“An Enormous Disappointment”

A Hearing Committee of the Law Society of Alberta reprimanded an experienced attorney

Mr. Garber is a senior member of the LSA who practiced for over 30 years in a well-regarded Alberta law firm before leaving to commence sole practice. Within that very different context for practice, Mr. Garber engaged in business with a colleague at the same time as providing legal services to their venture, which gave rise to these citations.

Background 

 In January 2013, Mr. Garber left Parlee McLaws LLP and became a sole practitioner with a general practice of 30% litigation, 30% real estate, 10% labour and employment, 20% corporate and 10% administrative law.

Mr. Garber was referred to Practice Management in October 2016.  A Practice Assessment found that Mr. Garber “struggled with the practical and financial realities of moving from a firm practice to a sole practice”.  His Practice Management file was closed after a Follow Up Practice Assessment in October 2017. 

In her final report, the assessor stated that in her opinion, Mr. Garber was “genuinely remorseful” and that he had “worked to create better systems and practices”.  She stated further that Mr. Garber had been “engaged, friendly, willing to take advice, and implement change.  He and his assistant [A] are a good team, and seem truly committed to running a strong practice”.

The transaction involved in one complaint

On October 1, 2014, Mr. Garber, [complainamt] O.R. and S.P. formed a partnership for the purpose of constructing and selling six houses in the Cold Lake subdivision (the “Project”).

Mr. Garber did the legal work for the Project.  He prepared the partnership agreement, a bare trustee agreement and did some of the legal work related to obtaining mortgages and transferring titles.  There were no retainer agreements and Mr. Garber was not paid for his legal services.

O.R. provided accounting services for the Project, with primary responsibility for tracking and payment of the contractors. S.P. provided realtor services for the Project.  Neither O.R. nor S.P. received any payment for their services in respect of the Project. The Development Co. was responsible for overseeing the construction of the Project.

Mr. Garber did not obtain O.R.’s consent with respect to any potential conflict of interest that might arise from their partnership and did not recommend she obtain independent legal advice before entering into the business transaction with him.

 $1.5M was invested into the Project, however the partnership interests did not match each partner’s financial investment.   Mr. Garber invested 49% of the funds but held a 30% partnership and title to two lots.  S.P. invested 33% and held a 46% interest and title to three lots.  O.R. invested 18% and held a 24% interest and title to one lot.

The deal did not pan out

Conflict arose between the partners.  On October 28, 2015, Mr. Garber prepared a resolution to dissolve the partnership.  It was signed by Mr. Garber and S.P. but not O.R.  The resolution stated that all revenues and expenses would be reconciled as of the date of the resolution “on a house by house and partner by partner” basis.

On December 21, 2015, O.R. filed a Statement of Claim against Mr. Garber, S.P. and the Development Co. alleging breach of contract, negligence and unjust enrichment.  Mr. Garber and S.P. counterclaimed alleging breach of contract, negligence, unjust enrichment and defamation. 

As of March 2016, the construction of two of the houses was complete, two of the houses were nearly complete and two were partially complete.  One house, owned by Mr. Garber, was sold on October 27, 2015 at a loss of just under $10,000.

The claim and counterclaim were discontinued without costs on June 19, 2017 by written agreement of the parties.  O.R. obtained independent legal advice and provided Mr. Garber with a full release of her claims against him.

In a second matter

Mr. Garber allowed his firm trust account to be used as an operating account for [client] Development Co. 2 and did not adequately monitor trust account transactions or review trust reconciliations.  Trust transfers were made without Mr. Garber’s authorization, resulting in trust shortages and, ultimately, his breach of the trust condition he accepted from Justice Canada.  Mr. Garber did not immediately report the trust shortage that resulted in the breach of trust conditions to the Law Society.   

The text of the reprimand

The Hearing Guide of the Law Society requires that Hearing Committees take a purposeful approach to sanctioning a member who has been found guilty of conduct deserving of sanction. The fundamental purpose of sanctioning is the protection of the best interests of the public and the protection of the reputation and standing of the legal profession generally. Mr. Garber, I acknowledge your co-operation with the Law Society leading up to today and resolving these complaints by admitting guilt and by proceeding with a single Bencher hearing.  Your admissions have permitted these citations to be resolved on a more efficient basis, which is not just a benefit to you, but is a benefit to the public and to the Law Society.

 Mr. Garber, you are an experienced lawyer, having practiced for over 33 years.  It is clear to me that you have a long and principled career having made significant contributions to the administration of justice in Alberta.  Your career has been exemplary until these citations.  I have noted the positive comments of the Practice Management report which indicates that you were cooperative and receptive to their involvement.  I also note that these citations arose following a major transition in your practice. I expect that facing these citations now, at this stage of your career, is an enormous disappointment.  You have admitted guilt on five citations.  Those citations are serious and have the potential for serious consequences.  While there were no serious consequences to the public and there was no loss, there was litigation, a complaint and a significant investigation.

 In these matters, you put your professional reputation and integrity at risk and your clients’ interests at risk.  In making these comments today and in expressing this reprimand today, I urge you to constantly have at the forefront of your mind and your practice the integrity required of all of us as members of this profession and the diligence that we all must demonstrate to protect our clients’ interests and to maintain our reputation and the reputation of this profession.

 In concluding, I wish you the best as you move forward from these very difficult circumstances and thank you for your attendance today.

 (Mike Frisch)