LawPRO is warning lawyers to be vigilant about bad cheque fraud over the long weekend, when fraudsters are known to take advantage of bank closures and off-guard staff at law offices.

LawPRO sees a higher traffic of bad cheque fraud activity when lawyers and their staff are busy preparing for a day off and are less likely to spot a red flag, says Dan Pinnington, LawPRO vice-president of claims prevention and stakeholder relations.

“When the fraudsters are setting up the time for the fake cheque to show up and go through the lawyers’ office, if that happens just before a long weekend, when people are otherwise busy and rushing, there is a better chance that the fraud will go through undetected,” he says.

Fraudsters claiming to be legitimate clients would have a lawyer deposit a fake cheque into a trust account and prompt the lawyer to wire good money elsewhere. They are aided by bank closures over long weekends, which delays detection of bad cheques and gives them a bit more time to get money out of the account, Pinnington says.

“They’re taking advantage of the fact that people are distracted and rushing and busy before a long weekend so maybe they take a little bit less care or rush through to get it done,” he adds.

Lawyers who suspect they have received a fraud email can contact LawPRO or check AvoidAClaim.com for a list of confirmed fraudsters. Since the site started tracking e-mails in January 2011, 45 per cent of alerts were from Ontario lawyers. Another 45 per cent came from the U.S., while five per cent came from the rest of Canada and another five from outside North America.

Last month saw a high traffic of e-mails from the U.S., LawPRO also notes. The most common type of fraud e-mails in April was debt collection scams, followed by business loan collection scam. The lastest fraud posted on AvoidAClaim today comes from lawyers D.C and Connecticut who says they’ve been contacted by the purported Seina Bloomberg with regards to a to a collaborative family law agreement dispute. “This is a fraud we have seen before under several other names and similar scenarios,” says the blog entry.

“These frauds are getting are more realistic, looking more sophisticated,” Pinnington says. “Lawyers need to watch out for the red flags. If there’s anything that doesn’t add up, they should ask questions and dig dipper.”

Cassels Brock & Blackwell LLP can now feel some sense of security about recovering its legal costs in Mauldin v. Cassels Brock & Blackwell LLP after the Ontario Court of Appeal changed the terms of the cost orders in the investment fraud case.

Ontario Court of Appeal (Photo: Gail J. Cohen)

The case, which saw Toronto businessman Robert Hryniak convicted of civil fraud, was back in the appeal court this week for a decision on who should pick up the legal tabs.

Cassels Brock and its former partner Jack Peebles were named as co-defendants for allegedly allowing Hryniak to access to the firm’s trust accounts as he wished. But while Hryniak was found guilty in a summary judgment and ordered to pay $2 million, the court dismissed a summary judgment motion against Peebles and the law firm, deciding the allegations against them must go to trial.

Two groups of plaintiffs, known as the Mauldin group and the Bruno group, sued Hryniak. Both groups had originally won in a summary judgment, but later, an appellate court reversed the decision in the Bruno case, which it sent to trial.

In October 2010, a Superior Court judge had ordered Hryniak to pay Cassels Brock and Peebles for their costs in both motions. The judge had used the Sanderson model to order costs, which follows that the losing defendant pays the cost of the successful defendants.

One of Hryniak’s grounds of appeal was that he shouldn’t have to pay the legal costs of his co-defendants in the Bruno motion. Cassels Brock and Peebles agreed with this appeal, arguing the Sanderson order is inappropriate since Bruno was unsuccessful with all three defendants.

The law firm also said “it is not fair and equitable for it to continue to bear the risk of non-recovery of costs payable by Hryniak under the Sanderson order,” according to the decision.

This week, the appeal court agreed.

“Since Bruno’s motion failed against all three defendants, we set aside the motion judge’s Sanderson order in respect of the costs of the Bruno motion,” the appeal court said.

“The Sanderson order reduced Bruno’s obligation to pay the costs awarded to Cassels Brock and to Peebles by $21,212.27 and $4,545.45 respectively. Bruno is now responsible for payment of these amounts. Hryniak’s obligations to Cassels Brock and Peebles are reduced accordingly.”

When reached by Legal Feeds, a Cassels Brock spokeswoman said the firm would not comment on matters before the courts.

The Supreme Court of Canada has heard and reserved Hryniak’s appeal in relation to the summary judgment in Mauldin case.

Upadate: May 13. Fixed comment from Cassels Brock.

A controversial motion seeking action to expand the scope of paralegal practice was withdrawn hours before the Law Society of Upper Canada’s annual general meeting tonight.

(Photo: Shutterstock)

After intensive discussions over the past week with the law society and the Canadian Bar Association, the 10 paralegals who proposed the motion have decided it’s best not to go head with it, says John Tzanis, president of the Paralegal Society of Ontario.

“We had assurances from the law society treasurer and staff that everything we’re asking for is being done,” Tzanis says, adding that the paralegal group has also heard from OBA president Morris Chochla.

The motion would have asked the law society to look into training programs for paralegals so they can practise fully in areas like family law and immigration law.

Law Times recently reported on the fierce debate the motion had stirred between paralegals, who say it’s time they practised with fewer limitations, and lawyers who argue only law school can prepare a person for the kind of work they do.

“Lawyers and paralegals should be colleagues, we should be working together on all of these issues . . . not in opposition or going to a battle,” Tzanis told Legal Feeds. “It doesn’t make any sense . . . if we’re both fighting for access to justice for the public, why are we battling each other like this?”

The withdrawal of the motion is also meant to thwart the animosity that was expected at tonight’s meeting, which had been moved to a larger venue in expectation of unprecedented attendance due to the controversy.

“We’ve done so much to help build bridges and the last thing we wanted was to create a war of words,” said Tzanis. “I thought there will be some paralegals who don’t represent the majority of us or there will be some lawyers who don’t represent the majority going out there and making some comments that will put us back here.”

Tzanis also said the law society promised to communicate more openly about its follow through with the 2012 Morris report, which recommended creating training programs for paralegals that will allow them to practise more broadly.

Response on Twitter to the motion’s withdrawal was swift with a number of lawyers commenting that if the reason taking it off the table was the moblization of the bar against the motion, it shows the inherent conflict of having one regulator for both lawyers and paralegals.

“If Ontario benchers/lawyers mobilized against it, that is a massive conflict for @LawsocietyLSUC,” tweeted Mitch Kowalski. “And exactly why @LawsocietyLSUC has no business regulating paralegals in the first place.”

The $30 million over three years allocated for Legal Aid Ontario in this year’s Ontario budget doesn’t do much to address a system that is “strained to a breaking point,” according to Criminal Lawyers’ Association president Norman Boxall.

“Any increase for legal aid is welcome. However, given the extent to which it is underfunded, this allocation is not adequate,” says Boxall. The financial eligibility threshold for legal aid filters out too many people who are in need, says Boxall, who calls the criteria “frankly embarrassing.”

Yesterday’s budget notes the $30 million for Legal Aid Ontario is on top of the $150 million over four years allocated to it in 2009.

“This funding will improve access to justice and enhance outcomes for low-income families, victims of domestic violence, and other vulnerable groups by strengthening the capacity of family law service centres and other community and legal clinics across Ontario to respond to evolving needs and ensure services are sustainable,” the budget states.

Legal Aid Ontario spokesman Kristian Justesen only had praise for the funding.

“From LAO’s perspective, this is a good day for access to justice in Ontario,” he said. “This new investment will enhance outcomes for low-income families, victims of domestic violence, and other vulnerable groups.”
Overall, justice spending will decease by $57 million this year, according to the budget. The decline is primarily a result of “lower-than-expected costs related to municipal policing, lower overtime costs, and other internal efficiencies.”

Delays in buying courthouse furniture and equipment will also bring down capital expenses in the justice sector, according to the budget.

The Ontario government also said it’s implementing what it referred to as “transformative initiatives” in the justice system. They include “alternative financing to meet the capital infrastructure needs of Ontario’s justice system,” but the budget doesn’t elaborate on what they entail.

LawPRO finished 2012 with a deficit of $2.9 million, according to financial statements presented at the Law Society of Upper Canada Thursday.

Distribution of claims by practice area. (Source: LawPRO)

The insurer attributed the loss to reduced premium rates and a “troubling, ongoing trend” when it comes to swelling claims figures.

