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.
Six-Month Limitation Period
There is a six-month limitation period for filing a claim. Claimants must notify the Society in writing of their loss no later than six months after becoming aware of the loss. (Section 57(4) of the Legal Profession Act)
Under certain circumstances, the LFCC may extend this notice period to 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.
The LFCC can approve or deny claims under $5,000 alone. This Committee meets on an as needed basis.
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.
There are no fees associated with filing a claim.
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. Claimants may refuse to provide this consent, but must explain why. Refusal may lead to a claim being denied.
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 made a decision regarding a claim, 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.
What happens after a claim is approved?
A claimant 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.