PRACTICE WATCH, by Barbara Buchanan, Practice Advisor
Practice checklists, new BC Code, scams, client ID and counterfeit cheques
In this Practice Watch:
- The Practice Checklists Manual
- New BC Code – duty to report
- The bad cheque scam (fake certified cheques and other negotiable instruments)
- Verifying the identity of a client outside of Canada
- Counterfeit law firm trust cheques
The Law Society’s Practice Checklist Manual is a web-based reference available free of charge to BC lawyers and articled students (go to Publications and Resources > Practice Resources on the Law Society website at lawsociety.bc.ca). Developed by the Law Society with the assistance of the Continuing Legal Education Society of BC, the manual contains 41 checklists in nine subject areas:
- Client Identification and Verification (one checklist and sample forms)
- Corporate & Commercial (13 checklists)
- Criminal (four checklists)
- Family (six checklists)
- Litigation (six checklists)
- Real Estate (three checklists)
- Wills & Estates (five checklists)
- Human Rights (one checklist)
- Immigration (two checklists)
While it’s not mandatory for lawyers to use the manual, it’s obviously prudent to use checklists in practice so that important steps aren’t missed. Although an attempt has been made to be comprehensive, and the checklists are the result of careful consideration of each subject area, the checklists aren’t exhaustive and aren’t intended as a substitute for a lawyer’s professional judgment as to the correctness and applicability of the material to the lawyer’s file. They’re intended primarily to assist in organization and to suggest points that a lawyer should consider. It is expected that lawyers will use other resources as well. For example, if using part 4 of the Testator Interview Checklist (Fraud, Undue Influence, Suspicious Circumstances), a lawyer may also want to read the October 2011 Guide prepared by the BC Law Institute: Recommended Practices for Wills Practitioners Relating to Potential Undue Influence: A Guide. Lawyers should refer to applicable statutes, regulations and case law for definitive answers in any subject area.
In many situations, it won’t be necessary to carry out all of the activities contained in a checklist. The checklists are available in Word so that lawyers can customize them for their use.
The checklists are generally updated once a year on a rolling basis. For example, one subject area’s checklists may be updated and available on the website before another subject area.
More information is available on the website about the use of the Practice Checklists Manual and highlights of the most recent changes.
On March 2, 2012, the Benchers set January 1, 2013 as the implementation date of the new Code of Professional Conduct for British Columbia, which will replace the current Professional Conduct Handbook. Most rules in the current Handbook have counterparts in the Code; however, some have changed or are new. For example, under Chapter 13, Rules 1 and 2 of the Handbook, a lawyer must report another lawyer to the Law Society as follows:
(1) Subject to Rule 2, a lawyer must report to the Law Society another lawyer’s:
(a) breach of undertaking that has not been consented to or waived by the recipient of the undertaking,
(b) shortage of trust funds, and
(c) other conduct that raises a substantial question as to the other lawyer’s honesty or trustworthiness as a lawyer.
(2) In making a report under Rule 1, a lawyer must not disclose any confidential information respecting the lawyer’s client acquired in the course of the professional relationship or any privileged communications between them, unless the client expressly or implicitly consents.
In Rule 6.01(3) of the new Code, the duty to report has been expanded and helpful commentary is added. Notably, it appears that a lawyer has a duty to report himself or herself, as well as another lawyer, in the following circumstances:
Duty to Report
6.01 (3) Unless to do so would involve a breach of solicitor-client confidentiality or privilege, a lawyer must report to the Society:
(a) a shortage of trust monies;
(b) a breach of undertaking or trust condition that has not been consented to or waived;
(c) the abandonment of a law practice;
(d) participation in criminal activity related to a lawyer’s practice;
(e) the mental instability of a lawyer of such a nature that the lawyer’s clients are likely to be materially prejudiced;
(f) conduct that raises a substantial question as to another lawyer’s honesty, trustworthiness, or competency as a lawyer; and
(g) any other situation in which a lawyer’s clients are likely to be materially prejudiced.