“Claims costs are high and rising,” LawPRO said in its report, adding the number of claims reported to the Ontario insurer in the last year “increased significantly” to 2,560, a jump from less than 1,800 at the beginning of the decade.

In the same period, the average cost per claim also increased by $10,000. The median amount was pulled up by a growing number of severe claims, which cost greater than $100,000. While these exorbitant cases amounted to a claims expense in the $80- to $90-million range between 2007 and 2011, “the 2012 program’s ultimate cost is projected to exceed this range,” said LawPRO.

“The growth in claims is faster than the growth in lawyers and premiums,” said Susan McGrath, chairwoman of LawPRO’s board of directors and a law society bencher in presenting the report.

What McGrath called “Ontario-specific characters,” such as high cost of real estate and legal services also rack up claims expenses.

Not surprisingly, the real estate and litigation practice areas resulted in the majority of claims LawPRO received, amounting to 33 per cent of claims cost.

“Looking more closely at the underlying cause of claims by policy year, we are seeing a startling increase in types such as time management, as well as failure to either know or apply the law,” according to the report.

LawPRO currently has 3,500 open files, the highest number in the last decade. This is “despite a concerted and successful effort on the part of the company’s claims group to close more files than the previous year,” it said.

But LawPRO praised its work when it comes to its expanded online efforts to help lawyers avoid claims, particulary through its Avoid a Claim blog (http://www.avoidaclaim.com/). It also reported a survey result that showed 86 per cent of lawyers were satisfied with how the company handled their claims.

Last year, LawPRO won all six matters it took to trial and on which a decision was rendered. It was also victorious in both matters that went to appeal and succeeded in 18 out of 25 summary judgement applications.

LawPRO’s full report can be found here.

Cyber attacks that targeted major Canadian law firms are among the top 10 worst security breaches in North America, according to a list compiled by virtual data room provider Firmex.

The list, which includes Google and Dallas marketing firm Epsilon, cites a total of 11 unnamed Canadian law firms among companies across the continent that suffered major cyber break-and-enters, potentially revealing sensitive client information to hackers.

In one 2010 security breach involving a takeover deal between BHP Billiton and Potash Corp, “hackers rifled through the networks of seven law firms looking for confidential information pertaining to the proposed $38 billion bid,” says Firmex.

The incident was blamed on China’s state-owned Sinochem Group, which allegedly feared BHP’s takeover of Potash Corp would lead to a global control over supply of potash and sought to disrupt the bid, according to Fermex.

Attacks against law firms are becoming more targeted, says Debbie Stephenson, who researched security breaches to compile the list.

“Hackers are seeing if they can get backdoor entry to law firms, they can get access to a lot of client information,” she says. “They’re becoming smarter.”

In another attack in April 2011, which Firmex calls “one of the most devious,” four Canadian law firms were targeted by hackers attempting to access sensitive documents by posing as partners who were working on an acquisition of a Chinese company, says Stephenson.

Lawyers “received e-mails that appeared to be from a partner working on the deal,” the Firmex list explains. “The e-mails were fake and included attachments that contained malware, which when opened successfully infected dozens of computers.”

It’s unclear if confidential documents were actually leaked through the espionage, but the fact that hackers can gain access to law firm computers is troubling, says Stephenson.

While not on Stephenson’s list, last December a Toronto-area law firm lost “a large six figure” amount after a virus gave hackers backdoor access to its bookkeeper’s computer, according to LawPRO. The virus copied bank account passwords as she typed them. 

Law firms are “somewhat lagging in security,” she adds. “They’re playing catch-up with these advanced techniques.” l

Some law firms have banned use of personal e-mail at work to reduce risks and others outlawed use of document sharing products like Dropbox, which lack advanced encryption features.

“It’s just important to note that [cyber attack] is on the rise,” says Stephenson. “It is the new crime wave in the millennium and it’s something that we’re really not prepared for.”

When Phillip Coffey was charged with impaired driving in August 2010, it left a bad taste in his mouth.

