Stolen funds to cost solicitors

Press, 25 August 1988, Page 6

Stolen funds to cost solicitors

PA Wellington Solicitors will have to raise about $1.6 million between them to pay back funds stolen from clients by a Tauranga solicitor, a Parliamentary select committee was told yesterday.

The justice and law reform committee was considering the Law Practitioners Amendment Bill, which removes limits on the amount the Law Society can require its members to pay into the society’s fidelity guarantee fund. Most of the claims likely to be made against the fund because of the Tauranga solicitors’ actions had been discovered, the president of the New Zealand Law Society, Mr Graham Cowley, told the committee. The society was looking at a levy of “approximately $600” from each of its 2800 contributing solicitors to meet the known amount of claims, he said.

The fund had remained static around $1 million since 1980 and the society saw that as its minimum desirable level.

Its present balance was about $975,000. Unfortunately the fund

was now faced with substantial claims for theft by a Tauranga solicitor, Mr Cowley said. The society wanted to maintain the integrity of the fund and with it increase public confidence in solicitors. The bill, which was introduced to Parliament yesterday and is being given a swift passage, gives the society the. power to levy solicitors practising on their own account or in a partnership more than the present $lOO if it believed the amount in the fund was not enough to meet actual or likely claims. But the levy is subject to approval by the Minister of Justice.

It also removed the maximum on the $lOO annual ordinary fee. The society’s decision to go to Parliament to obtain the amendment to the law showed a commitment by the legal profession to honour the clients of the Tauranga solicitor, Mr Cowley said.

Once the bill was passed the society intended to put the information it had about the need for the one-off levy before the Minister in a matter of days. The member of Parliament for Rotorua, Mr Paul East, questioned the society about its screening procedures before admitting people into the profession.

Mr Cowley said he believed the screening process was as tight as it could be.

The numbers of solicitors who got into trouble with clients’ money was small and basically had not changed.

“What has changed is the number of noughts after the dollar sign,” he said. '

The vice-president of the society, Mr Bob Eades, said that there was a cross section of people practising as solicitors and problems were not confined to newly admitted members.