WIDESPREAD Trust Fund theft by legal practitioners is going largely unpunished due to the fragmented oversight and lack of coordination between key regulatory and prosecutorial bodies.
IAs a result thousands of non-compliant lawyers are falling through the cracks and many continue to practise despite serious allegations of misconduct.
This week the Law Society of South Africa (LSSA) called out the Legal Practice Council (LPC) and the National Prosecuting Authority (NPA), saying there must be swift and transparent action where evidence exists.
However, the NPA said it had no jurisdiction over such investigations while the LPC said they while they could serve as witnesses when the NPA took a matter to court for criminal prosecution, its involvement ended when a practitioner was struck off.
The LSSA was responding to reports that fingered thousands of legal practitioners for trust fund theft running into billions of rands.
“Public trust is the foundation of the legal profession. Every failure to prosecute or meaningfully sanction trust fund theft is a failure of justice – not just for individual complainants, but for the entire legal system. It sends the unacceptable message that those entrusted with the rule of law are themselves above it,” said LSSA President Nkosana Francois Mvundlela.
He said while the figures were “deeply concerning” they must be viewed within the broader context of a legal profession comprising thousands of committed and ethical professionals. Prevention, said Mvundlela, was more effective than punishment. He urged the Legal Practitioners’ Fidelity Fund (LPFF) to increase its investment in post-admission legal education and training, and urged the LPC to improve public transparency by sharing data on the number of practitioners completing training in key areas such as trust account management. “This level of transparency will help the LSSA, the profession and the regulator identify where the gaps are – and where interventions are most needed. We must address misconduct without fear or favour – but we must also equip legal professionals with the knowledge and tools to prevent it.”
Kabelo Letebele from the Legal Practice Council said the number of serious complaints, like the theft of trust funds, accounted for a small percentage of complaints received annually. “Not all accounts under curatorship relate to misconduct. The LPC also acts as curator over trust accounts of deceased practitioners. In general, practitioners may be suspended or struck from the roll in instances of serious misconduct such as theft of trust funds. At the time that a curator is appointed it implies that the investigation is complete.”
Letebele said there were roughly about 33 000 attorneys and just under 10 000 advocates in the country and at any given time the LPC was investigating between 2% to 5% of these legal practitioners. “What is common is that we would be investigating multiple complaints against a practitioner or as we investigate, we find other matters that need to be looked into under the same practitioner/firm,” he said.
Legal practitioners said Letebele, are officers of the court and the LPC's role was to initiateinvestigations and disciplinary proceedings when required, especially for serious contraventions such as misappropriation of clients’ funds. In such cases, the LPC then applies to court to have the legal practitioner(s) suspended or struck off from the roll. It also referred matters to the police for investigation.
He said the Legal Practice Act, required that a legal practitioner practicing for their own account must have their trust account audited annually by an auditor who was regulated by the Independent Regulatory Board for Auditors (IRBA). A practitioner without audited results could not be granted a Fidelity Fund Certificate (FFC), which they required annually to practice. He said lawyers with trust accounts had to undergo “Attorneys Bookkeeping training” and before they were admitted attorneys and trust advocates had to pass an accounting exam.
The NPA’s Mhaga stressed that attorneys were not afforded any special privileges, and were prosecuted in the same manner as anybody else who had committed theft. However, it was the police’s duty to investigate the theft of Trust Funds by legal practitioners. “ The place where the offence was committed determines which court has jurisdiction to hear such prosecutions and it is therefore not viable to create a unit or centralise such matters.”
He said that because of the unique position of attorneys and the fact that these funds are held in trust it was usually presented as an aggravating circumstance. In addition the organisation did not keep record of the professions of those who were prosecuted, and therefore couldn't give an update of the cases relating to legal practitioners that the police had submitted to the NPA for prosecution, or say if there was a backlog.
“The NPA takes these matters seriously, but is dependent on the matters being reported to the police and the police investigating the matter, including whatever forensic investigation may be required in a particular instance.” He also He also stated that the NPA could not confirm whether more than 500 such cases had been reported to the police by the LPC or the victims - or the current status of those investigations.
Last year Legal Services Ombudsman Judge Siraj Desai told a parliamentary committee that theft was rampant and that millions were stolen by attorneys on a regular basis. He also supported the LPC’s calls to have the Legal Practice Act as the disciplinary process outlined in the Act was cumbersome and time-consuming and action was needed to protect the integrity of the profession.