FIDELITY GUARANTEE

Evening Post, Volume CIX, Issue 144, 21 June 1930, Page 9

FIDELITY GUARANTEE

THE SOLICITORS' FUND

APPROVAL AT HOME

(From "The Post's" Representative.) LONDON, Bth May.

In an article in the Solicitors' Journnal," the working of the Law Practitioners Amendment (Solicitors' Fidelity Guarantee Fund) Act, 1929, is explained in some detail. It is pointed out that section 23 of the New Zealand statute gives power to inquire into the affairs of firms which for any reason are under suspicion. "The audit of tho accounts, of a big firm of family solicitors who failed with liabilities running into hundreds of thousands of pounds, would of course, be an extraordinarily difficult matter," says the writer of the article, "especially if the partners were hostile. Such firms in the course of business deal with largo sums of cash on behalf of dozens of different clients, and misappropriai tion, and concealment or misappropriation, is particularly easy. The auditor's task, however, though difficult, might yet result in exposing a long-concealed insolvency, and preventing further loss. The New Zealand statute, therefore, No. 15 of 1929, is certainly worth the consideration of the profession here, and could no doubt be modified so as to be made the basis of a somewhat less ambitious scheme in this country." ■ •

The subject is also dealt with in tho "Daily Telegraph." The writer recalls that about thirty years ago two or three big firms of family solicitors in London failed for hundreds of thousands of pounds, the head of one being sent to penal servitude, while the head of another only escaped that fate by committing suicide. It was a matter of general knowledge in the profession that both firms were insolvent, but naturally other solicitors had to be careful of libel, and could only wait until tho 'equivalent of a "run on the, bank" came about, with consequent collapse. THE FUND COMMENDED. "It is, no doubt, the small cases whic bring discredit on the profession generally," the writer continues, "for tho educated classes and business men, who are usually trustees of large estates, should be able to protect themselves. "It may be remembered that Armstrong, who was hanged for murdering hia wife, inado a strenuous attempt to murder another solicitor, because he was unable to produce money which had been entrusted to him by a purchaser of land, while the other solicitor, representing the vendor, was pressing him to complete the matter. "Possibly then it might be iiijthc best interests of tho profession to establish such a guarantee fund as that now to be raised in New Zealand, witli some limit on the amount to bo paid to any one person—in New Zealand there does not appear to be siich a limit —and perhaps confined to the honesty of solicitors personally, and not of their clerks. Such a fund would, of course, bo protected, as in New Zealand, by giving the trustees of it. certain powers of audit of a firm's accounts in case of suspicion, or even ' power to exclude them altogether from the scheme on notice to the public. "The establishment of the fund would no doubt prove that solicitors generally placed the highest possible value on the honour of their profession."