|
|
How crooked lawyers dodge justice
Special report: Law Society watchdog fails to
protect clients from shady members
Paul McKay
The Ottawa Citizen
It exists, according to its own august statement of purpose, to uphold
the
"integrity and honour" of Ontario's legal profession.
But 201 years after the Law Society of Upper Canada was mandated to
sniff out
unscrupulous lawyers and guard the interests -- and money -- of unsuspecting
clients, the self-governing body of Ontario's 27,000 lawyers is proving
to
be a
watchdog with a muffled bark and no bite.
With the provincial government poised to rewrite the rules governing
how the
society investigates complaints and disciplines its members, a five-month
Citizen
probe has shed light on a startling string of misconduct, theft and
fraud
cases
involving Ontario lawyers -- the handling of which underscores the
need to
reform the Law Society's own kid-glove approach to meting out justice
to its
peers:
- A Nepean lawyer who was disbarred in 1983 for taking client money
regained
his legal licence in 1986, then was disbarred a second time in 1996
after
lifting
money from an estate he handled. He was a friend and mentor to his
law office
partner, who was later suspended for chronic misconduct.
- An Ottawa woman was ripped off for $162,872 by her lawyer, who had
fled
to Australia with cash and a falsified passport. The lawyer was her
son. He
was
later jailed for stealing at least $1.5 million from clients.
- A Thornhill lawyer created 50 phony mortgages after receiving more
than $1
million in investment funds from clients. Property addresses and legal
titles
never matched. The lawyer gambled away more than $800,000 and never
repaid
his clients. The Law Society began its disciplinary action only after
the
lawyer
was in jail on criminal charges.
- A Burlington lawyer took a widow's house out from under her after
a
promised low-cost lawsuit turned into a $94,000 legal bill that included
phantom
hours never worked by a lawyer assisting him. The lawyer took the widow's
property as payment, then continued to take advantage of other clients
for
years
before the Law Society acted.
- A Guelph lawyer cut a deal with the Law Society that saw 26 counts
of
professional misconduct dropped in exchange for a guilty plea on 12
lesser
counts, a one-year suspension and a small fine. His victims were never
called as
witnesses, and learned of the plea bargain in their local newspaper.
- Several lawyers, including one in Ottawa, have been caught stealing
the
trust
account funds of elderly clients with Alzheimer's in nursing homes,
or raiding
funds from the estates of deceased clients.
- Lawyers in Toronto and Barrie stole the settlement funds of young
children hit
by automobiles.
This fall, the Ontario legislature is slated to approve the first major
changes to
the laws governing lawyers since 1970. The proposed amendments to the
Law
Society Act, quietly introduced in late June, have already passed first
reading.
Drafted by Law Society officials and the office of the provincial Attorney
General, the revised legislation would give the society added powers
to
inspect
the trust accounts of Ontario's lawyers, then discipline and disbar
those
found
guilty of defrauding their clients. The premise is that the new powers
--
including surprise audits and search and seizure of trust account records
without a warrant -- will help the Law Society detect criminal conduct
early,
and deal with it decisively.
Anticipating passage, the Law Society has already dropped a mandatory
requirement that the trust accounts of every Ontario lawyer be audited
once
each year by independent, certified accountants. Until this year, the
Law
Society
has maintained that these annual audits were both necessary -- and
adequate --
to protect the public from unscrupulous lawyers.
Will the public be better protected by a plan to drop 16,800 mandatory
annual
audits for all lawyers, and replace it with a "fraud squad" strike
force of
Law
Society investigators aimed at a few hundred under suspicion?
The financial stakes are huge. At any given time, billions of dollars
sit
in the
combined trust accounts of Ontario's 16,800 private practice lawyers.
Money
from estates, mortgage deals, investment ventures, divorce or personal
injury
settlements flow through legal trust accounts. The temptation to raid
them can
also be huge. Every lawyer with a trust account has both the opportunity
and
the means to commit a financial crime.
The Law Society Act reflects a historic arrangement in Ontario that
has given
the legal profession -- as a fully self-regulating profession -- a
parallel
system of
justice in which lawyers accused of wrongdoing face a panel of peers,
and
where no criminal findings are ever made.
The Citizen study shows this often amounts to a privileged system of justice.
It allows crooked lawyers to be judged by other lawyers, not 12 citizens
on a
jury panel. It allows suspected lawyers full constitutional and legal
rights to
defence, but gives their victims few rights to obtain documents, cross-examine
the lawyer, or even testify.
Plea-bargain deals are commonly made inside Law Society halls -- often
without
victim input or prior knowledge and without any right of appeal. Sometimes
cash settlements are quietly paid to persistent claimants through the
Law
Society's insurance arm -- but the public learns nothing of the lawyer's
negligence or bad practices.
And they keep practising. Last year, lawyers paid $66 million in settlement
costs
through their collective insurance premiums for some 2,000 claims.
For victimized clients, there is often little sense of justice. To win
their claims,
they are forced to hire new lawyers to square off against high-priced
attorneys
hired by the Law Society to minimize damage awards. If the clients
win, the
lawyer, with his costs covered by the Law Society insurer, can appeal
those
rulings in the courts -- causing more expense to the victim.
Finally, in cases where lawyers are proven guilty of professional misconduct,
the ultimate (and rare) penalty is disbarment. The Law Society also
pays out
millions each year -- in 1997, $5 million -- to compensate clients
for acts of
deliberate dishonesty by lawyers.
The society's proposal for added "fraud squad" powers is a tacit concession
that
it has not done a good job.
"Experience has taught us that the provisions we have in place now are
ineffectual in addressing and abating the manifold problems associated
with
lawyers' professional misconduct," Law Society head Harvey Strosbeg
recently
wrote to his members. "Because of a handful of dishonest and dishonourable
lawyers, the public's trust and confidence in the profession's honesty
have
been
seriously eroded."
There is no lack of evidence on that point. The Citizen's review of
recent Law
Society disciplinary cases reveals that crooked lawyers cheat and defraud
their
clients because they are greedy -- and have little fear of being caught
and
punished.
During the next week, the Citizen will examine some of these cases in
detail.
They are drawn from all parts of Ontario, and include cases from estate
theft to
real estate fraud. They will show what happens when innocent citizens
get
stung by their own lawyers -- and what happens when they complain about
it to
the Law Society.
Paul McKay is a Citizen reporter.
His e-mail address is: pmckay@thecitizen.southam.ca
Copyright 1998 The Ottawa Citizen
