A Hearing Report was released last week by the Law Society of BC finding that a lawyer committed “professional misconduct” for failing to inquire in a timely fashion into an overpayment from ICBC following the settlement of 4 personal injury claims.
In last week’s case the lawyer represented four clients who sustained injuries in a 2006 collision. A settlement was reached. Apparently an oversight ocurred and ICBC provided a settlement cheque for $10,948 over and above the settlement figure.
During a routine compliance trust audit several months following the settlement, the Law Society’s Trust Assurance Department found that the lawyer “still had $10,948 in his trust account”. The lawyer apparently had handwritten notes of his discussion with his clients around the time of settlement indicating that “the funds were to be kept until an apparent limitation date expired“.
Ultimatley a hearing was held investigating this matter. The Hearing Report indicates that the lawyer explained that “the difference between the cheque received in the amount of $45,264 and the settlement agreed upon in the amount of $32,000 plus disbursements that ICBC agreed to pay in the amount of $2,316, was paid for bad faith” but since ICBC would not “go on the record for paying money out for bad faith” he assumed they would be receiving a cheque that included money for bad faith but not be designated as such.
The Law Society rejected this explanation and cited the lawyer for “professional misconduct” finding that his behaviour was a “marked departure from the conduct expected of a lawyer in such circumstances“. In coming to this conclusion the Law Society provided the following sensible advice to lawyers who receive an overpayment following the settlement of a personal injury claim:
 This Panel has concluded that the Respondent, when he received the cheque from ICBC, knew the sum received was in excess of the settlement and, as a result, he should have taken an appropriate step to clarify what appeared to be an error. Instead, it was not until well after the receipt of the funds that he communicated with ICBC. That communication was substantially later than it should have been. While it appears that the Respondent may have had conflicting instructions from his clients with respect to whether or not to communicate with ICBC, he should have simply and clearly posed the question to ICBC as to whether or not they had made an error in calculating the amount of money paid. If he felt that he was acting contrary to his clients’ instructions, he should have advised them to obtain separate counsel. Instead, he did not act until the Law Society commenced its investigation following the audit. While he promptly communicated with the clients on July 3, 2008 with respect to the fact that the funds were held in trust as required by the Law Society Rules, he did not communicate with ICBC until well after the Law Society questioned him on several occasions about why he had not contacted ICBC. At the same time, when he did contact ICBC, he did not explain in a clear and unequivocal way what the issue was, which further compounded the problems.
 In this Panel’s view, the failure of the Respondent to make the obviously necessary inquiry was questionable conduct casting doubt on the Respondent’s competence and also reflecting adversely on the integrity of the legal profession. Given the foregoing, the Panel has concluded that the Respondent committed professional misconduct as this is a marked departure from the conduct expected of a lawyer in such circumstances.