Ontario: Law Society of Upper Canada is Considering Raising Compensation for Victims of Unscrupulous Lawyers/Paralegals

Update: see previous post – December 10, 2013 Ontario: Does the Law Society of Upper Canada Have To Raise the Maximum Compensation to Victims Under the Compensation Fund?

Benchers approved changes to the guidelines of the compensation fund last month after a victim who lost $930,000 in a mortgage fraud orchestrated by disbarred Mississauga lawyer Mario Mazzucco challenged the rules of the fund in a Divisional Court. (Mazzucco was sentenced to six years in a federal penitentiary after pleading guilty to two counts of fraud over $5,000).
Benchers approved changes to the guidelines of the compensation fund last month after a victim who lost $930,000 in a mortgage fraud orchestrated by disbarred Mississauga lawyer Mario Mazzucco challenged the rules of the fund in a Divisional Court. (Mazzucco was sentenced to six years in a federal penitentiary after pleading guilty to two counts of fraud over $5,000).

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Victims of theft and fraud by lawyers in Ontario could soon be eligible for more compensation from the Law Society of Upper Canada.

The law society, which regulates the profession in the province, has reopened discussions about whether to raise — or even eliminate — the $150,000 per claim limit on its victim compensation fund.

“Claims from the public involving lawyer dishonesty are actually really important to us, that they are handled appropriately, so this is something we need to look at,” said Toronto lawyer Peter Wardle, a law society bencher and chair of the compensation fund committee.

New rules which were introduced in the wake of a recent court decision don’t include any changes to the cap.

The decision to reconsider the cap on compensation comes after the Star reported that victims of lawyer fraud in Ontario are eligible for less compensation than almost anywhere else in Canada, despite the fact that there are more lawyers here than in any other province. The fund is paid for with annual fees from the law society’s 40,000 members.

Osgoode Hall - The Law Society of Upper Canada
Osgoode Hall – The Law Society of Upper Canada. The Law Society of Upper Canada is looking at boosting compensation for victims of theft by lawyers.

The law society has said it could not recall a case in which the cap was waived. In almost every other province, the limit on victim compensation offered by law societies is either non-existent, or higher than in Ontario, with flexibility to increase it in certain cases, the Star found.

In addition to considering whether to raise the cap, Wardle said the possibility of eliminating it altogether is “on the table.”

“Jurisdictions all around North America do it differently. There are some that have a lower per claim limit, some have no per claim limit, some have per lawyer limits. We are going to look at all of that,” he said.

Compared to jurisdictions in Canada and the U.S., Wardle said Ontario’s limit is “nowhere near the lowest and nowhere near the highest.”

The cap was raised to $150,000 from $100,000 in 2008. About 95 per cent of claims the Law Society of Upper Canada receives are below the limit, Wardle said.

However, as several recent high-profile cases have illustrated, some thefts and frauds by lawyers leave victims with losses that far exceed the limit.

Toronto lawyer Javad Heydary fled to Iran in November amid allegations that more than $3 million in trust funds belonging to a Mississauga couple were missing.

Benchers approved changes to the guidelines of the compensation fund last month after a victim who lost $930,000 in a mortgage fraud orchestrated by disbarred Mississauga lawyer Mario Mazzucco challenged the rules of the fund in a Divisional Court. (Mazzucco was sentenced to six years in a federal penitentiary after pleading guilty to two counts of fraud over $5,000).

The Law Society of Upper Canada
The Law Society of Upper Canada

The court ruled that the law society has the right to set limits on victim compensation.

According to a law society spokesman, the new guidelines “use clearer language and are better organized to explain who can make a claim, how grants are calculated and what types of losses are wholly or partially excluded.”

“New, plainer language will help claimants understand why a grant can or cannot be recommended,” he told the Star in an e-mail Wednesday.”

The new guidelines do not change the per-claim limit or the way the law society handles claims.

Any further changes to the compensation fund would also have to be approved at convocation, a regular meeting of law society ben

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