The judge ruled only a possibility, not a certainty, of a breath test malfunction was enough to drop charges. (Photo: Shutterstock)

The Mono, Ont., man has acid reflux, a condition that sends a bitter fluid up his throat once in a while. He had such an episode just before his breath alcohol tests were taken on the evening a police officer pulled him over. In a recent decision, Ontario Court Justice Douglas Maund dropped charges against Coffey, ruling his acid reflux resulted in two false breath test results.

Even though Coffey only had three glasses of wine that evening, the regurgitated alcohol meant the breathalyzer picked up more alcohol than would normally be in his mouth, a toxicologist testified.

The expert’s opinion was that “the potential presence of mouth alcohol could have a dramatic effect and could produce abnormally high and false readings,” the judge said.

Another expert said this scenario would be very unlikely, but couldn’t rule it out.

In his verdict, Maund said scientific certainty is not needed to satisfy the requirement of reasonable doubt.

“What is necessary is to establish a realistic scientific possibility,” he said. “A reasonable doubt must be raised on the basis of credible evidence tending to show that the instrument was malfunctioning. I find that the evidence before me has established such a reasonable doubt as required by section 258(1)(c)(iv).”

Coffey had also told the court that he hadn’t taken his medication on the day of the incident.

“I find that I accept Mr. Coffey’s evidence that he was actually experiencing acid reflux symptoms during the breath tests. I found his evidence credible and he was unshaken in cross-examination,” the judge said.

“Having come to this conclusion, I find that it has been established that there was a real possibility that some alcohol may have been in Mr. Coffey’s oral cavity when the tests were taken. There was therefore a real potential for false readings from the instrument.”

The Ontario Court of Appeal was correct in overturning a sexual assault guilty verdict this week that would have been “a dangerous conviction to uphold,” a Toronto criminal lawyer says.

‘The last thing the Court of Appeal wants is judges to apply general rules of credibility of witnesses,’ says Daniel Brown.

The appeal court ordered a new trial for a man accused of repeated sexual assaults against members of his family after finding the trial judge believed the complainants for the wrong reason.

A passage in Provincial Court Justice Alan Cooper’s ruling suggested that since the complainants are the accused’s nieces and great niece, their evidence is by default more credible than it would have been had they not been related to him.

Cooper’s faulty statement reads the complainants “had to testify about a family member, which in my view makes their allegations more credible than a complaint against a non-family member.”

The appeal court said this line of thought is “clearly improper.”

“The impugned passage expresses the view that, because of the difficulties in family relationships that sexual allegations often create, allegations of sexual misconduct made against a family member are inherently more credible than allegations of sexual misconduct made against a non-family member,” the Court of Appeal ruled.

“Such an approach is clearly improper and, standing alone, requires that we set aside the convictions and order a new trial.”

But the decision doesn’t mean the complainants’ family ties with the accused are irrelevant, says criminal lawyer Daniel Brown.

“In some cases you say, ‘Why would this person make up a lie that would essentially tear their family apart?’” he says. “The problem in this case is that the judge seemed to premise right from the start that in cases where complainants testify against their own family members, they’re automatically more credible.

“You have to look at the family context and the family dynamics in each particular case as opposed to having a general premise that complainants who testify against family members are automatically more credible in the same way police officers are more believable than other witnesses.”

The Crown had argued the trial judge was simply pointing at the lack of motive in the case and not setting a general principle. But the appeal court read the words differently.

“Although we agree that the passage must be read in context, we are unable to accept the Crown’s submission,” the court said.

Despite the problematic statement, the conviction would have had a better chance of standing had there been more corroborative evidence, says Brown.

“Sometimes judges make mistakes like that and it may not affect the outcome of the case. But this case was particularly unique because it wasn’t what we might call an overwhelming Crown case,” he adds.

“The last thing the Court of Appeal wants is judges to apply general rules of credibility of witnesses instead of looking at it in a particular case by case basis.”

An appeal court judge ordered a new trial in a road rage conviction Thursday after finding the accused was served ineffectively by his legal counsel, who did not allow him to testify in his own defence.

Linofiel Eroma was charged with possession of weapon for a dangerous purpose and aggravated assault after a road rage incident in Toronto, according to the ruling. He was convicted in April 2010, and sentenced to a 90 days in jail to be served intermittently with a three-year probation.

