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By TS Tan
A client can seek compensation from the Malaysian Bar Council for any financial loss due to his lawyer’s dishonesty. The redress comes in the form of a grant from the Advocates and Solicitors Compensation Fund, which was established in 1978.
A claimant can apply for compensation after his lawyer’s misappropriation of money or the client’s loss involving money held from an estate or for a real estate closing. Negligence is however not considered. So far, claims as small as RM178.20 and as large as RM468,012 have been settled.
Under Section 80 (8) of the Legal Profession Act 1978, a claim may be entertained provided certain procedures and conditions are complied with. For instance, a prerequisite is that the lawyer concerned must be first struck off the roll before a client submits a claim.
Claims should be made within 21 days from the date of the Bar Council’s notice of a list of disbarred lawyers published in newspapers. Applications for compensation can also be submitted within six months or a period not exceeding two years after a financial loss is discovered.
A claimant is required to submit two forms – A and B – given by the Bar Council Secretariat or downloaded from its website (www. Malaysianbar.org.my). Form A is for the report of a financial loss caused by a breach of trust by an advocate and solicitor who is a member of the Bar Council. A claimant uses Form B to apply for compensation, providing full details of the claim and attaching relevant documents.
He or she must submit a certified true copy of a police report lodged by the claimant against the lawyer, a photocopy of his/her identity card or passport and other supporting evidence for the claim. A cheque or postal order for RM100 as the administrative fee is also required.
Panel reviews claims
All documents may be mailed or presented to the Compensation Fund Department (Jabatan Dana Pampasan), Bar Council Malaysia, 15 Leboh Pasar Besar, , 50050 Kuala Lumpur. A claimant may also seek advice from the council’s secretariat (tel: 03-2031 3003 or fax: 03-2026 1313/2034 2825/2072 5818).
An adjudication panel comprising senior lawyers will review the application before inviting the claimant to attend a hearing together with witnesses and produce the original documents. The panel will next submit a written report with recommendations on whether the claim should be approved in part or in full, or rejected. The Bar Council will have the final say on the claim.
The council may also recommend a legal suit for civil remedy, criminal proceedings against a defaulting lawyer or action by a disciplinary board.
First mooted by veteran lawyer JSH Skrine in 1972, the compensation fund was introduced to protect the interests of lawyers’ clients who suffer losses as a result of dishonest acts committed by unscrupulous advocates and solicitors. It is also aimed at safeguarding the reputation of the legal profession.
The council does not restrict the number of claims made per year. In 2007, it received a total of nine claims for amounts in excess of RM1.5 million and it approved more than RM1.4 million for such claims in 2009.
Claims that are not considered
The process of obtaining compensation may take a year or longer, depending on the nature and complexity of a case. The council does not entertain claims for losses when a lawyer is not acting in his professional capacity or when they are caused by a default of a client’s personal loan advanced to his lawyer or suffered in a business venture. It also does not consider payments made to lawyers as legal fees.
The fund is accrued from the yearly RM100 contribution by each of the Bar Council’s 12,800-odd members. It currently stands in excess of RM12.8 million.
The council may use its discretion to invest the fund’s surplus in worthwhile projects. It may also borrow money from the fund with an annual interest set by the Malaysian Association of Bankers. Its members may also obtain loans from the fund.
Other countries have established similar compensation funds with some variants. In Singapore, for example, it has the Law Society’s Compensation Fund which covers financial losses caused not only by dishonest lawyers but also their staff in failing to pay or deliver trust money or trust property.
Staff lawyer assigned
In the US, a government-mandated client compensation fund is available. Each lawyer is required to pay a biennial registration fee of US$375, which is considered to be excessive.
In dealing with claims, the Law Society of Upper Canada assigns a staff lawyer to recommend each case to its fund’s review committee, which makes the final decision, or prepares a report for consideration.
The Solicitors Regulation Authority of the UK deliberates over similar claims which can be made not only because of a lawyer’s dishonesty, but also because of his failure to account for money received. The claimant may not necessarily be a client or a former client.
In some countries, there is a distinction between the duties of an advocate or barrister and those of a solicitor. An advocate in the UK pleads cases in court, whereas a solicitor deals with out-of-court work, gives legal advice, prepares cases for barristers or represents clients in certain lower courts. In the US, an attorney is permitted to handle both office and trial work.
A distinction does not exist in Malaysia where the duties of advocates and solicitors are fused. Both are therefore allowed to present cases in higher courts.