Compensation Fund

Compensation

Fund

This section provides an overview of Part 13 Compensation Fund of the Law Society Act, 1996 as well as Rules 89 through 97 of the General Rules.

This information is a general guide only, and persons wishing to make a claim to the Compensation Fund should refer to the relevant sections of the Law Society Act, 1996 and the General Rules, or consult with a lawyer for full details of the procedures and other relevant matters.

Overview

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As the governing body of lawyers in New Brunswick, the Law Society has established a Compensation Fund which may reimburse a client for a financial loss when the loss happened due to the fraud or dishonesty of a lawyer during a solicitor-and-client relationship. This fund is provided through a fee paid by practising lawyers as part of their Law Society dues. Council of the Law Society, which manages the Law Society, has overall authority over the fund and has appointed a Compensation Fund Committee to manage the fund. 

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Application to the Fund

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To make a claim to the Compensation Fund, an Application for Payment from the Compensation Fund must be filled out by the claimant. Whether a lawyer has been found guilty of a complaint or not, the Compensation Fund Committee cannot consider reimbursing the client unless an application to the fund has been received. In cases where an application has not been received but where the Registrar of Complaints has become aware of a client who may have a valid claim, the Registrar will normally forward an application form with instructions to the client.

Although we accept complaints by email, we cannot accept Compensation Fund applications by email.

Applications for compensation are normally reviewed after a Discipline Committee hearing has taken place.

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Time Limit

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Once completed, the application form must be filed with the Executive Director of the Law Society as soon as practicable, but no more than two years after the claimant became aware of the facts leading to the application.

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Compensation Fund Committee

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When a claim is received, the Executive Director will refer the application to the Compensation Fund Committee. The committee may or may not hold a hearing while it considers the claim. When the committee has concluded its evaluation, it will forward a report to Council of the Law Society, and the claimant will also receive a copy. The report will either recommend that the claim be paid in part or in full or recommend that the claim be denied. The report will set out the committee’s reasons for its recommendation.

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Factors

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As explained above, the fund is to reimburse clients who suffered a financial loss as a result of dishonesty on the part of a lawyer in cases arising from the lawyer’s practice or actions as a trustee (i.e. in a solicitor-and-client relationship).

Many other factors are taken into account when determining if a claimant will be compensated and to what extent. The factors include:

  1. Hardship to the claimant;
  2. The extent to which the claimant contributed to, acquiesced in or delayed in reporting the misappropriation;
  3. The extent to which the claimant cooperated in the investigation or adjudication of the application; and
  4. Whether there are alternative civil or criminal remedies available to the claimant.

Before his or her application is considered, a claimant may be required to exhaust any civil remedies he or she has against the lawyer or take steps to institute criminal proceedings.

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Claimant's Legal Fees/Interest

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A claimant is not required to retain a lawyer to act on his or her behalf in making a claim to the fund. However, a lawyer may be helpful to the claimant in explaining the provisions of the Law Society Act, 1996 and the General Rules that apply to the fund, or may assist in assembling the information required to submit and/or support the application. The Law Society’s staff will also attempt to answer any questions.

Interest on the amount claimed is not normally paid.

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Payment from the Fund

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Upon receipt of the Compensation Fund Committee’s recommendation, Council of the Law Society has the power to allow the claim in whole or in part and make a payment out of the fund to the former client. Council may also deny all or part of the claim. Payment of any amount is totally within the discretion of Council.

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Negligence

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There may be circumstances in which a claimant’s money was improperly applied by the lawyer and lost, not as a result of dishonesty on the part of the lawyer but as a result of a mistake (or negligence). In such cases, relief should be sought from the Professional Liability Reserve (Insurance Fund).

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If You Still Have Questions

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If you have other questions or concerns, you are invited to communicate with us by telephone for further explanation. Please remember that we cannot give you legal advice, and we are not permitted to give our opinion over the telephone.

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