Yes, even lawyers can struggle with debt, and when they do their first question is often: How will a consumer proposal or assignment in bankruptcy affect my license with the Law Society of Upper Canada (the “LSUC”)?
The short answer, is that the LSUC imposes no restrictions on debtors who file consumer proposals, while they impose a number of restrictions on debtors who make an assignment in bankruptcy.
A member must notify the LSUC immediately upon making an assignment in bankruptcy, and while bankrupt may not:
In addition, while bankrupt:
Please note that the information contained in this blog post is based upon information that was received from the LSUC’s regulatory compliance department on February 23, 2017. If you are a lawyer who is concerned about the impacts of an insolvency proceeding upon your license it is incumbent upon you to independently confirm any impact that such a proceeding would have upon your license as rules, regulations, and by-laws change and no Licensed Insolvency Trustee has any ability to prevent restrictions imposed by the LSUC, or any other applicable governing body.
I have provided detailed information below that was obtained directly from the LSUC for your more in-depth consideration.
By-Law 8, Part 1, section 1, provides that a licensee shall immediately notify the Law Society whenever any of the following events occurs:
By-Law 9, Part II, of the Law Society Act imposes on bankrupt licensees certain obligations and restrictions on activities, including the handling of money and other property. Bankrupt licensees must comply with these requirements.
By-Law 9, Part II, section 2(1) states:
Subject to subsection (2) and (3), a licensee who is bankrupt within the meaning of the Bankruptcy and Insolvency Act (Canada) shall not receive from or on behalf of a person or group of persons any money or other property and shall not otherwise handle money or other property that is held in trust for a person or group of persons.
Practice Restrictions While Bankrupt
Please note that pending a discharge from bankruptcy a member may not:
A member’s status will be listed as “practice restricted” on the Law Society’s online Lawyer and Paralegal Directory because of the restrictions noted above.
We would require the following information in order to monitor the member’s compliance with the bankruptcy provisions and restrictions: