LEGAL FIDELITY FUND.

New Zealand Herald, Volume LXVII, Issue 20642, 14 August 1930, Page 8

LEGAL FIDELITY FUND.

PROTECTION FO.K CLIENTS, FEES NEARLY £IO,OOO A YE'AR* LARGE ACCUMULATION POSSIBLE* Probably between £9OOO and £IO.OOO will be accumulated in Uie New Zealand solicitors' fidelity guarantee fund by the end of this year. Tlie amount, of .course, will depend on Hie extent of the claims, if anv. which are established for the reimbursement of moneys stolen by a solicitor or his servant or agent. The fund came into operation at the beginning of this year, under an Act passed during the last session of Parliament for the purpose of protecting solicitors' clients against pecuniary loss due to dishonesty. Every solicitor practising in'the Dominion is required to pay a contribution of £5 5s to the fidelity fund this year, that sum having been fixed by (lie council of the. New Zealand Law Society, which administers the fund, arid may vary th» annual fee between limits of £5 and £lO. The membership of the society is about 1800, of whom 642 are in the Auckland and Hamilton districts. The f.ees payable this year, therefore, total about £9500. Contributions to Fund. No limit* to the amount of an individual reimbursement which may be claimed frpra the fund is stated in the Act. The possl* bility of claims being either very heavy in' the aggregate or very light is obvious. These alternatives were envisaged in two of the provisions of the legislation which set up the fund. One is that, if at any time the fund is insufficient to satisfy the liabilities of the New Zealand Law Society in relation to it, the council may impose a levy not exceeding £lO, in addition to the ai-nual fee, there being a proviso that no solicitor shall be required to pay by way of levy more than £SO during the whole period of his practice. On the other hand, there is a provision that solicitors shall not. be required to make further contributions if the fund amounts to not less than £IOO.OOO. If claims are. small for a few years the annual fees, with the addition of the growing return from investment of the money, may easily accumulate until that large figure is reached. It is possible that the fidelity scheme might then be selfsupporting, not requiring the collection of further annual fees, especially as the council has power to enter into insurance con- ; tracts, and may thus spread- over a num. ' ber of years the burden of any unusually large claims. Wide Protection to Clients. The scheme under which the,, fidelity guarantee fund is being operated offers a wide protection to persons who entrust the handling of money or other property to their solicitors. A client who is unable to obtain a satisfactory statement from his solicitor should lay the matter before the council of the District Law Society, which has power to appoint an accountant to make an investigation of the affairs of the solicitor and supply a confidential report to the council. In this way it may be possible to check an irregularity and sti minimise the loss resulting from it. It is important for persons who suffer loss to observe thr.t no claim against the fund will be recognised unless written notice has been given to the council within 12 months after the claimant has become aware of the theft. The council may receive and settle a claim at any time after tlie theft, but no claimant is entitled without the leave of the/council to commence an action against the fund, unless lie has exhausted all legal remedies against the defaulting solicitor or other persons concerned. The Auckland District Law Society is drawing the attention of the public to the existence and purpose of the fund. Up to the present no claim against the fund has been established in this district.