. There are equally numerous examples of continuing breaches of Law Society accounting rules. It is clear to the Panel that the Respondent was challenged to find appropriate financial record-keeping assistance in the early years of his practice. Resources were scarce and the skill level of bookkeeping staff did not meet minimum expectations. Many, many mistakes were made.

The horror

The trust account behaviour evidenced by the Respondent over the time period described in the citation is nothing short of deplorable. The events describe a horrific time period in the practice of the Respondent where, with respect to the trust account, almost nothing was done properly.

We find that, taken as whole, the conduct of the Respondent represents a manifestly marked departure from conduct the Law Society expects of lawyers. Accordingly, we confirm that the behaviour of the Respondent, in the circumstances described in the Notice to Admit and as acknowledged by the Respondent with his admissions, constitutes professional misconduct.

That is however, not the end of the analysis. The Law Society seeks a finding of “misappropriation,” and the Respondent categorically disputes that allegation. It is important to determine if the behaviour of the Respondent amounts to “misappropriation,” as that determination will impact upon the nature and extent of any penalties to be imposed upon the Respondent. This will be the final determination of significance, since virtually all other components of the multicount citation were admitted.

The panel defined misappropriation and concludes

We believe that the circumstances of the Respondent are unique. He is clearly guilty of negligence and gross incompetence in the conduct of the financial aspects of his practice. So comprehensively inept is he that it may not be appropriate to characterize his behaviour as negligent. Negligence suggests that there has been dereliction of a duty owed. That characterization requires there to be an understanding of an initial duty that is owed. Nothing in the evidence before us suggests that the Respondent was aware of the duty owed to clients in the financial administration of his practice.

We American lawyers can learn from the Canadian word choices to describe the self-regulatory process. Woe betide the lawyer who gets a “visit to gather records and information” from the Law Society. (Mike Frisch)