Since 1949, the Law Society has provided financial protection for the public if a lawyer steals money or other property.

Although instances of theft are rare, the legal profession believes that innocent members of the public should not suffer financial hardship because of the actions of a few dishonest lawyers. Lawyers value the public's trust and do not want to see the integrity and reputation of the profession stained by the dishonest actions of a few. It is for this reason that the Law Society provides trust protection coverage.

If a claim is made against a lawyer for stolen money or other property, trust protection coverage is available to reimburse the claimant, on the lawyer's behalf, for the amount of their loss.

Here are some frequently asked questions that claimants may have about the trust protection coverage. They are for guidance only and not intended to be exhaustive or definitive. Trust protection coverage is provided through the BC Lawyers' Compulsory Professional Liability Insurance Policy, and the policy wording governs. For more information, including current policy wording and payment limits, consult the compulsory policy section of the site.

What is the purpose of trust protection coverage?

In every profession, there is occasionally a member who is dishonest. Although not all professions or industries protect victims of their dishonest members, the legal profession in BC has, since 1949, offered financial protection to members of the public whose money has been stolen by their lawyer.

Before May 1, 2004, the Law Society's Special Compensation Fund reimbursed clients whose money had been stolen by their lawyers. Such claims are now paid through trust protection coverage, provided as part of the Law Society's insurance program. Trust Protection Coverage (TPC) was introduced to provide greater certainty of payment and more expeditious determination of claims.

The legal profession considers TPC essential for two reasons:

• to ensure victims of lawyer theft do not suffer hardship or harm.
• to ensure the public retains confidence in the overall integrity of the legal profession.

How does trust protection coverage operate?

The Law Society of BC provides trust protection coverage to all its members through its compulsory professional liability insurance policy. TPC is in addition to the professional liability insurance for negligence that lawyers in private practice are required to carry.

If a claim is made against a lawyer relating to the theft of money or other property, TPC is available to reimburse the claimant, on the lawyer's behalf, for the amount of the loss.

Claims reported under TPC are managed by the Lawyers Insurance Fund (LIF), the department of the Law Society that also manages negligence claims reported under the policy. Once LIF receives notice of a claim, it is assigned to a lawyer (claims counsel) who reviews the claim to determine whether it meets the criteria for payment under TPC .

Where does the money to compensate through trust protection coverage come from?

Every practising lawyer in BC is required to pay an annual assessment for trust protection coverage.

What losses are eligible for payment?

Before a trust protection coverage claim will be considered for payment, the following three requirements must be met:

1. Dishonest appropriation

The claim must arise out of a dishonest appropriation (wrongful taking) by the lawyer of money or other property. It doesn't matter if the lawyer uses the property him or herself, or gives it to someone else.

If there is no evidence of dishonest conduct, or if the dishonesty is unrelated to the lawyer's dealings with your property or money, then the claim is not eligible for payment.

2. Lawyer must have been acting in his or her capacity as a lawyer

In addition to acting dishonestly, the property taken must have been entrusted to and received by the lawyer in his or her capacity as a lawyer.

Sometimes a person who is a lawyer may act dishonestly in a matter that has nothing to do with the practice of law. For example, the lawyer may also be a businessperson and, in conducting a business transaction, the lawyer may steal funds from a company. As the lawyer is acting as a business person, not as a lawyer, TPC will not apply.

3. Claimant innocent

TPC is intended to assist innocent victims of a lawyer's theft. TPC does not apply if:

• the claim is somehow connected to the wrongful or unlawful conduct, fault or neglect of the claimant or the claimant's spouse (including common-law spouse);
• the claim, if brought by an organization, is somehow connected to the wrongful or unlawful conduct, fault or neglect of a person associated with the organization;
• the claimant had prior knowledge of the lawyer's dishonesty; or
• the claimant unlawfully obtained the lost property.

Trust protection coverage is not available if the lawyer who steals the property is a member of another Law Society and steals funds in that capacity. TPC also limits the amount payable if the claimant is an organization in which the lawyer, the lawyer's family or law firm, has an ownership, management or controlling interest

There may be other policy terms that limit or preclude a claimant's recovery, although they are unlikely to apply to most claims.

What type of claims are not eligible for payment?

Trust protection coverage will not compensate a claimant for a lawyer's carelessness or poor work. Claims of that kind are advanced as negligence claims against a lawyer. All lawyers in private practice carry professional liability insurance for negligence, and claimants should seek their own legal advice without delay if their claim is for negligence.

TPC does not apply if the claim is, in essence, a dispute over fees. A claim that a lawyer's fee is excessive or too high, is not a claim that the Law Society has the authority to determine. An application to review a lawyer's account that a client believes is unreasonable may be made to the local District Registrar of the BC Supreme Court. In addition, TPC does not respond to claims arising from investments.

Is there a time limit for trust protection coverage claims?

Yes. Any TPC claim must be brought and written notice given to LIF within two years of the claimant becoming aware of the lawyer's theft and, in any event, within 10 years of the theft.

Does a claimant need a lawyer to make a claim?

Claimants do not need to hire a lawyer to assist with a claim, although there may be situations where claimants may wish to obtain their own independent legal advice about their claim.

How much can a claimant recover?

Trust protection coverage will reimburse a claimant, on behalf of the lawyer who has committed the misappropriation, for the value of the money taken. If the property taken isn't money (or its equivalent), the claimant will be reimbursed for the property's actual cash value at the time the property was taken. Each claimant may recover up to $300,000 per claim, unless the claim arises out of the lawyer's temporary practice under national mobility. National mobility alows BC lawyers to practise temporarily in or with respect to the law of most other Canadian jurisdictions. For these claims, the claimant may recover up to $250,000 per claim, subject to a per lawyer limit of $2 million. There is $17.5 milion available to pay all claims made each year.

The amount paid under TPC will be reduced by any monies otherwise available to the claimant, the lawyer, or the lawyer's law firm, to repay the stolen funds. For example, if the claimant has purchased an insurance policy that applies to the loss, or if the claimant is able to recover any monies directly from the responsible lawyer, TPC will only pay any shortfall remaining after taking into account either the insurance available through the policy or the funds recovered from the lawyer.

What if the claimant disagrees with the Lawyers Insurance Fund's assessment?

If a claimant disagrees with LIF's assessment of a claim, the claimant has recourse to the courts.

How does the Law Society's complaints and discipline process affect claims?

LIF may need to wait until after the Law Society's complaint investigation and ensuing discipline proceedings, if any, are completed, before payment can be considered. These investigations and proceedings often assist LIF in determining whether or not a lawyer has, in fact, stolen money or other property, and avoid the necessity of separate but essentially parallel investigations. However, in appropriate circumstances, a claim may be paid before the conclusion of the complaint or discipline process.

How long does the process take?

As soon as LIF has received necessary information from the claimant, investigation into the claim begins. Although the length of time required to conduct the investigation depends on various factors, LIF will work to resolve the claim as quickly as possible.

How does a claimant make a claim?

The Lawyers Insurance Fund will provide claimants with an information package explaining how to make a claim that may be eligible for payment under trust protection coverage.

For a copy of the information package, please contact Hazel Cords, Executive Assistant, Lawyers Insurance Fund, by telephone: 604 605-5372 or toll-free in BC 1-800-903-5300, by email: insurance@lsbc.org or by fax: 604 682-5842.