SOLICITORS' TRUST FUNDS.

Auckland Star, Volume LVI, Issue 224, 22 September 1925, Page 4

SOLICITORS' TRUST FUNDS.

FUTILITY OF AUDITS. FURTHER SAFEGUARDS NEEDED. A glaring case of a solicitor embezzling trust funds has induced the Wanganui "Herald" to deal editorially with tbe general question of giving further protection to clients against defalcations by their legal advisers. Within recent years a law was passed compelling solicitors to submit to an annual audit of their trust accounts, but, according to our contemporary, this safeguard is practically futile. The v.-riter proceeds:— "Consideration of many of the past cases referred to has impelled us to the conclusion that it ie usually impossible for any audit to discover misappropriation until it is too late, especially if tho embezzling solicitor has neglected to pay trust moneys into his trust account, and to enter them in his trust account books. He is thus able to use his clients' moneys for his own purposes without detection until he is hopelessly involved. When • this happens, his unfortunate clients have little or no prospect of any recoveries. In the past there have been too many sad cases' of elderly men and widows losing their savings through the dishonesty of a solicitor, and many of these persons are precluded by reason of their advanced age or ill-health from earning a living. "It is surprising how long suffering the public are over this matter, as the remedy is a simple one. The Government should raise tho present annual ! license fee of three guineas for a soli- ! citor to £25, and should set up a fund ! out of these license fees to reimburse losses by any solicitor's dishonesty, any balance of the fund to belong to the Government as ordinary revenue. A revision in the fee could be made in the cases of legal firms where several solicitors are practising in partnership. The method suggested would, in many cases, cost less than the present useless audi, of a solicitor's trust account, and would have the important advantage of providing funds to reimburse clients, whose moneys have been misappropriated and lost. The present annual license fee of £3 3/ is absurdly small, and may be contrasted with the. £40 payable by an auctioneer and £10 'by a land agent, tho latter having also to provide a fidelity "bond and to have his trust account audited annually. Tho legal profession is notoriously conservative, but we .ug-' gest that the adoption of the safeguard we advocate is in the best interest of tho profession itself. It would strengthen public confidence, and thus lead, to j increased business."