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Compensation Fund FAQs

What is the Compensation Fund?

The Law Society's Compensation Fund helps people who have lost money as a result of their lawyer or paralegal's dishonesty.
How is it funded?

The Compensation Fund is entirely funded by Ontario's lawyers and paralegals. The fund represents an effort by lawyers and paralegals to compensate for the misdeeds of a few.

Since 1953, millions of dollars in grants have been paid to deserving clients. The fund was extended to include paralegals licensed by the Law Society in 2008.
What kind of losses may be covered?

The Compensation Fund can consider a grant if you have lost money due to a lawyer or paralegal's dishonesty. Typical claims involve the loss of money from estates, real estate closings and settlements in legal actions.

The loss must arise in connection with the lawyer or paralegal's authorized practice. To qualify, claimants must be able to show that the money or property came into the lawyer or paralegal's hands.

Fees paid to a lawyer or paralegal may be reimbursed only after it is determined that few or no useful services were provided and if there is evidence of dishonesty.

If you believe that the fees charged by your lawyer were too high, you may contact the Assessment Office of the Ontario Superior Court of Justice. See Complaints about Legal Fees.

If you believe the fees charged by your paralegal were too high, you may wish to contact the Small Claims Court. Currently, the jurisdiction of the Small Claims Court is limited to claims of $25,000 or less.See Your Legal Bill - Too High?

If you have a complaint about a lawyer or paralegal, see Complaining about a lawyer or paralegal.
What losses are not covered?

The fund covers losses due to a lawyer or paralegal's dishonesty. The fund does not cover losses resulting from malpractice or negligence, except in special circumstances, as follows:

Claimants may apply to the Law Society Compensation Fund in cases of negligence where their lawyer has intentionally:

a) failed to report a claim at all or in a timely fashion to the professional liability insurer (LawPRO), or

b) failed to co-operate with LawPRO in accordance with the insurance policy’s terms and conditions,

provided that the lawyer intended to prejudice the claimant’s efforts to obtain compensation from LawPRO, resulting in no insurance payment. In such cases, the lawyer’s conduct will be considered dishonest — thereby making the clients eligible to apply to the Compensation Fund for compensation.

If you believe the lawyer or paralegal has made a mistake, you may wish to seek legal advice about your options. You may have to sue the lawyer or paralegal in court. The Law Society cannot pay you money or make a lawyer or paralegal pay you money because of his or her mistake.

Losses on mortgage investments caused by a decline in real estate values are not compensated. Losses arising out of a business venture between a lawyer or paralegal and a client are also not covered. Similarly, the fund will not compensate clients in situations where the lawyer or paralegal has failed to repay a loan given by a client who knew it was for personal use.

Reimbursement is limited to the actual amount taken by the lawyer or paralegal and does not include damages, expenses incurred or lost interest. For example, if a lawyer or paralegal takes money that should have been used to prevent a foreclosure on a home, the fund can reimburse the claimant for the lost money but not the lost house.

If you have a complaint about a lawyer or paralegal, see Complaining about a lawyer or paralegal.
Is there a time limit for filing claims?

Yes. You must notify the Law Society in writing about your loss within six months from the time you first learn of the loss. In some cases, the Law Society may decide to extend this six-month period to two years, but the granting of an extension is not guaranteed and should not be relied upon.
How much can I recover?

You may be reimbursed for a portion or the full amount of your loss. You may not be reimbursed for more than the per claimant limit.

If your claim is due to a paralegal's dishonesty, the present limit is $10,000 per claimant.

If your claim is due to a lawyer's dishonesty, the present limit is $500,000 per claimant for claims involving funds advanced to a lawyer on or after September 22, 2016. (The per claimant limit for funds given to a lawyer between to April 24, 2008 and September 21, 2016 is $150,000.)

Compensation is limited to money received by the lawyer or paralegal for which he or she fails to properly account. In determining the amount of the loss, all payments received by the claimant, including interest payments, are deducted from the claim.

The fund is discretionary and therefore no one has an absolute right to recover money from it.
Who can apply?

You may apply if you have lost money due to a lawyer or paralegal's dishonesty, in connection with their law or legal services practice.

Claimants need not be Canadian citizens. Eligible claimants include trusts and estates. The fund does not pay grants to banks or financial institutions in the business of lending money.

The fund can only deal with claims involving the conduct of lawyers and paralegals licensed by the Law Society of Upper Canada. For example, if you gave money to a Winnipeg lawyer for the purchase of a home in Manitoba, you will need to apply to the Law Society of Manitoba for compensation.

See the Lawyer and Paralegal directory for a list of lawyers and paralegals licensed by the Law Society.
How do I file a claim?

Send a letter to the Compensation Fund explaining the loss. If it appears to be a matter within the fund's jurisdiction, we will send you an application package.

Complete and return the application in triplicate and keep a complete copy for your records. If evidence or documents are being attached to the form, keep copies of those for your files.

There is no application fee and you do not need to be represented by a lawyer or paralegal, although many claimants choose to be, particularly in difficult or complicated claims. The application form does need to be signed in the presence of a Commissioner for Taking Affidavits.

Refer to the yellow pages or web listings to locate a Commissioner for Taking Affidavits in your area.

See Contact Us for contact information.
Who decides whether a claim will be paid?

The Compensation Fund Committee, which is a standing committee of Convocation (the Law Society's Board of Directors), considers grants over $5,000. The Committee decides whether to pay the claim and how much to pay. Law Society staff may determine grants under $5,000.

Guidelines for the determination of grants guide the committee and staff's decisions. There are guidelines for claims relating to paralegals and separate guidelines for claims relating to lawyers.

The guidelines include information for the claimant about the pre-requisites that must be met before a grant may be paid and factors that may affect the amount of any potential grant. For example, where a claim involves having left funds for investment with a lawyer, the degree of risk accepted by the claimant and any carelessness on the part of the claimant that may have contributed to the loss, are factors that may reduce the amount of payment. Hardship on the part of the claimant is also a factor that may be taken into account when the amount of the payment is determined.

All claims to the fund are assigned to a staff lawyer. If the case is straightforward and is eligible for a grant, the staff lawyer may recommend approval of the grant to senior management, if it is under $5,000. If the amount of the grant is $5,000 or more, the staff lawyer may recommend payment of the grant to the committee.
How long does the claims process take?

The entire process may take anywhere from six months to eighteen months or more.

There are several reasons why the review of claims may be delayed. First of all, as the ability to receive a grant from the fund depends on proof of dishonesty, disciplinary proceedings taken against the lawyer or paralegal involved may need to be completed before applications are considered.

Secondly, some time is required to ensure that the client has explored all other reasonable avenues to recover the funds.

Finally, many applications are submitted to the fund without sufficient supporting documentation and delays can occur while additional information is sought. It is important to include as much information as possible to assist fund staff.
What other steps should claimants take?

The fund is a fund of last resort. The claimant must try to recover the loss from the lawyer or paralegal and from any other sources including insurance or the lawyer or paralegal's partners, if any. However, notice of a claim should be filed with the fund as soon as possible. The Compensation Fund staff will determine whether all reasonable steps have been taken to recover the funds from other sources.

If a claim strongly suggests criminal conduct on the part of the lawyer or paralegal, the claimant must report the facts to the relevant police authority for investigation before a grant may be considered.

As the Law Society cannot provide legal advice, claimants may wish to consult another lawyer or paralegal - see Services for the Public. There are deadlines for starting legal actions so it is best not to delay.

If you have a complaint about a lawyer or paralegal, see Complaining about a lawyer or paralegal.

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