Compensation Fund policies and procedures

A. GENERAL

1. These Policies and Procedures describe how claims for compensation will be reviewed and decided at the Compensation Fund. They should be read in conjunction with the Guidelines, which assist in the exercise of the Fund's discretion pursuant to the Law Society Act, R.S.O. 1990, c.L.8, s.51, as amended.

B. NOTICE TO THE COMPENSATION FUND

2. General two-year limitation: Any person who believes that they may be eligible for compensation for a loss due to dishonesty by a lawyer or licensed paralegal should contact the Compensation Fund in writing, as soon as possible after the loss is discovered. The Law Society Act says that notice must be given within a maximum of two years after the loss came to the knowledge of the person suffering it.

3. Deemed notice: Notice is deemed to be given to the Compensation Fund when information about a potential claim is received by the Law Society. This could be in the context of a complaint about a lawyer's or licensed paralegal's alleged misconduct

C. LIMITED TO ONTARIO

4. Apart from claims made pursuant to the National Mobility Agreement, as specified in that Agreement, the Compensation Fund does not deal with claims where the lawyer or licensed paralegal is practising outside Ontario and the loss resulting from that person's dishonesty happened outside Ontario.

D. INQUIRIES AND POTENTIAL CLAIMS

5. Determining jurisdiction: The first step in assessing a potential claim is to determine if the claim falls within the Compensation Fund's mandate, or jurisdiction. If so, the Fund will send the claimant an application form which must be completed and sworn in front of a Commissioner for Oaths and Affidavits. If not, staff will send a letter explaining why not. Sometimes staff will ask for additional information from the claimant to help determine whether or not the claim is within the Fund's mandate.

6. Deadline for returning application form: An application form sent to a claimant should be completed and returned to the Compensation Fund within six (6) months. The Fund reserves the right to refuse to consider a claim after the six-month period has expired, unless the claimant provides a satisfactory, written explanation for the delay and requests an extension.

E. APPLICATION FORM

7. Completion of application form: The claimant must complete the application form truthfully and thoroughly, to the best of his or her ability. The application is a sworn document. Any deliberate falsehood or misrepresentation will automatically result in the denial of the claim.

8. Proof of authority to apply on behalf of another: A person applying for a grant on behalf of another person or on behalf of an estate is expected to provide proof of his or her authority to do so. Such proof could include a copy of a will naming a personal representative, a power of attorney, a court order, etc.

9. Licensee's opportunity to comment on application: Where feasible, the Fund will give a copy of the application form to the lawyer or paralegal whose alleged dishonesty is the subject of the claim. That person will be given an opportunity to comment on the application.

F. EVIDENCE

10. Satisfactory proof: The claimant is responsible for furnishing satisfactory proof of the claim. What is satisfactory proof will vary from case to case, depending on the nature of the allegations against the lawyer or licensed paralegal, as well as the degree of difficulty involved in obtaining evidence. Proof that funds were advanced to a lawyer or paralegal could include, for example:

  • Receipts issued by the lawyer or paralegal
  • Statements of account from the lawyer or paralegal
  • Bank records of the claimant
  • Cancelled cheques issued by the claimant or on the claimant's behalf

11. Lack of cooperation: Because the Compensation Fund is discretionary, the Law Society reserves the right to refuse to consider a claim if the evidence requested is not provided in a timely fashion or if a claimant is otherwise uncooperative.

12. Evidence from other Law Society activities: In considering a claim to the Compensation Fund, staff may obtain and consider evidence assembled by the Law Society in the course of other regulatory proceedings involving the same licensee, including complaints, investigations, discipline proceedings and trusteeships.

G. DECISIONS

13. Basis for exercising discretion: The Law Society will apply its discretion to pay or refuse to pay a grant in a manner consistent with the Law Society Act and the Guidelines. A decision to pay or not pay is final.

14. Fund of last resort: The Compensation Fund is a fund of last resort. Before considering a claim for compensation, the Fund may ask for proof that other reasonably available avenues for recovery have been exhausted. The Fund will sometimes postpone a decision on a claim until the conclusion of external legal proceedings, for instance a civil lawsuit against a lawyer or paralegal licensee.

15. Criminal conduct: Where a claim arises in circumstances suggesting criminal conduct on the part of a lawyer, paralegal or any other individual, the Law Society may, before considering the claim, require proof that the matter has been reported to law enforcement. Such proof might include, for example, a copy of a formal police report.

16. Timing of grant decision in relation to other proceedings: The timing of when a claim will be decided will vary from case to case. In some situations, there will be enough persuasive evidence to justify a grant even before an investigation or formal discipline has finished. In other situations, the Compensation Fund will have to wait for the completion of an investigation and possibly the conclusion of formal discipline before a claim can be decided. This is likely to happen, for example, when there are serious disputes as to the credibility of the claimant or the lawyer or paralegal licensee, or both. It can also happen when the Compensation Fund needs to rely on a formal finding by a Hearing Panel that the lawyer or paralegal was dishonest before making a grant.

