On March 4, 2013, an article titled “The profession’s dirty little secret” appeared in The Law Times. We feel that portions of the article confuse the distinction between errors and omissions insurance and client compensation funds. We also feel the article gives readers the incorrect impression that a large portion of LAWPRO’s claims expenses are related to lawyer defalcations. While we posted a comment to the online version of the article to clarify the above points, length restrictions prevented us from posting a more detailed clarification. This post contains our full clarifying comments.
LAWPRO insures Ontario lawyers with respect to their provision of professional legal services as defined in the LAWPRO policy. A lawyer’s intentional misappropriation of client or firm funds does not fall within that definition, and intentional fraudulent acts are not covered under the LAWPRO policy.
While it is quite true that the cost to LAWPRO to resolve 2012 claims is estimated to be approximately $100 million, those costs do NOT represent compensation for lawyer defalcation, but rather relate to indemnity and defence costs for lawyer errors and omissions: Non-fraudulent mistakes and instances of negligence, and/or to the cost of successfully defending claims alleging such errors.
Where a client has suffered a loss due to lawyer defalcation, his or her proper recourse is not to LAWPRO, but rather to a fund designed to compensate client victims of illegal activity on the part of lawyers. In Ontario, this fund is administered by the Law Society of Upper Canada, and is funded entirely by Ontario lawyers.
The above comments relate to Ontario. If you are in another province, check your Law Society website, as the E&O programs and compensation funds operate differently in different jurisdictions.