The Advisory: Volume 8, Issue 3, June 2010

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From the President

What the Law Society is doing to Prevent Mortgage Fraud

By Don Thompson, QC, Executive Director, Law Society of Alberta

Rules Aimed at Fighting Fraud:

The Law Society has worked closely with the Federation of Law Societies of Canada to develop and tighten rules which are aimed at fighting fraud. The following will show the recent stepping stones to implement measures to reduce fraud from occurring in law practices:

  • In April 2005, rules to regulate cash transactions through lawyers’ trust accounts were put in place.
  • In December 2008, client identification and verification rules were introduced to enable lawyers to protect themselves and their clients from situations of fraud involving false identity of a party
  • In February 2010, a rule was put in place to prohibit the use of a lawyer’s trust account where no legal services are provided

A new Safety of Trust Safety program is currently being implemented by the Law Society which reflects the commitment of the Law Society as a regulator to better equip lawyers to keep trust money safe. It will also closely monitor compliance with the rules and procedures to protect trust money from loss through fraud.

As a regulator, the Law Society of Alberta sets standards and enforces those standards for Alberta lawyers.

The Law Society’s Enforcement Record:

The Law Society has a history of successfully investigating and prosecuting misconduct by lawyers. We take all allegations of misconduct seriously; where there is evidence of misconduct, we conduct full reviews, and where appropriate investigations.

This includes complaints on mortgage fraud which we take very seriously.

Where a Hearing Committee finds a lawyer has been involved in fraud, the lawyer is disbarred.

In every case where the Hearing Committee has reasonable grounds to believe a criminal office has been committed, the matter is referred to the Attorney General.

Our enforcement record shows:

  • In 2008, the Law Society disbarred 15 people. Of those, eight disbarments included admissions or findings of misappropriation or fraud related conduct. All eight resulted in referrals to the Attorney General.
  • In 2009, the Law Society disbarred eight people. Three of those disbarments included admissions or findings of misappropriation or fraud, or conduct related to obstructing investigations related to similar conduct. Only one matter was referred to the Attorney General.
  • To date in 2010, the Law Society has disbarred two people. One of these disbarments included findings of misappropriation, and this matter was referred to the Attorney General

Our processes are entirely public: we provide public notice in advance once citations are determined; we have public participation through public representatives on hearing committees; hearings are held in public; and we publish notices and hearing reports in a timely manner.

Supporting Lawyers from Fraud and other Risks:

A recent Ipsos Reid poll shows that Albertans use the services of lawyers for a wide range of matters, most frequently for real estate transactions (84%), wills and estates (78%), family relationship problems (59%), small business issues (54%), personal injury problems (46%) and crime related matters (40%).

The services of lawyers were also used by Albertans to address immigration problems (35% of those experienced such situations), property damage (27%) and discrimination issues (25%).

Reputation (43%) and referral from another person (41%) were the factors most often considered important by Albertans in their selection of a lawyer. Professional credentials (legal training 30%) and standing (subject to Code of Ethics and professional 26%) followed behind as important selection criteria.

With its strategic goals to be highly trusted and to be recognized for excellence in management and leadership in service:

  • The Law Society provides the services of Practice Advisors who are available to lawyers for consultation on issues of practice concern.
  • The Law Society regularly updates lawyers on risks associated with practice including frauds operating in the area through articles in its regular Advisory publication, on its website and in electronic Ebulletins.
  • Summaries of disciplinary matters are published by the Law Society in its regular Advisory publication.
  • An on-line study module has been developed to help lawyers implement client identification and verification procedures.

The Law Society strives to be responsive and to act in anticipation of matters which may affect the public trust and confidence in lawyers. The Law Society is constantly innovating and researching policy initiatives to support lawyers in being safe. It supports programs and opportunities for lawyers to fulfill their Continuing Professional Development program obligations. It implements rule changes in consultation with lawyers and other law societies. And the Law Society of Alberta is moving forward on its new Safety of Trust Property project of which lawyers will become more aware over the coming months.

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