SOLICITOR’S FIDELITY

Hawera Star, Volume XLIX, 9 January 1930, Page 9

SOLICITOR’S FIDELITY

THE GUARANTEE FUND

P 1 ONKERING LEGISLATEQN

PROTECTION OF THE PUBLIC

The important pioneering legislation enacted l last session at the instance ol the New Zealand Law Society with the object of affording protection to- the public against loss of trust moneys through the dishonesty of solicitors came into operation cni New Year's Day, and the fidelity guarantee fund which the legal profession has- voluntarily undertaken to build up for the purpose of off-setting possible defalcations will grow automatically as members take out their annual, practising certificates. Commenting recently on the coming into force of the Act, the president of the New Zealand Law Society (Air A l . Gray, 1 v.(.), pointed out that probably other countries will not be slow to follow New Zealand s example. Briefly, the Act—styled the Law Practitioners Amendment (Solicitors Fidelity Guarantee Fund) Act—establishes a fund not to exceed £IOO,OOO, to bp administered by the New Zealand Law Society, consisting of'annual contributions- paid by solicitors practising in 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 bis care in the course of bis practice. The council of the Law Society 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), Mi’ CL H. Treadwell (vicepresident), Mr P. Levi (treasurer), all of Wellington; Air A. FL Johnstone, Auckland; and Mr ML J. Johnstone, Auckland; and All - AT. J. Gresson, Christ church.

TO SAFEGUARD' THE! 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 practise as a solicitor. To safeguard the fund, yn accountant may be employed to conduct an audit of solicitor’s- 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 bv 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 to be in embarrassed circumstances. The accounts of the fund are to bei 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 lias 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,” stated Mr Gray, “ami it is welcomed by the profession as a whole a;s 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 iis only just to say that bv comparison 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 n-üblid in the members of an old -and honourable profession. OTHEBS-'i FOLLOW SUTT.

“Already in sonic parts of Australia mull in England the idea of a compulsory audit of solicitors’ trust accounts a system which was adopted ill this country by Statute in 103 B—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. o- U a ran too fund' in New Zealand has Slso created a great deal of interest in Australia and the Hon. 1. M. unford, K.C., the new High Commissioner for New Zealand, who had charge or the Bill during its passage through the House of Representatives, intends to take every opportunity of promulgating the ‘provisions of the new Actamongst members of the profession m England: It is quite reasonable, therefore, to expect that in the course of time the Law Society of England will adopt- some mi eh measure as New Zealand lias pioneered.” Mr Gr ay pointed out that the Act does not apply to solicitors who are not in practice on their -own account, isuc-h as persons in the Government employ or the like. It was expected that a sum of between £GOQD and £iflOO would be provided for the fund in the firstyear. That, of course, would be repeated in the second and succeeding years, and if, as seemed probable, the number, of practising solicitors still continued to increase, the fund would also grow proportionately. In addition to 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. THANKS EXPRESSED.

In conclusion, Mr Gray expressed indebtedness on behalf of the legal profession to the Government for the facilities it had afforded tor the pie-parat-ion and passage of the measure in the recent Parliamentary session. He referred particularly to the Prime Minister (the Right Hon. Sir Joseph Ward), who allowed the Bill to be brought in as a Government measure; to the Chief Law Draft-man (Mr James Christie), who had drafted it; to Sir Thomas Sidey, who took a great part in the preliminary work of preparing the Bill, and who had charge oi it in the Legislative Council; and to the Hon. T. M. Wilford. K.C.. who piloted it through the House of Representatives.