Lawyers’ Fund for Client Compensation

What is the Lawyers’ Fund for Client Compensation (LFCC)? 

The Lawyers’ Fund for Client Compensation (LFCC) reimburses clients who have suffered a loss because of the misappropriation or conversion of their money or other valuable property by their lawyers. 

The Lawyers’ Insurance Association of Nova Scotia (LIANS) insures lawyers against losses arising from certain errors or omissions during practice and the LFCC covers eligible losses arising from a lawyer’s theft or fraud. 

A separate fund exists for claims related to losses arising from dishonesty, fraud or criminal acts by lawyers in the certifying of title under the Land Registration Act

The Society’s Council has the discretion to pay any claim for compensation in whole or in part, to pay some claims and refuse others, and to dispose of any claim in any matter that it deems appropriate (under the Legal Profession Act and Regulations) 

The LFCC money consists of annual contributions from every practising lawyer in Nova Scotia.  

Six-Month Limitation Period 

Payments out of the Fund are limited to the amount available to the Society through insurance for all claims made in any claims year. 

There is a six-month limitation period for receiving the Notice of Loss from an applicant. Applicants must notify the Society in writing of their alleged loss not later than six months after becoming aware of the loss. (Section 57(4) of the Legal Profession Act)  

Under unusual circumstances, Council may extend this notice period for a maximum of 24 months after the loss came to the claimant’s knowledge.  

What is the Claim application procedure? 

The Society’s LFCC Committee reviews claim applications and recommends to Council approval or denial of a claim.  

The Committee Claims approve or deny claims under $5,000 alone. This Committee meets on an as needed basis. The Society’s Director of Professional Responsibility processes all claims for review by the Committee. 

Before the Committee will consider a claim for compensation, an applicant is required to complete a Claim Application Form and file it with the Society. This form helps applicants provide the information required for a claim under the Act and Regulations, and assists the Committee with the review process. 

There are no fees associated with filing a claim for compensation. An applicant does not need to hire a lawyer in order to submit a claim, but the complete Claim Application Form must be sworn before a Commissioner of Oaths or Notary Public with any supporting materials or other documents attached. 

The Claim Application Form includes a section for applicants to provide written consent for release of the applicant’s name, contact information, and the amount and date of the approved claim, to law enforcement authorities for purposes of investigation. Applicants may refuse to provide this consent, but must explain why. 

Claim criteria 

In reviewing a claim for compensation, the Committee will consider, among other things, whether the client’s money or property was entrusted to or received by the lawyer while acting in the capacity of a lawyer. In other words, was the lawyer holding the claimant’s funds in trust for purposes of providing legal services, or merely for investment or some other purpose? 

Supporting material must be filed with the Claim Application Form to establish or prove the amount of the claim. This can include: 

  •  copies of billings or invoices from the lawyer in relation to the service(s) for which the lawyer was retained, indicating any fees, disbursements and other charges paid by the applicant; 
  •  copies of receipts or cancelled cheques; and 
  •  copies of relevant correspondence or legal documents, including deeds, wills contracts, etc. 

Other factors the Committee will consider in determining the validity of the claim and the amount to recommend for payment are as follows: 

  •  any conduct of the applicant that may have contributed to the loss; 
  •  the relationship of the applicant to the lawyer, such as partner, associate, employer or employee, spouse, child or other close relative, or whether the applicant is an entity controlled by the lawyer or by any of the others listed above; and 
  •  whether the applicant has made reasonable attempts to recover his or her loss. 

Notification of decision 

Once the Committee has decided to recommend approval or denial of a claim to Council, the claimant will be notified in writing of the Committee’s decision or recommendation, and of the date when Council will review the recommendation and make its decision, if appropriate. If an applicant is dissatisfied with the Committee’s recommendation, he or she may make submissions to Council, with or without legal representation, by filing written notice to this effect with the Society’s Executive Director at least ten days prior to the date for review of the claim by Council. 

What happens after a claim is approved 

An applicant is notified of the decision to approve or deny the claim as soon as possible. If the claim is denied, the applicant will be advised of the reasons. 

When a claim is approved, the applicant receives written notification and will be required to complete an Assignment of Claim and Release, prepared by the Society, before receiving the Compensation Fund claim cheque.  

By completing these forms, an applicant releases the Society from further liability in relation to that particular claim and gives the Society the right to pursue options for recovering some or all of the losses from the former lawyer or other parties.  

These forms and the claim cheque must be sent to a lawyer of the applicant’s choosing, who will explain the purpose and meaning of the document to the claimant prior to release of the cheque.  

Once a claim is approved or denied, the Society’s membership is advised of the name of the lawyer involved, and the amount of the claim approved or denied. Claimants’ names are not published. 

Questions?  

For more information, or to request a Claim Application Form or other application materials, please contact Catherine Turcotte-Roy Officer, Complaints and Investigations.