The Press. TUESDAY, NOVEMBER 10, 1914 Defaulting Solicitors.

Press, Volume L, Issue 15121, 10 November 1914, Page 6

The Press. TUESDAY, NOVEMBER 10, 1914 Defaulting Solicitors.

Thrco cases of misconduct of solicitors in respect to clients' moneys entrusted io-their caro liavo recently been Vought to ligKS in Christchurch, and the question lias, again been raised as to Low far tho Law Society is discharging its duty of keeping-up tho standard of professional honour among its members, and, by tho exercise of its disciplinary powers, safeguarding the interests of the public. On the occasion of the last scandal of tho eamo kind occurring in Christchurch, we pointed out how extremely difficult it is to guard against such, cases of fraud so long as clients fail to follow the most ordinary dictates of com monsens© -when entrusting their funds'to others for investment, and wo are still of opinion that the task of protecting those who will not tako the most elementary precautions to protect themselves is extremely difficult. We suggested, Jiowovor, that it would be one step in tho right direction if solicitors- woro compelled to have the ac--i counts of trust funds Under their control regularly audited by an independent auditor—a practico that has already been adopted by many of the leading firms for their own protection; Last year a Bill was brought down by the Government and passed, amending the Law Practitioners Act, 1908, which not only gives further powers to the La-sv Society-in the way of investigating charges' of misconduct against any practitioner, but empowers tho Govcrnor-in-Councilto framo regulations providing among other things for an annual audit. o*f the trust accounts of every solicitor, and for a report of tho result of that audit. Inasmuch as tho regulations were not required to be submitted for the Governor's approval until March 31st last, there has not yet been timo .-for-this'■ provision to be carried into practical effect. Frankly, wo feel bound, to admit that, though this is an -undoubted improvement in the law, it will not render frauds by solicitors impossible in the future, nor wilj it do

ercising some degree of vigilanco and circumspection in their dealings with lawyers. It is. indeed, open to doubt whether the Act as passed ensures a really efficient audit of trust accounts. The auditor is entitled to demand. , the production of " books, papers, and ac- " counts," and unless this empowers him to 'Scmand the production of deeds and other securities for the- trust mojievs invested —about which there

a-oni.s to 1m some doubt —It is 'dear that the audit, will not be satisfactory. A more serious point to bo considered is that if a solicitor intends to defraud a client, he -will probably tako care not. 10 pay tho moneys received into a trust account, and consequently the, matter will not come under the auditor's in'poeuon and examination. While we agree that a great responsibility re.->t.s oil the I>au' Society in this matter, wo qnito j>eo that in the present state of the, Jaw its task js not from difficulty. We believe that tho local Law Society is at ;ill time? ready

to investigate charges against any members of the profession, and is anxious to protect, the public. Obviously it is very much lo the interest oi' -'ill honest and reputable members oi' the profession that thi.% should be done. 50 that the confidence of Ihn public may bo retained. Apparently, however, tho Council can do nothing on its own motion, and it is easy to understand that

its disciplinary powers are in con.sequenec very much crippled. When a client becomes uneasy about his solicitor's dealings with his investments—so uneasy that ho takes another solicitor into his confidence—his chief anxiety naturally is to get l.ia money back. He knows that if a complaint is mado-to tho Law Society and it turns oiit to bo a. case of fraud, there will bo a prosecution, and any hope of recovering any of his own money will in all probability vanish. Ho instructs his new legal adviser accordingly, and the latter, being bound to rospect his client's confidence, is debarred from himself bringing the matter before the Council. Tho whole question will now doubtless again come beforo the Law Society for very serious consideration, and wo hope- that they will be ablo to doviso some further improvement in tho method of. dealing with such cases. In the meantime tho public will be well advised to satisfy themselves personally that tho money they entrust to solicitors for investment is applied according to their instructions. It is worth the consideration of the Law Society whether members of the legal profession should not be prohibited from acting as land agents and carrying on other business foreign to the practico of tho law. It might also be deemed desirable to insert further statutory powers so that all the ■books and accounts of legal firms, not merely trusfc accounts, should bo submitted to an annual audit by auditors appointed by the Law Society and reporting to the Council, the latter being empowered to make further investigation where it is not satisfied with the auditor's report. Pending such an amendment of tho law, respectable firms might find it to their advantage to submit their books voluntarily to a complete audit, including tho examination of-securities, a copy of the auditor's report being furnished to each client of the firm.