Claim Guidelines
A. PREFACE
1. General: These Guidelines outline the general principles that will guide the Compensation Fund in the exercise of its discretion pursuant to the Law Society Act, R.S.O. 1990, c.L.8, s.51, as am. These Guidelines are not rules, are not exhaustive and will not necessarily apply to every conceivable situation. The facts and circumstances of each case will be carefully considered as part of decision-making.
Grants are generally payable from the Compensation Fund to those who have suffered losses due to dishonesty on the part of lawyers or licensed paralegals. Most commonly, a loss for which compensation is payable results from theft or misappropriation of money that ought to be held in trust for a client as a retainer or as the proceeds from a settlement, a sale of property or an estate.
These Guidelines were adopted in this form by Convocation in 2014. The updated Guidelines are not intended to change the substantive considerations in determining a claim but are intended to restate and clarify, in plain language, the underlying principles and process that apply to the determination of Compensation Fund claims. The updated Guidelines apply to all outstanding Compensation Fund claims.
2. Final decision: A decision by the Compensation Fund to pay or not pay compensation is final.
3. Proof: To make a grant, the Compensation Fund must have satisfactory proof of loss. What is satisfactory proof will vary, depending on the nature of the claim and the evidence that is reasonably available. Proof that funds were given to a lawyer or paralegal could include, for example:
- Receipts issued by the lawyer or paralegal
- Statements of account from the lawyer or paralegal
- Bank records of the claimant
- Cancelled cheques issued by the claimant or on the claimant's behalf
4. Fund of last resort: The Compensation Fund is a fund of last resort. The Fund will determine, at its discretion, whether all reasonable steps, in the circumstances, have been taken to recover a loss through other means, for example through litigation.
B. WHO CAN CLAIM
5. Lawyer-client / paralegal client relationship:Subject to the exceptions set out in these guidelines, the claimant must be a person who had a lawyer-client or paralegal-client relationship or other similar fiduciary relationship with the person whose dishonesty is the reason for the loss.
6. Exception - estate beneficiaries. A beneficiary of an estate may claim for compensation, where a loss from the estate is because of the dishonesty of a lawyer who has acted as solicitor for the estate or estate trustee or both.
7. Financial institutions and insurers: The Compensation Fund will not pay grants to banks or other financial institutions that are in the business of lending money, nor will it compensate for losses covered by a contract of insurance, including title insurance.
C. LOSSES FOR WHICH COMPENSATION MAY BE AVAILABLE
8. Loss: For the purposes of the Compensation Fund, loss is defined as the difference between what the lawyer or licensed paralegal received from the claimant or on the claimant's behalf, and the amount that was earned and accounted for, and/or returned to the claimant.
9. Dishonest conduct: The loss must result from a lawyer's or paralegal's dishonest conduct. Dishonest conduct includes wrongful acts committed by a lawyer or paralegal, such as theft or embezzlement of money that ought to be held in trust for a client, or the wrongful taking or conversion of money or property. It can also include wrongfully failing to return a retainer that has been paid by a client but not earned.
10. Lawyer-client, paralegal-client or fiduciary relationship: The loss must arise in the context of a lawyer-client or paralegal-client relationship or other similar fiduciary relationship between the lawyer and client or paralegal and client. Such a relationship generally involves the provision of legal advice, legal representation and/or legal services by a lawyer or paralegal to a client.
11. Practice of law / provision of legal services: Apart from exceptions contained in these guidelines, the loss must be connected to the practice of law or the provision of legal services. Any funds or property alleged to have been lost must have been received by the lawyer or paralegal in his or her capacity as a lawyer or paralegal. If a lawyer or paralegal has acted dishonestly in a matter that is not connected to the practice of law or provision of legal services, compensation will not be available.
12. Legal entitlement:The claimant must be legally or beneficially entitled to the money or property for which he or she is seeking compensation.
D. DETERMINING THE AMOUNT OF COMPENSATION THAT IS PAYABLE
13. Amount of loss: The Fund will consider the value of work performed by the lawyer or paralegal and the cost of disbursements, whether or not the claimant received an account for the work or the disbursements. The fact that work was performed may cause the Fund to reduce a grant or deny one altogether.
14. Maximum grant: Convocation will, from time to time, determine the maximum amount payable by the Fund. For losses resulting from funds given to a lawyer on or after September 22, 2016, the maximum grant is $500,000. For losses resulting from funds given to a lawyer between April 24, 2008, and September 21, 2016, the maximum grant is $150,000. Grants for such losses originating prior to April 24, 2008 are subject to the maximum in place at the time funds were advanced. The maximum grant is $10,000 for a loss resulting from dishonesty on the part of a paralegal licensee.
15. Risk and carelessness: The Compensation Fund will consider the extent to which the claimant was careless or took unreasonable risks. Risk and carelessness on the part of the claimant may reduce or eliminate a grant. In assessing risk and carelessness, the Fund may consider, for example:
- whether it was reasonable for the claimant to trust the lawyer or paralegal concerned without, for example, considering other sources of professional advice (accounting, legal or otherwise);
- whether the claimant was reckless in entrusting the money to the lawyer or paralegal; and
- whether the claimant was careless in protecting his or her own interest after having a reasonable opportunity to suspect that a loss due to dishonesty might be occurring.
E. LOSSES FOR WHICH COMPENSATION IS NOT PAYABLE
16. General: The following losses will not result in compensation from the Fund:
- Losses by spouses, children, parents, grandparents, siblings, partners, associates and employees of the lawyer(s) or paralegal(s) causing the loss
- Losses covered by a bond, surety agreement, or insurance contract to the extent to which coverage applies
- Losses by any business entity controlled by the lawyer or paralegal
- Losses by any governmental entity or agency
- Losses by banks or other financial institutions
- Interest, damages, expenses, costs and other consequential or incidental losses
17. Loans: The Compensation Fund will not compensate for a loss resulting from a loan to a lawyer or paralegal unless the claimant was persuaded to lend money by the lawyer or paralegal because of an ongoing lawyer-client or paralegal-client relationship. Such a relationship must exist separate and apart from the loan itself.
18. Investments: The Compensation Fund will not compensate for a loss resulting from an investment solicited or facilitated by a lawyer unless the claimant was persuaded to make the investment because of an ongoing lawyer-client or paralegal-client relationship. Such a relationship must exist separate and apart from the investment itself.