CLIENTS in the Australian state of Victoria could lose a significant proportion of more than $25 million owed to them if hopes of bailing out the bankrupt Solicitors Guarantee Fund are dashed.
The Law Institute is calling on the Victorian government to provide cash for aggrieved clients after a higher than average level of claims in the 1994-95 financial year caused the fund to blow out.
The bulk of the claims result from defalcations on mortgage cases by five solicitors and
a law firm.
If the state government refuses to provide aid to the 49-year-old fund the Law Institute will consider imposing a “dreadfully unfair” $2 million retrospective cap on outstanding claims, says the institute president Mark Woods.
This would mean clients of one solicitor, who are collectively owed $20 million, would see their payout reduced to $2 million in total.
The government, which has collected almost $190 million since 1982 in end-of-financial-year excess from the fund, is facing strong public pressure to bankroll the institute.
Earnings over the past 12 years have saved taxpayers from footing the bill for legal aid and other projects including the Victoria Law Foundation and the Attorney General's Law Reform account.
Woods says further crisis meetings will be held this week, and it is hoped clients waiting for compensation will know the outcome by the end of the month.
Woods says: “The institute's view, of course, is that since the government has been the major beneficiary of funds over the years it ought to be tipping some of the money back in to help claimants now.”
He says another option, if the government refuses to channel cash back into the fund, would be for it to stop taking money from the coffers for the next three or four years.
This would enable the Law institute to pay claimants in instalments.
However, Woods says it is likely that public pressure on the institute and parliament will see the government stepping into the breach.
“The government can't take the moral high ground here,” he says. “The public are angry at lawyers for the fact that the money has gone, but they're also angry at the government because it holds the key to our ability to provide redress.”