Ontario Law Society Raises Compensation Fund to $500,000


In 1953, The Law Society of Upper Canada established a “Compensation Fund” in order to compensate clients who had lost money advanced to dishonest lawyers. Since 2008, the Fund also covers clients who lost money advanced to dishonest paralegals, to a maximum limit of $10,000. If your claim is due to a lawyer’s dishonesty, the present limit has been increased to $500,000. Prior to this, the maximum was $150,000, effective April 24, 2008. Prior to that, the maximum was $100.000. A hearing could take anywhere from 6 months to 18 months. photo by fightyourtickets.ca

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TORONTO — Anyone cheated by a lawyer in Ontario will now be eligible for up to $500,000 in compensation, more than triple the previous limit, the body that regulates the profession has decided.

In recommending the higher cap, a committee of the Law Society of Upper Canada tasked with the issue noted the last increase was in 2008, at which the time the limit was set at $150,000.

“In light of the over eight years that have elapsed since the last increase and acknowledging the mandate of the law society to govern in the public interest, the committee determined that an increase in the per claimant limit is appropriate at this time, notwithstanding the infrequency with which claims exceeding the limit are likely to arise,” the committee concluded.

Osgoode Hall. The Law Society of Upper Canada, which is housed at Osgoode Hall, provides victims of lawyer “dishonesty” up to $150,000 through a victim compensation fund. Other provinces have a higher cap. How does the Law Society of Upper Canada's Compensation Fund help clients: If you've lost money due to a lawyer or paralegal's dishonesty, the fund can reimburse you for all or part of your loss. Typically, the fund will pay for losses involving money from estates, from trust funds held for real estate closings and from settlements in legal actions.
Ogoode Hall. Where the Law Society of Upper Canada is located. photo by fightyourtickets.ca

Between Feb. 1, 2014, and Aug. 31, 2016, the fund doled out almost $7.5 million to 260 claimants, law society figures show.

The highest payout during that period — almost $1.4 million — went to 35 clients of Javad Heydary, a Toronto lawyer who took money from trust accounts before he fled to Iran in late 2013 and likely died there.

Another 10 clients of Richard Chojnacki, a lawyer from Mississisauga, Ont., received $1.08 million. His licence was revoked in October 2010 and he was jailed in 2012 after pleading guilty to fraud for embezzling money from clients.

The society established the fund in 1953 to compensate clients who lose money due to their lawyer’s dishonesty. Errors and omissions insurance, which covers negligent conduct, does not cover dishonest conduct, such as theft.

“The legal profession is considered unique in protecting clients from dishonesty in this fashion,” its report states.

Claims in other provinces vary widely. For example, Nova Scotia has no limit while Quebec’s is set at $100,000. A survey of “client protection funds” in the United States also showed wide variance in programs, ranging from limits of $50,000 to $400,000.

To cover the higher cap approved this week, the society’s 35,000 practising lawyers will have to pay another $18 a year, bringing their levy to $290.

People ripped off by paralegals can get as much as $10,000 — an unchanged amount. The fund paid 37 clients of paralegals $85,640 from February 2014 to the end of last month.

Courtroom. Mandatory minimum sentences remove the discretion from the judge hearing the case. photo by fightyourtickets.ca
A courtroom in Ontario. photo by fightyourtickets.ca


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