Unless a lawyer who departs from proper professional conduct is checked at an early stage, loss or damage to clients or others may ensue. Evidence of minor breaches may, on investigation, disclose a more serious situation or may indicate the commencement of a course of conduct that may lead to serious breaches in the future. It is, therefore, proper (unless it is privileged or otherwise unlawful) for a lawyer to report to the Society any instance involving a breach of these rules. If a lawyer is in any doubt whether a report should be made, the lawyer should consider seeking the advice of the Society directly or indirectly (e.g., through another lawyer).
Nothing in this paragraph is meant to interfere with the lawyer-client relationship. In all cases, the report must be made without malice or ulterior motive.
Often, instances of improper conduct arise from emotional, mental or family disturbances or substance abuse. Lawyers who suffer from such problems should be encouraged to seek assistance as early as possible. The Society supports professional support groups in their commitment to the provision of confidential counselling. Therefore, lawyers acting in the capacity of counsellors for professional support groups will not be called by the Society or by any investigation committee to testify at any conduct, capacity or competence hearing without the consent of the lawyer from whom the information was received. Notwithstanding the above, a lawyer counselling another lawyer has an ethical obligation to report to the Society upon learning that the lawyer being assisted is engaging in or may in the future engage in serious misconduct or in criminal activity related to the lawyer’s practice. The Society cannot countenance such conduct regardless of a lawyer’s attempts at rehabilitation.
Scamsters continue to try to trick lawyers into voluntarily paying out funds from their trust account. We have reorganized and expanded the bad cheque scam information in the Fraud Alerts section of the Law Society website to further assist lawyers. Read about how to avoid getting caught and become familiar with the common characteristics, red flags, ruses and twists and developments, and steps you can take to manage the risk. Check out the names and documents page. It includes an alphabetical list of some of the names that fraudsters have used in BC along with the types of ruses they attempted. Please note that real people with the same names may be the victims of fraudsters or of coincidence, but are not suspected of wrongdoing.
Read about what to do if you suspect a new client may be a scamster or discover you’ve been scammed. Contact Practice Advisor Barbara Buchanan (email@example.com) or 604.697.5816 if you would like confidential practice advice in determining if a new matter may be a bad cheque scam that you should report to the police and your bank, or to report any new potential scams and fraudsters. Reporting allows us to notify the profession, as appropriate, and to update the list of names and documents.
These names have been added recently:
Commercial loan – Brian McKinley
Commercial invoices (collecting on a phony overdue business debt) – Ronal Fortis, Taro Hagiwara
Personal loan agreement – Yu Sheng Li
Phony debt collection in the matrimonial context – Isabella Minor, Tammy Brewer, Tammy Schwartz
In the bad cheque scam scenarios, a new client often initially contacts a lawyer by email and says that he or she resides in another country and, for that reason, cannot meet with the lawyer in person. The client usually emails a scan of a driver’s licence or passport hoping that the lawyer will accept the scan for verification of identity. This is not sufficient.
If you can’t meet with the potential new client in person, you must enter into a written agreement or arrangement with an agent. The agent must meet with the client in person to verify the client’s identity, then send that information to you. You may use your discretion to determine who is an appropriate agent in the circumstances. It may be a lawyer or notary or some other reasonable person. Of course it would be prudent for you to choose the agent yourself rather than relying on suggestions from a potential scamster.
For more information about how to verify the identity of a client outside of Canada, refer to Law Society Rules 3-91 to 3-102 and the Client Identification & Verification Procedure Checklist in the Practice Checklists Manual. The checklist includes, in Appendix II, a sample agreement with an agent for verification of identity and a sample attestation form for the agent’s signature. You can also refer to the frequently asked questions in the Client Identification and Verification web page (go to Publications and Resources > Practice Resources on the Law Society website).
A BC lawyer had quite a shock in February to find that someone created a counterfeit trust cheque in the name of his law firm. The cheque was deposited and money was removed from the account initially, but was quickly returned by the financial institution after it learned the cheque was fake. There were a number of discrepancies between the law firm’s real trust cheques and the fake cheque. Advice? Keep a close watch on your trust account and your cheques.
Contact Practice Advisor Barbara Buchanan at 604.697.5816 or firstname.lastname@example.org for confidential advice or more information regarding any items in Practice Watch.