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Winnipeg Free Press - PRINT EDITION

Winnipeg lawyer disbarred

-- Court upholds law society ruling -- Duped client into selling house to wife

By: Mike McIntyre

Posted: 10/25/2011 1:00 AM

A veteran Winnipeg lawyer has been disbarred after a routine audit uncovered a case of major malpractice where he duped a client so his own family could cash in on their misfortune.

James Richard Smith lost his final shot at keeping his 37-year career alive earlier this month when the Manitoba Court of Appeal rejected his bid to overturn the Law Society of Manitoba's ruling.

Smith was convicted of seven counts of professional misconduct by a disciplinary committee, which then recommended the most serious sanction available. Smith is believed to be the first provincial lawyer ever disbarred without having misappropriated funds in a criminal manner.

"Our view of all the facts is that they disclose a pattern of lack of integrity," the Law Society of Manitoba wrote in its original decision that has now been upheld.

Smith's downward spiral began in 2007 when the law society reviewed his books as part of its normal practice. It began to focus on the estate of a woman identified as C.B., who had been his client and designated Smith as sole executor of her will. Smith was also the lawyer for her estate, which consisted of about $20,000 savings and a home that had been appraised at $90,000. Her beneficiaries were her two sons -- with a 41.66 per cent share each -- and a charity to receive the other 16.67 per cent.

Following C.B.'s death, her two sons contacted Smith about distribution of her cash. Smith responded with a letter, claiming he had found an "investor" who was interested in purchasing their mother's home for $50,000 -- $20,000 on acceptance of the offer and $30,000 on transfer of title. Smith claimed the $90,000 value on her home was a "gross amount" that would be greatly reduced by commissions and home repairs if sold on the open market.

Smith suggested to the two sons they would likely receive about the same amount on the home if they agreed to sell cheaper to the investor he had lined up. They quickly agreed and the deal was consummated.

There was just one thing Smith failed to tell them -- the mystery buyer was actually his wife.

"As an executor of the estate, Mr. Smith owed a fiduciary duty to the beneficiaries to act in their best interests. Instead, in his capacity as legal counsel to the estate, he wrote a letter that was misleading in order to obtain a financial benefit for his family," the law society wrote.

"When Mr. Smith chose to act for both sides in the real estate deal, he took on the responsibility of being loyal to and giving the best possible advice to both clients."

Smith continued to insist he'd done nothing wrong through the process and was also convicted of failing to answer certain law society questions and inquiries, in addition to other specific misconduct charges. He claimed he should have received a lighter sanction such as a reprimand or suspension.

The Appeal Court has now found the law society was justified in taking such extreme action against Smith, particularly given his lack of insight and remorse.

"Our obligation is to impose a penalty that protects the public and maintains the reputation of the profession. This includes ensuring that only people who understand and adhere to the duty to act with the utmost of integrity practise law. Unfortunately, Mr. Smith is not such a person. When the opportunity presented itself to be dishonest, he took it," the law society wrote.

They concluded by saying Smith, if presented with a similar opportunity in the future, "would once again favour his personal circumstances over that of the public."

www.mikeoncrime.com

Republished from the Winnipeg Free Press print edition October 25, 2011 A3

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