President’s Blog
February 21, 2017

by Herman Van Ommen, QC

Some may have seen the CBC’s Fifth Estate episode that aired on February 17, which suggested lawyers cannot be trusted. In my view, lawyers in British Columbia are ethical and honest, and in the rare instance when theft by a lawyer from a client account is discovered, the Law Society, as the regulator of the legal profession in BC, moves quickly to compensate the victim and discipline the lawyer.

As the regulator of almost 12,000 lawyers in BC, the Law Society honours its duty to act in the public interest. It has zero tolerance for lawyers who have misappropriated or fraudulently obtained money from a client or who are accused of any other form of unprofessional conduct. The Law Society’s Rules and Code of Conduct clearly set out expectations for lawyer conduct and for discipline in cases of professional misconduct.

In Canada, the legal profession finances the compensation of victims directly through fees paid by its members, and it is the only profession in Canada to do so. In BC, all practising lawyers are required to carry insurance covering claims for theft of funds held in trust for clients.

Since that compulsory trust protection coverage was introduced in 2004, total compensation of $1.1million has been paid relating to 73 claims involving 22 different lawyers. Every one of those lawyers is now either disbarred, deceased or no longer practicing law. Given that approximately 8,000 lawyers in private practice are responsible for handling more than $100 billion deposited to trust accounts annually, that’s a very small percentage of lawyers involved in relatively small amounts of misappropriated funds.

The Law Society’s current system for compensating victims of theft is the result of highly unusual circumstances in 2002, when Vancouver lawyer Martin Wirick was found responsible for misappropriations that would eventually total nearly $40 million. The Law Society swiftly disbarred Wirick, and fully compensated all victims. Wirick was arrested in 2008 on allegations of theft and fraud and was sentenced at court to seven years in prison.

The Wirick case caused the Law Society to reconsider its system for compensating victims of theft. When the irregularities in Wirick’s trust accounts first came to light, claims for lawyer theft were covered by a special compensation fund maintained by an annual fee assessed to all practising lawyers. Law Society Rules at that time capped annual payments from the fund at $17.5 million. Benchers agreed to remove the limit so that all valid claims for theft would be paid, and the Law Society assessed lawyers an annual fee of $600 to fund the payouts. Lawyers would continue to pay a special levy through 2009.

Today the special compensation fund has been replaced by compulsory liability insurance that covers theft, as well as claims for loss due to lawyer negligence. From 2010 through 2015, payouts for theft claims averaged $153,000 a year, and victims were compensated within an average of eight months. Victims of theft are compensated for the amount of the theft plus interest.

The legal profession in BC should be proud of its record of dealing with the few bad apples that exist in every group.