Complaints, Lawyer Discipline and Public Hearings

Summary of Decision of the Hearing Panel on Facts and Determination

Hong Guo

Richmond, BC

Called to the bar: May 4, 2009

Hearing date: November 6, 2020

Additional written submissions: March 15, 2021

Panel: David Layton, QC (chair), Jeevyn Dhaliwal, QC and Brendan Matthews

Decision issued: May 20, 2021 (2021 LSBC 20)

Counsel: Alison Kirby for the Law Society; Craig E. Jones, QC for Hong Guo

FACTS

In April 2016, Hong Guo reported to the Law Society a multi-million dollar employee theft from one of her trust accounts. After a forensic investigation of Guo’ s books, records and accounts, the Law Society obtained a consent interim order from three Benchers that required her to ensure all trust transactions to all new client matters be handled through new trust accounts. The order was later changed to require Guo not to handle trust transactions in any way and not to operate a trust account in her own name or in the name of her law firm.

A subsequent compliance audit revealed that Guo received cash advances between $200 and $840 from six clients in 2018 for work to be performed pursuant to fixed fee agreements. The clients provided Guo with advance payments on the fixed fees, and Guo deposited the payments directly into her general account. She later completed the specified legal work, usually within a week or so. At that point, she billed the clients the previously agreed-upon fixed fees, minus the advance payments previously provided. There is no evidence in any of the client files of work being performed prior to the issuance of cash receipts. She had no written fee agreement with any of the clients, nor are there any notes in the client files regarding any fee agreement.

DETERMINATION

The panel considered whether a failure to deposit cash funds into a trust account on receipt constitutes professional misconduct. The Law Society submitted that funds received from a client for services to be performed are received in trust and that the cash funds are therefore trust funds, unless there was a specific agreement made with the client regarding advance payment. Guo took the following positions: she had a fixed fee agreement with each of the six clients; absent a specific agreement otherwise, once a client agrees to pay a fixed fee for services, any advances made by the client to a lawyer becomes the lawyer’ s property even though services have not yet been provided; and the cash funds advanced by clients prior to the legal work being completed are therefore not trust funds and could be deposited directly into her general account.

The panel emphasized the fiduciary responsibilities the lawyer owes to the client and considered similar Canadian discipline decisions. The panel concluded that, absent the client’ s informed consent otherwise, advances paid by the client to the lawyer under a fixed fee contract must be held in trust until the lawyer has completed the work.

The panel found Guo failed to ensure the advance payments of cash funds were deposited into a trust account and the six clients did not provide their informed consent to Guo treating the cash funds as her own property on receipt. The panel found Guo breached the Law Society Rules and her conduct constituted professional misconduct.

 

2021 LSBC 20 Decision on Facts and Determination