TRUST FUNDS

Hokitika Guardian, 8 January 1930, Page 2

TRUST FUNDS

GUAM DING AGAINST LOSS. LEVY ON LAW PRACTITIONERS WELLINGTON, January .4. The important pioneering legislation 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 ol solicitors came, into operation on New Year’s Day, and the fidelity guarantee fund which the legal profession has voluntarily undertaken to build lip for the purpose of off-setting possible defalcations will grow automatically as members take out their annual practising certificates. Commenting to-dav on the com'ng into force of the Act Hip president of the New Zealand Law Soeirtv (Mr A. Grnv. K. C.L pointed nut Hint nrobnlJv other ooun+’-ms will

■>mt bo slow to follow New Zealand’s

example. Briefly, the Act—styled the New Practitioners Amendment (Solicitors Fidelity Guarantee Fund) Act —establishes a fund not to exceed £IOO,OOO to he administrated by the New Zealand Law Society, consisting of annual contributions paid by solicitors practising in New Zealand. Out o<f it will bo 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 fund.

Under the regulation published last mouth, the Council of the Law Society has appointed a committee of management, consisting of Mr A. Gray, K. C. (president), Mr C. H. Treadwell (vicepresident,) Mr P. Levi, (treasurer,) all of Wellington; Mr A. H. 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 suffiicent to satisfy liabilities, hut 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 practice as a solicitor. To safeguard the fund, an accountant may be employed to conduct an audit of solicitors’ trust accounts and render a confidential report as to any irregularity which may be disclos|ed 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 he taken to prevent the possible misuse of clients’ moneys by solicitors' who may happen to be in embarrassed cumiinstances. The accounts of the fund are tb he 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 provision regarding procedure, and'claims for amounts not exceeding £SOO will he satisfied before claim 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,” said Mr Gray in an interview this morning, “and it is welcomed by the profession as a. whole as an earnest of the desire of its members to provide a means of indemnifying clients who may be unfortunate enough to : misplace their confidence in an advisor 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 fortunaelv 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 members oif an old and honourable profession.

“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 country by Statute in IflJd— 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’ guar-

antee fund in New Zealand has also created a great deal of interest in Australia, and the TTon. T. M. Wilford, K.C., the new High Commissioner for New Zealand, who had charge of the