Friends, Neighbors, Clients, Victims

The Law Society of British Columbia imposed a four-month suspension of an attorney who received loans from two clients.

The Respondent’s professional misconduct is very serious.  In particular, he knowingly acted for two clients in securing loans in which he had an exclusive personal interest.

When these loans went into default his clients were compelled to hire different lawyers to enforce the security the Respondent had prepared himself and presumably charged for.  Foreclosure proceedings against the Respondent were commenced, and in the context of these proceedings the Respondent not only misled the new counsel for the lenders about the status of a pending sale of the subject property, but also misled the court about the status of the potential buyer.

To make matters worse, the lenders were not only clients of the Respondent but also friends and neighbours.

The more serious the conduct, the greater the need for deterrence, both specific and general.  Given the Respondent’s status as a former member, specific deterrence may have less import.  However, general deterrence remains a significant factor in imposing the appropriate sanction.

Victim impact

This is undoubtedly one of the most egregious Ogilvie factors in this case.  The two clients who loaned money to the Respondent have lost significant sums of money.  The Respondent has made an Assignment into Bankruptcy and at present is an undischarged Bankrupt.  The Respondent tendered as Exhibit 9 in these proceedings his Notice of Bankruptcy.  We note that Exhibit 9 reveals that both clients that loaned the Respondent money are listed as creditors and are still owed $224,000 and $120,000 respectively.  The Panel notes that there is virtually no chance these victims of the Respondent’s professional misconduct will ever be made whole.

Sanction

The Panel has concluded that the penalty in this matter for all eight findings of professional misconduct should be a global sanction.  A suspension of four months is the appropriate disposition in this matter, the suspension to commence upon the issuance of this decision.  Members of the profession must know that borrowing money from a client fundamentally alters the solicitor-client relationship.  In a case such as this, no doubt the individuals who lent money to the Respondent did so because they trusted him.  Trust is the very foundation of a solicitor-client relationship and the Respondent’s professional misconduct in this case breached that trust.

Furthermore, it is impossible for the lawyer to act objectively for the client when he is beholden to the client as in this case.  The Respondent’s professional misconduct was a clear violation of the PCH in that he took advantage of his special relationship with these clients as their lawyer.  Accordingly, the public must know that this type of conduct will attract the most serious sanctions if lawyers choose to cross the line and borrow money from individuals who are their clients.

(Mike Frisch)