The Advisory: Volume 8, Issue 1, January 2010
Summary of Disciplinary Matters
Including Hearing Reports issued between August and September 2009
In this Summary of Disciplinary Matters for the period August to September 2009, the Law Society of Alberta seeks to educate and inform lawyers on its role as a self-regulator in the public interest.
The Law Society completed 4 hearings and issued 5 reports during this time. The hearing reports issued may correspond to the hearings held during this period, but may reflect hearings held in earlier periods. Several of the reports are summarized below. All hearing reports are available at www.lawsociety.ab.ca.
Reprimand and Fine for A.
A significant delay in resolving problems, a complete lack of attention to the matter during a five-year period, and the failure to keep a lawyer apprised on the status of matters was such that a Hearing Committee of the Law Society, acting in the public interest, imposed a reprimand and a fine on A.
The Hearing Committee, in denouncing this conduct in the public interest and in upholding the integrity of the profession, imposed a small fine for each of the two citations.
The Committee convened in September 2009 to inquire into the conduct of A., a member of the Law Society with nearly 50 years of law practice. The citations against A. were:
(a) It is alleged that you failed to be punctual in commitments made to another lawyer and failed to respond on a timely basis to communications from another lawyer, and that such conduct is conduct deserving of sanction.
(b) It is alleged that you misled another lawyer, and failed to immediately correct the resulting misapprehension on the part of the other lawyer, and that such conduct is conduct deserving of sanction.
The citations arise from files in which A. acted for Lender C and four individual purchasers with respect to the purchase of condominiums in Canmore.
In March 2003, the lawyer acting for Lender C contacted A., noting that more than eight months had passed since the registration of the mortgages and that there were prior encumbrances still on title. He asked that the issue be addressed.
A. candidly admitted that he was acting for all three of the original Purchasers (and mortgagors to Lender C), Lender C and the ultimate purchaser of the units, P Corporation. He recognized that as a result of such multiple representation there was no confidentiality of information and he had a duty to apprise all three of the clients of any material fact that came to his attention. However, he failed to advise Lender C that its mortgage funds had been advanced without the cash difference having been tendered by Lender C’s.
A. told the Committee that some of the delays experienced throughout the history of matter were as a result of the sudden departure of his legal assistant of some five years who had not kept the files well organized and who had not brought to his attention certain correspondence received from Lender C’s lawyer, where such correspondence had requested immediate responses.
Counsel for the Law Society indicated that in circumstances where there was multiple representation, A. should have realized that he needed to be very careful in dealing with all of the obligations that he had to the three parties and that, to the contrary, A.’s reaction to the problems that arose appeared to be more consistent with a lower threshold of care. In the hearing, Law Society counsel submitted that A.’s manner of dealing with the issues that arose in the face of multiple representations fell well below the standard required of a member of the LSA .
A.’s lawyer submitted that A. had already suffered as a result of these matters. He indicated that Lender C will no longer refer work to A. and, as a result, he has suffered a pecuniary loss.
In determining the sanction, the Hearing Committee fined A. $500 for each of the two citations for a total of $1,000, issued a reprimand and requested actual costs of the hearing,
The Hearing Committee Chair delivered the reprimand to A., and specifically noted that he failed to meet the standard of conduct required of a LSA member in the circumstance of multiple representation and failed to act in a manner consistent with common courtesy towards a fellow member of the LSA . A. had diminished the integrity of the profession in the eyes of Lender C, and while that resulted in a pecuniary loss to A. as a result of the fact that Lender C no longer provides him with work, it also has a detrimental impact on the view of the profession as a whole that Lender C might now have.
The Hearing Committee was comprised of Benchers Stephen Raby, QC, (Chair), Anthony G. Young and Norma Sieppert (a non-lawyer public representative.)
Reprimand and Fine for B.
To send a strong message of deterrence, a Law Society of Alberta Hearing Committee issued a reprimand and a $4,000 fine to B. on one citation for failing to advise an individual on a timely basis of the forgery of a letter and inappropriate behaviour. Additional reprimands and $2,500 fines were issued for each of two other citations.
