Legal Services Board
Defaults
What is a default?
A “default” is a dishonest failure by a law practice, an associate of a law practice, or an approved clerk to pay or deliver trust money or trust property, or fraudulent dealing with trust property in instances where the fraudulent dealing arises from a dishonest act or omission of an associate of a law practice or an approved clerk.
An associate of a law practice includes not only lawyers but also agents, employees and other persons engaged by a law practice.
The Board is empowered to deal with defaults that have a connection to Victoria, for example where the trust account is maintained under Victorian law or the defaulting practitioner holds or held a Victorian practising certificate. It is not always essential for the default to have occurred in Victoria in order for the matter to be considered by the Board.
Defaults not covered
Some categories of defaults are not covered by the Fidelity Fund. These are defaults of money or property entrusted to or held by a law practice:
- in connection with a financial service for which the practice or associate is required to hold a financial services licence or provides the service as a representative of another person who carries on a financial services business
- in connection with managed investment schemes or mortgage financing
- for investment purposes other than instances where the money or property was entrusted to or held by the practice in the ordinary course of legal practice or primarily in connection with the provision of legal services.
Claimant responsibilities
A person who suffers a pecuniary loss because of a default may make a claim against the Fidelity Fund. In order to assist the Board in investigating a claim it is essential that claimants provide full details of the claim and copies of any substantiating documentation. This will ensure that the investigation can proceed as promptly as possible. The Board may ask for further information and a failure to provide such information can mean a claim will be disallowed.