"AvoidAClaim" Blog

We had flurries last night here in Ontario – but we’re not fooled: spring is around the corner. Time to roll up the slush mats and slide in the bug screens.

 We challenge you, in the next month or two, to bring a little of the spirit of spring cleaning to your legal practice. What do we mean?

When work gets busy, many of us put certain non-mission-critical tasks on hold. But it’s important to remember that “on hold” should not be allowed to turn into “lost in the mists of time”. Lawyers must develop the discipline of regularly returning to and addressing the non-urgent details of their practice when opportunities present themselves.

You will know best what needs addressing in the course of your spring cleaning, but if you need some inspiration, here are our suggestions:

• Bill your files, and send reporting letters for matters that you’ve completed.
• Identify languishing files, and take the next step in each one. If you have no clear instructions for a particular file, call the client and find out how he or she wants to proceed.
• Make a list of good former clients for which you have no current work, and contact each of them to see if they have any legal needs (they may be doing their own spring cleaning!)
• Send thank-you notes. Handwritten ones, so rare these days, really make an impression.
• Book your vacation time, approve staff vacation requests, and identify the CPD events you will attend this year.
• File your taxes.
• Review your non-financial goals for the previous year. What did you achieve? Where did you miss the mark? What would you like to achieve THIS year?
• Address staffing issues: complete employee performance reviews, post job openings (and follow through with recruitment); make arrangements to cover staff leaves.
• Review your office lease, utilities, and your supplier contracts. Are you running your business efficiently?
• Consider your office technology and software. Does anything need updating? Are your antivirus subscriptions up-to-date?
• Tackle your reading pile, focusing on identifying news and legal developments in your particular area of law.
• Update your LinkedIn profile.
• Update your CV, bio, and your accomplishments file.
• Review your business card.
• Organize your email inbox, ensuring that client correspondence is properly filed.
• Shine your shoes, dry-clean your suits, and walk through your waiting area an office space as though you were seeing it for the first time. Does your office make an organized and professional impression?

When you feel like you’ve done a good job dusting out at least most of the cobwebs of your practice, shut the door behind you and take a walk in the spring sunshine. We think you’ll be surprised how energized and positive you feel about your work once the details are under control.

Ten lawyers in Ontario and the US have notified us that they have received an email from the purported Hiro Hayato of Chiyoda Electronics Co with regards to a commercial debt litigation scam. For examples of other names attached to this kind of fraud see our Confirmed Fraud Page. For an explanation of how this fraud works see our Fraud Fact Sheet.

Here is the initial email:

From: Chiyoda Electronics CoLtd [mailto:chiyodaelectronicscoltd@gmail.com]
Sent: February-25-13 7:31 PM
To: lawyer email
Subject: Legal services

Hiro Hayato
Accounting Officer,
Chiyoda Electronics Co.,Ltd.
3-9, Sotokanda 3- Chome, Chiyoda-ku, Tokyo
Zip: 101-0021
EMAIL: chiyodaelectronicscoltd@gmail.com

How to handle a real or suspected fraud (more…)

Many lawyers assume that simultaneously acting for members of the same family and their business or corporate entities is relatively safe from fraud and conflicts issues. After all, the parties all know each other and everyone is on good terms.

Unfortunately, this is just not the case. An analysis of LAWPRO claims files tell us that there is actually a greater likelihood of a fraud or conflicts of interest issue when clients are related to or know each other.

Understanding when and why malpractice claims arise when work is done for related clients can help you avoid a claim.

When do these types of claims arise?

In the estate and real estate contexts, problems often result when there are dealings with a property that is owned by a parent and child, or by siblings. On a will matter, allegations of undue influence or lack of ILA are often made when one family member appears to receive more than others under the will, or where it is unclear whether there was a gift or pre-taking when property is received before death.

In a real estate transaction, problems can arise after a mortgage is placed on a property and it is alleged that one sibling has received preferential treatment. Mortgage transactions involving spouses commonly lead to claims where one spouse is giving security but not receiving the benefit of the mortgage advance. Typically the lawyer is acting for both spouses and the mortgagee; when the mortgage goes into default a non est factum or undue influence defence is thrown up, and the mortgagee adds the lawyer into the action. It is vital in this scenario that the spouses be separately represented.

