The Law Society of Ontario, which licenses lawyers and paralegals in Ontario, has something called a “Compensation Fund.”
The compensation fund aims to help people financially who were affected by the dishonesty of their lawyer or paralegal. Lawyers and paralegals in Ontario pay into this fund which then recompenses parties who qualify.
The fund can pay back part or all of the money you lost. The only caveat being that the loss cannot be caused due to negligence.
Who can make a claim?
There are two circumstances in which people can qualify for the fund. They are:
- If a person was in a lawyer-client or lawyer-paralegal relationship or a similar type of fiduciary relationship and the person lost money because of the lawyer’s or paralegal’s dishonest behaviour; and
- An estate beneficiary can make a claim if the estate loss was caused by the dishonesty of the lawyer who dealt with the estate as a solicitor, estate trustee, or both.
Exceptions to who can be recompensed are banks or other financial institutions. The LSO will not compensate these institutions for losses covered by a contract of insurance, including title insurance.
What kinds of losses are covered?
There are four situations of loss which the fund covers. They are:
- Dishonest conduct: The lawyer or paralegal had to have acted in a dishonest matter, which caused the loss of money including money that was supposed to be held in trust for the client;
- Lawyer-client, paralegal-client or fiduciary relationship: As discussed above the client and lawyer or paralegal must have been in a relationship where legal advice was given, there was legal representation, and/or legal services were provided;
- Practice of law/provision of legal services: the loss has to be connected to provision of legal services or the practice of law; and
- Legal entitlement: the client must have a right, legally or beneficially, to have money or property returned.
Loss, in these circumstances, is defined as the difference between what the lawyer or licensed paralegal received from the claimant or on the claimant's behalf, and the amount that was earned and accounted for, and/or returned to the claimant.
How much does a person get back?
You can get back either the full or a partial amount of the loss. However, there is a monetary limit that is imposed.
If you have suffered losses due to the dishonesty of a paralegal, you cannot claim more than $10,000 in reimbursement per claimant.
If you have suffered losses due to the dishonesty of a lawyer, you cannot claim more than $150,000 per claimant for money advanced to a lawyer on or after April 24, 2008 until September 21, 2016. The maximum grant is $500,000 for losses resulting from funds given to a lawyer on or after September 22, 2016.
Another cap imposed is that reimbursement is limited to how much money the claimant advanced to the lawyer or paralegal for which she or he doesn’t properly account. In addition to that limit, if the claimant has received money back or interest payments those amounts are deducted from the total.
Furthermore, the compensation fund is a discretionary fund. No person has the absolute right to get money from it.
Is there a time limit to filing a claim?
Yes, you only have six months from the date you first learned of the loss to notify the Law Society of Ontario. Sometimes the law society will extend the time period to two years but that is case specific.
If you think you may have a claim for compensation you should consult a lawyer.
Guidelines for Compensation Fund Claims
Frequently Asked Questions about the Compensation Fund