Should the estate lawyer be disbarred for failing to stop embezzling executor?

I recently received a comment on this blog from a reader in Ontario talking about whether an estate lawyer might be disbarred for failing to stop an embezzling executor. Although I replied to the post, I thought the discussion might be of interest to many of you, so I'm posting it below. I often see questions and comments about the role of the estate lawyer, and I conclude that most people think the lawyer has a lot more control and influence over the estate than he/she really has. Read on to see the reader's comment and my response:

"The Province and the Ministry of Attorney General have got to start taking elder financial fraud and Executor fraud much more seriously. I am in the middle of a nasty court battle because the estate attorney turned a blind eye and allowed the Executor to rob the estate of hundreds of thousands of dollars. And will the UCLS disbar this attorney for gross negligence? Good luck with that..."

I agree completely that elder financial fraud and executor fraud need to be addressed more seriously, more often, more thoroughly, and more effectively. It's more widespread than anyone wants to believe.

I don't know the facts of your case, of course, but I do want to make a general comment. I think you misunderstand the role and the power of an estate lawyer. There isn't much a lawyer can do to stop a client who he thinks may be stealing from the estate.

Exactly how does a lawyer stop an executor from stealing? He can only do what any citizen can do - tell them to stop. And if the executor does not stop, then what? What would you do? Call the police? That's an option for most people, assuming there is clear evidence of theft. However, a lawyer is bound by lawyer-client privilege not to divulge what his client has told him. So calling the police - or anyone else - is out.

A lawyer can't go to a judge, either. Our legal system is set up so that lawyers can't tell on their clients. Based on public safety concerns, there have been a couple of exceptions made, as set out in the following rule from the lawyer's Code of Conduct:

Where a lawyer believes upon reasonable grounds that there is an imminent risk to an identifiable person or group of death or serious bodily harm, including serious psychological harm that would substantially interfere with health or wellbeing, the lawyer shall disclose confidential information where it is necessary to do so in order to prevent the death or harm, but shall not disclose more information than is required.

No doubt this is the rule that you are relying on in your case. However, to date the "harm" mentioned in this rule has been limited to child abuse, or physical endangerment. To my knowledge, the Code of Conduct has never required, or even permitted, lawyers to disclose information about clients based on the existence or threat of financial harm.

The only thing the lawyer can do is refuse to work with that executor. If money has already gone missing, that is of no help whatsoever to the beneficiaries.

Now, on the other hand, if it can be proved that the lawyer actively helped the executor to steal money, that's different. That's illegal for anyone, including a lawyer.  Here is what the Ontario lawyer's Code of Conduct says about that:

When advising the client the lawyer must never knowingly assist in or encourage any dishonesty, fraud, crime or illegal conduct, or instruct the client on how to violate the law and avoid punishment. The lawyer should be on guard against becoming the tool or dupe of an unscrupulous client or of
persons associated with such a client.

The problem here is, again, lying by the executor; he can lie to the lawyer about what he is doing with the money.

Beneficiaries are often horrified to find that the estate lawyer has released the entire estate to the executor, rather than to the beneficiaries. But that's what is supposed to happen. It's the executor who has the responsibility to distribute the estate, not the lawyer. The lawyer's job is to get the documentation through probate, and that's it unless the client specifically asks for more help. If the executor instructs the lawyer to give him the entire account and says that he's going to pay the beneficiaries, of course the lawyer is going to hand it over. For one, the executor is his client and calls the shots, so the lawyer cannot refuse. Two, as I said, it's the executor who is bound by law to pay the beneficiaries. And three, that's the usual procedure for estates so there is nothing suspicious about it.

I know that seems hard for people to understand, but that is the law. Even if the lawyer suspects that the executor is skimming, all he can really do is warn him of the law and the consequences of breaching it. Believe me, some executors are greedy enough to lie to the lawyer about what they intend to do with the money and take their chances.

Despite what the public likes to think, most lawyers are honest, hard-working people. There's no advantage to us to allow an executor client to rip off beneficiaries. None whatsoever. In fact, all it would do is bring down complaints and lawsuits on our heads. Why would any of us risk our entire livelihood over an estate?

If the lawyer in your case was actively involved, then I agree with you that he should be disbarred. We don't need him in our profession. But if your complaint is that he didn't stop the executor, that's going to be a tough one.