On the real estate fraud front, we have seen several high profile cases in Ontario in which a family member was the first true victim of the fraud, often because a power of attorney was fabricated or used incorrectly by another family member. Spousal impersonation has also been a problem for many years. Further complications arise because it can be challenging to establish the good faith of the alleged victim once a family member, now outside the jurisdiction, obtained significant proceeds from a real estate fraud.

In the business or corporate context, claims often arise when lawyers do work for both a corporation and its individual shareholders, or formultiplemembers of a partnership. As long as everyone involved is getting along, headed in the same direction and making money, all is fine. But circumstances change, often in unexpected ways. There can be unanticipated costs or even financial losses, marriages breakup, people lose interest and decide they want to cash-out or sell their interest, and so on. When changes such as these occur, clients who once all wanted the same thing now want very different things. As a result, duties of confidentiality and loyalty can become very complicated, and even irreconcilable.

Defending conflicts of interest claims is complicated and tends to be more costly than other the types of claims LAWPRO handles. LAWPRO is also seeingmore “fail to warn” claims. These occur when a lawyer doing work for multiple people and/or entities makes a seemingly innocuous comment to one of the clients. Due to changed or unexpected circumstances, that comment ends up giving that one client an advantage, and the clients that didn’t get the benefit of that comment allege a “fail to warn.”When you are acting formultiple people or entities, take care tomake sure all communications and advice reach all clients. Indeed, when it comes to avoiding conflicts, the best defense is a good offence. Be extra vigilant in looking for potential conflicts when you are doing work for related individuals or entities, both at the start of the matter and as it proceeds.

Don’t let your guard down

When handling a file for clients who are family members or know each other, lawyers seem to let their guard down and miss or do not followup on things that are slightly out of the ordinary. The situation can become even worse when the lawyer has become an acquaintance or close friend with one or more of the clients.

In this situation, it also seems lawyers are more likely to take shortcuts at various stages in a matter, including:

• not following formal file opening process, and, in particular, not doing a proper and full conflicts of interest check;
• not opening a file and doing “off-thebooks” work;
• not documenting the file or keeping time dockets;
• skipping appropriate or necessary searches;
• not following up or completing tasks to be done by client or lawyer; or
• not sending interim or final accounts and reporting letters

When shortcuts are taken, things will be missed, mistakes will be made, and malpractice claims will result. For the reasons stated above, when clients know each other it is even more critical that you jump through all the procedural and legal hoops.

Most lawyers are surprised that they are more likely to get a claim where clients are related or know each other. Please be aware of your greater exposure in this circumstance, and don’t let your guard down.

This article is from the Winter 2008 “Personality & Practice” edition of LAWPRO Magazine. All past LAWPRO Magazine articles can be found at www.lawpro.ca/magazinearchives

This bulletin from the Ministry of Government Services has come to our attention:

In 2008, the Ministry of Government Services introduced new criteria related to obtaining authorization to register documents in the electronic land registration system (ELRS) in accordance with the Land Registration Reform Act.

In order to obtain authorization, Teraview account holders are required to satisfy the Director of Land Registration that they meet the new criteria. They are also required to enter into a Registration Agreement with the Ministry, under which the account holder has certain obligations, among them, ensuring all those who hold a personal security license (PSL) under the account to submit documents electronically for registration are in compliance with the terms of the agreement. Once the Director is satisfied that the requirements are met, authorization is granted for a period of no less than five years.

The first of the Registration Agreements executed under this process will begin to expire in early 2013. The Notice of Decision document sent to account holders upon authorization contains the specific expiration date for each account.

The Ministry has performed a review of the authorization files and is currently finalizing a streamlined process for the renewal of authorizations. Account holders will be provided further information about the process over the next several months.

In order to ensure continuity for account holders during this time, the Ministry is extending the expiry date of Registration Agreements that expire within the months of January through to and including September, 2013, to September 30, 2013.

During this extension period, account holders will continue to be bound by the terms of their Registration Agreement. Continued use of the electronic land registration system for the purpose of submitting documents electronically for registration will constitute account holders’ acceptance of the terms of this extension.

New Teraview account holders who have not yet obtained authorization from the Director of Land Registration to register documents electronically must continue to use the existing application process. Information about this process, including the application guide and required documentation, are on the ServiceOntario website at www.serviceontario.ca/landregistration, by selecting ‘Electronic Registration’ from the menu on the left side of the page.

