Beware when handing lawyers money, public warned
Published:Tuesday | September 7, 2021 | 12:08 AMTanesha Mundle/Staff Reporter
Members of the public, especially those who will be entrusting lawyers who practise on their own with large sums of money, are being encouraged to make serious enquiries about how their monies will be managed before retaining one.
That is the advice from attorney Allan Wood, QC, chairman of the General Legal Council (GLC), which is the regulatory body for lawyers.
It comes against the background that many clients have encountered problems in trying to recover their monies from lawyers, specifically those who operate on their own, when they die or fall ill. In some instances, the funds cannot be found.
This issue, Wood explained, is partly due to a lack of due diligence by many clients before engaging a lawyer.
“They all need to realise that they have bargaining power and that there is nothing wrong in making certain enquiries of an attorney,” he said.
In carrying out their due diligence, Wood said clients should visit the GLC’s website to check if the particular lawyer is up to to date with – and has a history of – filing an accountant’s report, which they are to submit annually once they handle monies from clients.
Clients should also check if the lawyer is current with his or her practising licence.
“If you are engaging a sole practitioner, an enquiry needs to be made about what [will] happen to my money – or what happens to my business – if you fall sick? Is there anyone who is going to carry on the practice? Is there anyone who is going to be able to access my money to pay me out?” Wood added.
For example, he said, “If a client is going to give an attorney – a sole practitioner – a house sale and $10 million to $20 million is going to be paid to that attorney, the client should be able to sit down with the attorney and discuss where is my money going to be held, and if something happens to you – you fall sick or you die – how do I get my money. And is there anybody on the account who will be able to draw on the account?”
Liability insurance
Clients should also find out whether the lawyer has professional liability insurance should anything go wrong.
The GLC chairman highlighted that in many of the cases that he has seen involving a deceased or sick sole practitioner, the council has been burdened with the task of investigating where the lawyer maintained bank accounts, whether there were other signatories on the account(s), or if the council needs to get an order from the court for the money to be paid out.
“Much of that can be avoided if the client, at the time of engaging, take precautions to ensure that there are things in place to avoid this type of problem,” Wood said.
He noted that lawyers are required to indicate in the accountant’s report where the clients’ funds are being held and whether there are signatories on the account, but in some instances, attorneys do not file their reports promptly or at all.
“We also had a case, strangely enough, where the attorney had clients’ money and the clients couldn’t be located, and there was no information available out of the attorney’s practice from the documents we saw to be able to locate these clients, and we tried to trace them but we couldn’t,” Wood stated.
In cases where the money is found and can be traced to the client, the council will pay over the money to the client, he said.
However, Wood said: “In some cases that we have had, the money can’t be located. In one instance, there was a significant shortfall, where we could not locate in excess of $20 million. We just can’t find it.”