Eroma appealed his conviction, claiming despite his wish to do so, his lawyer Paul Slocombe did not allow him to testify at trial. His testimony would have challenged the complainant’s credibility and the account of eyewitnesses, said Eroma.

“In the absence of some explanation or response from the appellant’s trial counsel, which has not been forthcoming through no fault of the appellant, the appellant’s claim that he instructed his counsel throughout that he wished to testify and that he was effectively prevented from doing so by his counsel stands uncontradicted,” the appeal court ruled in R. v. Eroma, adding “the presumption of trial counsel’s competency is of greatly diminished force.”

Slocombe, has since been disbarred by the Law Society of Upper Canada as a result of other clients complaining about his conduct, part of which was his failure to follow their instructions.

“There is no doubt that the appellant’s decision whether to testify in his own defence was his alone to make,” said Justice Janet Simmons, writing for a panel including justices Eleanore Cronk and Eileen Gillese.

“Based on this record, we are satisfied that the appellant has established on the balance of probabilities that he wished to testify at his trial and that his instructions to counsel in this regard were ignored or overridden by the appellant’s trial counsel.

“There is every possibility that the appellant’s trial representation occasioned a miscarriage of justice,” added the court, which ordered a new trial.

The accused, who needed a Tagalog interpreter throughout his trial, also said he didn’t understand what was going on at times, especially when his lawyer and the trial judge spoke simultaneously.

The appeal court urged the Crown to proceed with a new trial “having regard to the unique and most unfortunate circumstances of this case.”

When it comes to addressing aboriginal justice issues, yesterday’s federal budget largely upholds the status quo, leaving some lawyers with mixed feelings.

Money for aboriginal issues is not new, it’s just been shuffled around, says David McRobert. (Photo: Laura Pedersen)

While the renewal of funding for aboriginal justice programs is positive, lawyers say they see neglected issues, little in the way of a long-term commitment, and no ambitious plan to tackle the concerns of aboriginal communities.

The 2013 budget plans to spend “$71 million over two years for supplementary policing services, the aboriginal justice strategy, and the family violence prevention program.”

It appears like a hefty sum, but the breakdown of the allocation simply shows a reinstitution of funds from previous years, according to David McRobert, a member of the Ontario Bar Association’s aboriginal law section executive.

The aboriginal justice strategy, a program designed to help aboriginal communities assume greater responsibility for administering justice in their communities, is receiving $11 million in 2013-14. This is consistent with the government’s funding for the program since 2000, which ranged from $9 million to $10 million.

“The recent Iacobucci report for the Ministry of Attorney General on flaws in the jury system with respect to aboriginal participation and the fact the aboriginal peoples are vastly overrepresented in our male and female prisons . . . show that native communities need much more control over their justice systems to prevent some terrible ongoing injustices,” says McRobert.

“This money is necessary and a positive development but it is a drop in the bucket.”

Although the budget suggests the strategy is being renewed for two years, Jonathan Rudin, project director at Aboriginal Legal Services of Toronto, says a government memo he received Friday indicates the renewal is only for one year.

“We are happy that the AJS is has been renewed at the same level but if it’s only been renewed for one year, that’s certainly problematic for us in terms of planning and being a able to deliver services,” says Rudin, adding that several programs have been funded by the strategy for many years. “We don’t know from year to year whether we’re going to be around.”

The family violence prevention program, which funds shelter and violence prevention services on reserves, received $11.9 million last year. It’s receiving the exact same amount this year.

But the problem McRobert sees with the budget is also about what’s not in it. “The budget makes no mention of numerous calls for a public inquiry into the high number of missing and murdered indigenous women,” he says.

This year’s budget also allots $33 million over two years to policing support programs in First Nations and Inuit communities. In 2011, the budget provided $30 million over two years to the same program. An additional $3 million over two years is proposed to assign 10 more officers within First Nations police services who will focus on contraband tobacco.

This is good considering the seriousness of the tobacco smuggling problem, says McRobert, but “it seems questionable that 10 new officers will do much.

“Even so, the focus of the Justice department and the Finance department is on justice spending and not on prevention. Smuggling is attractive because other economic opportunities on certain reserves are not available.”