TRUST FUNDS.

Press, Volume LXVI, Issue 19819, 6 January 1930, Page 8

TRUST FUNDS.

GUARDING AGAINST LOSS.

LEVY ON LAW PRACTITIONERS

[THE PRESS Specie SerYic]

WFUJNOTON, January 4. Th.i-port.nl pioneering legislation enacted it -o. Bi on .ttho j«.U»«» the New Zealand Law *o*»*™* object of affording protection to tl.< J . f loss of trust moneys lSoni: e Z^JZ C nty of solicitors tlirougn mi motion on New Unr» SJ 6 and tli: "demy guarantee fun,, Shfth"he leg.l profe-i»n has vohn, ■ to build up tin mi irmly «"''";*, <Jofn] purpose o off « ; k nltonul ,i...-,11.v a, ;°eXr. toko "o-t thoir annual pr«,mcmnerß Commenting to-day £&*%&"*£, Society (Mr A. Gray, K.C.), pointed 1 4h«t nrobablv other countries wih Z\ be sl T ow to follow New Zealand's "'Briefly, the Act-styled the Law Practitioners Amendment (Soli, it,,,-* Fidelity (Juarantco Fund) Art eslah liihos a fund not to exceed £101101)0, to be administered by the New Zealand Law Society, consisting of annual contributions paid praedsing i„ New Zealand. Out of it will be met claims by persons who suffer pecuniary loss through the theft by a solicitor or his servant or agent of any money or property which may be entrusted to his care in the course of his practice. The Council of the Law Kocicty has fixed £5 5s as the annual levy to be made immediately on practising lawyers for the purpose of the fund. Under regulations published last month, the Council of the Law Society has appointed a committee of management, consisting of Mr A. Gray, K.C. (president), Mr 0. IL Treadwell (vicepresident), Mr T. Levi (treasurer), all of Wellington; Mr A. H. Johnstone, Auckland; and Mr M. J. Urcsson, Christchurch.

'To Safeguard toe Fund. A special levy not exceeding £lO may be made if at any time the fund is not sufficient to satisfy liabilities, but no solicitor will be required to pay by way of levy more than £.lO in any one year, or more than £SO during the whole period of his practice as a solicitor. To safeguard the fund, an accountant may be employed to conduct an audit of solicitors' trust accounts and render a confidential report as to any irregularity which may be disclosed or any other matter that may require investigation. This power is in addition to the existing provision by which every solicitor must have his trust account audited once a year, and its object is to enable an investigation to be made where circumstances seem to demand it, and to enable steps to be taken to prevent the possible misuse of clients' moneys by solicitors who may happen 1o be in embarrassed circumstances. The accounts of the fund are to be audited annually by a registered accountant. The Act further requires that notice of a claim on the fund must be given in writing to the council or the management committee within twelve months after the claimant has become aware of the theft. There are various provisions regarding procedure, and claims for amounts not exceeding £SOO will be satisfied before claims exceeding that sum are satisfied.

Ensuring Public Confidence. "The new Act is the outcome of long discussions by members of the legal profession in New Zealand," said Mr Gray in an interview this morning, "and it. is welcomed by the profession as a whole as an earnest of the desire of its members to provide a means of indemnifying clients who may be unfortunate enough to misplace their confidence in an adviser who may not be worthy of that confidence. The number of practitioners who in the past have been the •means of drawing public attention to the occasional misappropriation of trust funds has fortunately been very limited, and in view of the large amount of moneys entrusted to lawyers, those who are best able to judge consider it is only just to say that by compari son with other professions and occupations the profession of the law has attained and maintained a very high standard in this country. New Zealand is not the only country in which peculations by lawyers have sometimes occurred, and it is believed that this Dominion is the first country in the Empire to take active steps to ensure the confidence of the public, in the members of an old and honourable profession. "Already in some parts of Australia and in England the idea of a compulsory audit of solicitors' trust accounts —a system which was adopted in this country by Statute in 1913—has attracted the attention of leaders of the legal profession, and it is more than probable that the New Zealand system of compulsory audit will be adopted. The recent provision In the shape of the establishment of a solicitors' guarantee fund in New Zealand has also created a great deal of interest in Australia, and the Hon. T. M. Wiford, K.C., the new High Commissioner for New Zcaland, who had charge of the Bill during its passage through the House of Representatives, intends to take every opportunity of promulgating the provisions of the new Act amongst members of the profession in England. It is quite reasonable, therefore, to expect that in the course of time the Law Society of England will adopt some such measure as Now Zealand has pioneered."

How Fund Will Grow. Mr Gray pointed out, Hint tho Art does not apply to solicitors who are not in practice on their own account, such as persons in the Government employ or the like. It was expected that a sum of between £6OOO and £7OOO would he provided for the fund in the first, year. That, of course, would bo repeated in the second and succeeding years, and if, as seemed probable, the number of practising solicitors continued to increase, the fund would also grow' proportionately. In addition I<> the sum which it had been decided to levy, there was the safeguard of the further levy which might be made if by any chance circumstances should require it.

In conclusion, Mr Gray expressed indebtedness on behalf of the legal profession to the Government for 1 hefacilities it had afforded for the preparation and passage of the measure in the recent Parliamentary session. lie inferred particularly to the Prime Minister (Sir Joseph Ward), who allowed the Bill to bo brought in as a Government measure; to the Chief Law Draftsman (Mr .Tamos who had drafted it; to Sir Thomas Sidey, who took a great part in the pre liminary work of preparing the Bill, and who had charge of it in the Legislative Council; and to the Hon. T. M. Wilford, K.C, who piloted it through the House of Representatives.