Questions regarding authorization renewals, the extension period, or new applications may
be directed to the Ministry at (416) 314-3138 or toll-free at 1-866-262-8135.

Effective file management provides the foundation for timely, valuable client service and appropriate management of client matters. Here are some resolutions to help you complete the critical steps in file management:

• I will complete a conflicts check before opening a file: Conflicts of interest can lead to ugly and expensive malpractice claims. The best time to catch and avoid a conflicts claim is during a thorough conflicts search before a file is opened. A thorough search looks for conflicts involving both the client(s) and others connected with a matter.
• I will open a file for every matter I handle: Doing “off-books” work not only bypasses firm administrative procedures and checks, it often leads to short-cuts and mistakes. Open a file for every matter you handle to make sure that the file is properly handled.
• I will use a tickler system for limitations periods and time sensitive tasks: Missed deadlines and procrastination are the second most common cause of malpractice claims. A formal tickler system that tracks critical deadlines and tasks is the best way to avoid missing deadlines.
• I will have signed retainer agreements or engagement letters in all my files: Start out on the right foot with a written retainer letter or agreement. It establishes your terms of engagement and should clearly identify who the client is and what you are retained to do.
• I will send a final reporting letter at the end of every retainer: A final reporting letter clearly signals the end of a retainer to a client. Along with a final account, it should summarize the work that was done for the client, including outlining the key terms of any documents or agreements, the outcome of the matter and any ongoing steps or obligations that the client has.
• I will not handle matters I am uncomfortable with: Dabblers are more likely to face a malpractice claim. If you are unsure or hesitant about handling the matter for any reason (e.g., unfamiliar with the area of law, a potential conflict exists, a matter for a relative or friend, or a demanding or difficult client), get appropriate help or refer it to another lawyer.

Click here to see the full list of resolutions taken from New Year’s resolutions for a healthier law practice and a new you, which appeared in the December 2012 issue of LAWPRO Magazine.

• I will enter target dates a few days early to avoid last minute complications. Unforeseen circumstances can arise on the day a document needs to be filed. Setting your target date a few days before a deadline could prevent a snow storm, traffic jam or sick-at-home clerk resulting in a missed deadline.
• I will familiarize myself with the Limitations Act, 2002. We continue to see claims related to lawyers’ unfamiliarity with the new limitations rules. Take the time to review the rules and the related jurisprudence: See, for example, practicePRO’s limitations resources at practicepro.ca/limitations, and LAWPRO’s limitations casebooks, including this comprehensive review: www.practicepro.ca/ LawPROmag/LessonsLearned_LimitationsAct.pdf
• I will avoid administrative dismissals. Rule 48 of the Rules of Civil Procedure allows for the administrative dismissal of non-progressing actions. Be sure to take timely steps to move litigation forward.
• I will talk to my clients more often and not rely on email so much. Lawyers are increasingly using emails to communicate with clients, and this is resulting in misunderstandings. Clients and lawyers read things into emails that aren’t there, miss the meaning of what is said, or read between the lines and make assumptions. During a long litigation matter, arrange some face-to-face meetings, or at least a phone call if distance is an issue.
• I will make sure to have written confirmation of instructions and advice. As in all areas of law, this is a crucial to helping LAWPRO defend you in the event of a claim where you may have no recollection of the details years later. Take notes on your conversations with the client, and document in writing things like the details of settlement offers, the extent of what you will do in limited retainer cases, your advice on accepting (or not) offers, and the likelihood of winning or losing a case and the costs involved.
• I will create more detailed docket notes. Like the resolution above, this has the benefit of helping protect you in the event of a claim (e.g. “Conference with client re risks and costs of litigation” is much better than just “Conference with client re lawsuit.”) It also will help you determine if you are making money on a particular case by giving you a better understanding of the amount of time you and your staff are spending on it.
• I will review my file before closing it to make sure every task is accounted for. It’s a good idea to review your file before closing it and/or putting it into storage to ensure that nothing still needs to be done. If there is and it is part of your retainer, you should ensure that you complete the outstanding work. If it is not, confirm in writing to the client that it is the client’s responsibility to complete the work.

Click here to see the full list of resolutions taken from New Year’s resolutions for a healthier law practice and a new you, which appeared in the December 2012 issue of LAWPRO Magazine.

Social media and online networking is a new frontier for many lawyers, presenting new opportunities to connect with clients…but also new risks. Dan Pinnington has an article in July 20 edition of Lawyer’s Weekly looking at how family lawyers can take steps to protect themselves when interacting with clients on social media.

For further reading on this subject, be sure to also check out Social Media Pitfalls to Avoid from the December 2009 edition of LAWPRO Magazine.

Two Ontario lawyers received an email from the purported Theo Trescher of Trescher Fabrication Ltd with regards to a commercial debt litigation scam. For examples of other names attached to this kind of fraud see our Confirmed Fraud Page. For an explanation of how this fraud works see our Fraud Fact Sheet.

Here is the initial email:

From: Theo Trescher
To: undisclosed-recipients:;,
Date: 11/06/2012 04:14 AM
Subject: Legal Assistance..

I am Theo Trescher, Our company (Trescher Fabrication Ltd) needs your legal Assistance on a collection case. Please Advise.

Another variation appears under the name NicK Trescher:

From: Nick Trescher [mailto:nicktrescher@live.com]
Sent: Wednesday, June 27, 2012 1:51 PM
To: lawyer email
Subject: Legal Enquiry!

Regards,
Nick Trescher

How to handle a real or suspected fraud (more…)

Further to the post earlier today about passwords at LinkedIn being hacked, LinkedIn has issued the following update:

Our security team continues to investigate this morning’s reports of stolen passwords. At this time, we’re still unable to confirm that any security breach has occurred. You can stay informed of our progress by following us on Twitter @LinkedIn and @LinkedInNews.

While our investigation continues, we thought it would be a good idea to remind our members that one of the best ways to protect your privacy and security online is to craft a strong password, to change it frequently (at least once a quarter or every few months) and to not use the same password on multiple sites. Use this as an opportunity to review all of your account settings on LinkedIn and on other sites too. Remember, no matter what website you’re on, it’s important for you to make sure that you protect your account security and privacy.

Here are some account security and privacy best practices that we recommend for our members:

Changing Your Password:
• Never change your password by following a link in an email, since those links might be compromised and redirect you to the wrong place.
• You can change your password from the LinkedIn Settings page.
• If you don’t remember your password, you can get password help by clicking on the Forgot password? link on the Sign in page.
• In order for passwords to be effective, you should aim to update your online account passwords every few months or at least once a quarter.

Creating a Strong Password:

• Variety – Don’t use the same password on all the sites you visit.
• Don’t use a word from the dictionary.
• Length – Select strong passwords that can’t easily be guessed with 10 or more characters.
• Think of a meaningful phrase, song or quote and turn it into a complex password using the first letter of each word.
• Complexity – Randomly add capital letters, punctuation or symbols.
• Substitute numbers for letters that look similar (for example, substitute “0″ for “o” or “3″ for “E”.
  Never give your password to others or write it down.

A few other account security and privacy best practices to keep in mind are:

• Sign out of your account after you use a publicly shared computer.
• Manage your account information and privacy settings from the Profile and Account sections of your Settings page.
• Keep your antivirus software up to date.
• Don’t put your email address, address or phone number in your profile’s Summary.
• Only connect to people you know and trust.
• Report any privacy issues to Customer Service.

Not a bad time to change the passwords on your other accounts. If you use Google, consider enabling Google’s two-factor authentication, especially if you are using it for your law practice. See instructions on how to do this here.

You could also consider using a password manager like LastPast. It is a cross-platform and device tool that will safely store and remember passwords for you, thereby making it easier to use different and stronger passwords for your various accounts.

The Royal Bank has advised us that several counterfeit Canadian dollar bank drafts have been negotiated by lawyers (4 in Ontario, 3 in Alberta and 1 in Quebec). These drafts are drawn on RBC transit 05142 003 and are payable to individual lawyers. The subject line on all 8 drafts indicates “Rowland Webster”. They are dated April 12 and 13, 2012, and are in the amount of $325,850. They indicate Royal Bank of Canada, Mississauga ON on the top left corner of the draft. RBC’s investigation indicated that these drafts were given to the lawyer as payment on a debt collection.

The name Rowland Webster has been used as the debtor name on a loan collection fraud previously reported to LAWPRO. The fraudster client in this case was purporting to be Barbara Duckett. See this AvoidAClaim post for more information on the Barbara Duckett fraud. RBC did not provide the fraudster client name used on the above frauds.

Here is a scan of one of the cheques:

How to handle a real or suspected fraud (more…)