The Committee concluded that B., a real estate lawyer, who has no disciplinary record and is not at risk to re-offend, behaved in a manner that was imprudent and incautious (in respect to the first citation) and deliberate (with respect to citations two and three.)
The Committee found B. guilty of delay in advising a client of the forged letter and participating in a joke which brought discredit to the profession. The Committee did not find him guilty of sanctionable conduct in failing to determine any legitimate rationale for funds to be paid into and out of his trust account. The Committee imposed a reprimand and a fine on B. to protect the public and the reputation of the profession. The Committee expressed concern that lawyers do not allow their offices to be abused by those who would take advantage of others.
The Committee also urged the Law Society to review its Rules regarding the operation of trust accounts, and to provide clarity for lawyers and for the public on the use of trust accounts in cases where lawyers are not providing legal services to a client.
This matter began in 2005, when B., a solo practitioner, found his real estate practice very busy. The first citation arose from his involvement with a realtor who indicated that he would send real estate business to B.’s office. After contacting B., the realtor forwarded funds to be disbursed as instructed. B. received the funds but did not receive details nor paperwork regarding the purported transaction.
Unbeknownst to B. the funds belonged to a real estate client of the realtor who was not a client of B. The funds were forwarded to B. and then out of his trust account, as part of a scheme to deprive the realtor’s client of the funds. Further, the client was given a letter purportedly from B. and on B.’s letterhead.
When B. discovered the forged letter, he confronted the realtor who told him it was part of a joke being played on the client, and B. was asked to play along by not telling the client of the forgery. B. played along for a month when he informed the client of the forgery, and the fraud was uncovered.
On the first citation, Counsel for the Law Society noted there was no legal purpose for the funds to flow through B.’s trust account, as B. provided no legal services with respect to those funds. The Law Society of Alberta acknowledged that B. had disbursed the funds on the realtor’s instructions before he knew that he was unwittingly involved in a fraud.
The Hearing Committee considered B.’s delay in dealing with this matter once he became aware of the forged letter. In the first citation, B. failed to advise the realtor’s client on a timely basis of the forgery of the letter, and was found to have participated in a “joke” which caused the realtor’s client to believe that B. had funds in his trust account to the client’s credit when that was not the case.
Citation one expressly suggested that B. engaged in conduct that brought discredit to the legal profession by participating in inappropriate behaviour, which included failing to determine any legitimate rationale for funds to be paid into and out of his trust account as instructed by the realtor. While the Hearing Committee found such this particular conduct to be imprudent and incautious, it did not find B. deserving of sanction for it.
The Hearing Committee was concerned that B. allowed his trust account to be used in this way notwithstanding his own professed discomfort, and notwithstanding his receipt of an unexplained bank draft with the funds originating from an unexplained source, to be handled by him as instructed by the realtor as part of an unexplained transaction.
On learning of the forgery of this letter, the Hearing Committee found that it was not acceptable for B. to do nothing for approximately one month and to play along with the realtor’s supposed joke. He had a positive obligation to act. A number of options were open to B., the Committee noted in its report. He could have spoken with the Practice Advisor at the Law Society. The forged letter was on B.’s letterhead. B. could have called the police.
The remaining two citations against B. arose from a completely separate transaction involving an unauthorized release of holdback funds arising from the purchase of a duplex where there was a dispute.
The Hearing Committee issued for the first citation, a reprimand and a fine of $4,000, and for each of citations two and three, reprimands and fines of $2,500. The Hearing Committee also ordered that B. pay the actual costs of the hearing in the estimated amount of $9,951.38.
As well, as a result of the concerns raised by the misconduct and other behaviour, B. was referred to the Law Society’s Practice Review Committee for a general review and assessment of his practice.
The Hearing Committee was comprised of Carsten Jensen, QC, Chair; Neena Ahluwalia, QC; and Norma Sieppert (a non-lawyer public representative.)
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