TRUST FUNDS

NZ Truth, Issue 1168, 19 April 1928, Page 4

TRUST FUNDS

Legal Juggler Is A Menace Misappropriation of trust funds and juggling' with trust accounts has become so prevalent among law practitioners m New Zealand that the average citizen wonders when measures more effective than those already embodied m the Law Practitioners' Act, 1908, and its several amendments, will be taken to protect him. THE man m the street certainly has 1 cause for his anxiety, but it is a mistake to assume that the present alarming state of affairs has not caused the various law societies, as well as the Justice Department, grave concern. For years the problem of law practitioners' trust accounts haa exercised the minds of legal men, who realize the danger of the present system. Any system which would prevent juggling with trust accounts or straight-out misappropriation would be welcomed by New Zealand's law societies, but so far none has been thought out which would stand the test. The human element is the weak link m every system." If a legal practitioner — or any professional man, for that matter — is determined to rob his clients or his employer, he will do so provided he is given the opportunity to carry out such an intention. Even m the most rigid system which could be evolved and enforced, efficacy depends purely on the personal integrity of the human element under which it functions. There can be no argument about the imperfections of the present system of Government audit-check on legal trust accounts. ' Such trust accounts are subject to Government audit every twelve months and each law practitioner is given three months m which to furnish a certificate of correctness. It has been contended that more frequent audits would to some extent minimize the chances offering the unscrupulous practitioner to rob his clients. The law societies do not hold this view — neither, apparently, does the Justice Department. "N.Z. Truth" is certainly m agreement that more frequent checks, unsupported by other measures, would be sheer waste of time. "Truth" contends that the law societies — and the Justice Department, too — -must go deeper into the causes contributing towards this alarming betrayal of trust on the part of individuals whose very position adds to the difficulties of prevention and detection. Far better to face the issue squarely than to tinker about seeking a solution, which, at most, will only be as sound as the human element will allow it to be — without m any way minimizing the danger. AMEND THE ACT If the individual m the community is determined to go crooked rather than straight, then there is a law to deal with him. In the case of the law practitioner who is guilty of betraying his trust, it is seldom that he is proceeded against on a criminal charge, his punishment usually taking the form of suspension from practising his profession or having his name struck off the roll. Why not amend the Act and leave the Court of Appeal no alternative but to strike off the rolls' any law practitioner who is guilty of embezzling trust funds or who has been adjudged guilty of tampering with — or falsifying — trust accounts? Amend the law and let it be clear and definite m its intention, with no provisions as to the degree of guilt where it is proved conclusively that there has been theft of funds or juggling with trust accounts. It is surely easy enough to determine when a purely technical offence has been committed, but if possible the Act should be no amended as to prevent any loophole for escape or leniency on the • trumped-up grounds of a "technicality.". With such drastic penalty always m sight, "Truth" submits that there would be less rascality and legalized robbery perpetrated m the ranks of the legal profession. Why not also provide for criminal prosecutions m cases of misappropriation? Three years ago the law as a profession was overcrowded. Notwithstanding .this fact, our universities have been churning out young solicitors by the score — turning them loose on fields already overburdened far above their capacity. The majority of these young men go straight from the university to the courts, minus practical experience — fully-fledged solicitors at the age of twenty-one! They are entitled to take jjver the affairs of an estate which may involve the handling and investment of thousands of pounds; they are m a position where any member of the public— the individual would certainly nave to be incredibly stupid! — may entrust to them any sum from a £5 note to £1000 security. * What experience have these young theorists had m the management of business affairs? What do they know about financial investments? In this direction there is urgent need for an amendment of the Law Practitioners' Act. No law practitioner should be permitted to handle trust money until he has had at least five years' practice as a solicitor. This overcrowding of the profession — and the absence of any provision enforcing at least five years' practical experience m the office of a fullyqualified member of the profession — are certainly contributing factors towards dishonest practices and unprofessional conduct. If five years' practical law work were made part of the student's law course, there would be less overcrowding and the danger arising from inexperienced and youthful practitioners handling trust funds would be almost eliminated.