17. Staff and Committee roles: Staff counsel have discretion to authorize the payment of grants of $5000 or less in respect of lawyer dishonesty and $1500 or less in respect of paralegal dishonesty. Grants in excess of these amounts must be approved by the Compensation Fund Committee on the written recommendation of staff. The Committee has the discretion to accept or reject a staff recommendation, to refer certain issues to a Claims Officer, as set out below, or to send a claim back to staff for further review and/or analysis.

18. Licensee's opportunity to comment on recommendation: Where feasible, the Fund will give a copy of a draft decision or recommendation to pay a grant to the lawyer or paralegal whose dishonesty is the basis for the grant. That person will have a reasonable opportunity to comment on the recommendation.

19. Claimant's opportunity to comment: A staff decision not to recommend payment of a grant will be communicated to the claimant in writing. The claimant will have a reasonable opportunity to respond and explain the basis for any objection to the decision not to recommend a grant. The claimant's response will be reviewed and considered by the Fund and the claimant will be informed of the outcome of the review.

20. Releases, waivers and assignment: Before a claimant can receive a grant, he or she must fill out and sign the releases, waivers and assignments that the Fund supplies. If a judgement or right of action is assigned to the Fund, this means that the claimant will give up some of his or her own rights to recover from the lawyer or paralegal in exchange for the grant from the Fund.

H. CLAIMS OFFICERS

21. Roster of Claims Officers: Pursuant to section 4.2 of By-Law 12, the Compensation Fund Committee will, from time to time, appoint a roster of persons eligible to serve as Claims Officers and will specify the term for which each Claims Officer will serve.

22. Selection of Claims Officer: The Committee may, at its sole discretion, appoint a Claims Officer from the roster to assist with the Committee's determination of any claim for compensation, the estimated potential value of which exceeds five thousand dollars ($5000) for a claim involving a lawyer licensee or fifteen hundred dollars ($1500) for a claim involving a paralegal licensee.

23. Basis for appointment: The Committee may appoint a Claims Officer either on its own initiative or at the recommendation of staff.

24. Appointment decision is final: The Committee's decision to appoint or not appoint a Claims Officer to assist with the determination of a claim is final and not subject to further review.

25. Issues that may be referred: The Committee may refer any question, other than a question of law, to the Claims Officer to assist the Committee in determining a claim for compensation. The following are examples of issues that could be referred to a Claims Officer:

  1. An issue with respect to whether the claimant has in fact suffered a loss.
  2. An issue with respect to whether the claimant's loss is the result of the licensee's dishonesty, and/or some other factor(s).
  3. An issue with respect to the claimant's credibility.
  4. An issue with respect to whether a licensee has been "dishonest" in his or her handling of funds advanced by thisclaimant.
  5. A discrete factual issue with respect to the applicability of one or more guidelines (for instance, was the claimant careless? was this an investment scheme? etc.)
  6. An issue as to when the loss came to the attention of the claimant, i.e., was the Fund notified outside the limitation specified in section 51 of the Law Society Act
  7. Any other issue requiring a Claims Officer to receive and consider oral testimony by a claimant, licensee or other person, or receive oral and/or written submissions from parties, including the Law Society, and make recommendations for the Committee's consideration

26. Referral memorandum: Where a Claims Officer is appointed the Committee will set out in a written memorandum to the Claims Officer, with copies to the claimant, the licensee whose alleged dishonesty is the subject of the claim, and the representative of the Law Society :

  1. The specific issues of fact and/or mixed law and fact to be considered by the Claims Officer
  2. The mode of procedure and process to be followed by the Claims Officer including whether an oral or other form of hearing is required
  3. The deadline for the Claims Officer to report to the Committee
  4. Any other instructions that the Committee considers relevant to the work of the Claims Officer and to its ultimate determination of the claim for compensation.

27. Further instructions: The Claims Officer may, at any time, ask for further instructions from the Committee or for clarification of existing instructions.

28. Hearings in accordance with SPPA: Where a Claims Officer has instructions from the Committee to conduct a hearing, the hearing shall be conducted in accordance with the Statutory Powers and Procedures Act, as amended.

29. Opportunity to comment on report: Prior to submitting a report to the Committee, the Claims Officer shall provide the report to the claimant, to the representative of the Law Society, and to the lawyer or paralegal licensee whose dishonesty is the subject of the claim for compensation. The Claims Officer shall invite the parties to make written submissions on the Claims Officer's report within three (3) weeks or such longer time as the Claims Officer may stipulate. Any such submissions shall accompany the report when it is submitted to the Committee by the Claims Officer.

I. COSTS

30. General: The Compensation Fund will not generally compensate claimants or their representatives for the expenses involved in submitting a claim.

31. Exception: In rare circumstances, and at its sole discretion, the Fund may consider a small payment, not to exceed $500, to a claimant's counsel where that person has provided pro bono assistance to the claimant in preparing the claim.

32. Costs in Claims Officers matters: At his or her sole discretion, a Claims Officer who conducts an oral or other form of hearing may, upon receiving and considering submissions from the parties, recommend that the Compensation Fund Committee pay the costs of the hearing out of the Fund. In such circumstances, the Claims Officer shall not recommend that the Compensation Fund make payment of an amount that exceeds the tariff stipulated for costs in Law Society Tribunal matters, as set out in the pertinent Rules of Practice and Procedure.