SOLICITORS’ FIDELITY FUND IS NOW IN OPERATION.

Star (Christchurch), Issue 18960, 6 January 1930, Page 7

SOLICITORS’ FIDELITY FUND IS NOW IN OPERATION.

New Law Will Prevent Losses To Public By Defalcations

The important pioneering legislation 1 enacted last session at the instance of < 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 on 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 on Saturday on the coming into force of the Act, the president of the New Zealand Law Society (Mr A. Gray, K.C.), states the “Post,” 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 be 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 his care in the course of his 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 found. 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), Mr C. 11. Treadwell (vicepresident), Mr P. Levi (treasurer), all of Wellington; Mr A. 11. Johnstone, Auckland; and Mr M. J. Gresson, Christchurch. 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 solici tor. To safeguard the fund, an accountant may be employed to conduct an audit of solicitors' trust accounts and render a confidential report as to anv irregularity which may be disclosed or any other matter that may require investigation. This power is in addition to the existing provision by 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 be 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 has 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 the president of the New Zealand Law

Society (Mr Gray), “and it is welcomed by the professions as a whole as an earnest of the desire of its members to provide a means of indemnifving 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 is only just to say that by 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 public in the members of an old and honourable profession. OTHERS FOLLOW SUIT.

“Already in some parts of Australia and in England the idea of a compulsory audit of solicitors’ trust accounts —a system which was adopted in this countp' by Statute in 1913—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’ guarantee fund in New Zealand has also created a great deal of interest in Australia, and the Hon T. M. Wilford, K.C., the new High Commissioner for New Zealand, who had charge of the Bill during its passage through the House of Representatives, intends to take every opportunity of promulgating the provisions of the new Act amongst members of the profession in England. It is quite reasonable, therefore, to expect that in the course of time the Law Society in England will adopt some such measure as New Zealand has pioneered.” Mr Gray pointed out that the Act does not apply to solicitors who are not in practice on their own account, such as persons in the Government em ploy or the like. It was expected that a sum of between £6OOO and £7OOO would be provided for the fund in the first year. That, of course, would be repeated in the second and succeeding year and if, as seemed probable, the number of practising solicitors still con tinued to increase, the fund would also grow proportionately. In addition to the sum which it had been decided to ievy, there was the safeguard of the further levy which might be made if by any chance circumstances should require it.

In conclusion, Mr Gray expressed indebtedness on behalf of the legal profession to the Government for the facilities it had afforded for the preparation and passage of the measure in t. w recent Parliamentary sessions. 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 Draftsman (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 of it in the Legislative Council; and to the Hon T M. W ilford, K.C., who piloted it through the House of Representatives.