Law Society, Troubled Firm Clash Over Intervention

A law firm shut down by the Law Society for allegedly misappropriating client funds, along with clients whose money was frozen, have argued against the society's intervention in a court hearing, but the professional association insisted it was the best available solution.

The Law Society intervened in the practice of Wong, Fung and co. late last year after concluding that a former clerk had misappropriated money belonging to its clients and the firm had committed serious breaches of lawyer accounting rules.

The society appointed an intervening agent, together with five other assisting law firms, to handle the intervention work.

The troubled firm applied for leave for judicial review, challenging the society's decision to intervene.

In a hearing on Thursday, Paul Kwong, a lawyer representing the firm, argued a shortfall of around 23 million dollars in the firm’s bank accounts previously identified by the society had been made up for, and that there was no evidence any shortfall still existed.

Kwong also said it was unreasonable that malpractice on the part of a former clerk of the firm more than a year ago had resulted in the clients' money being frozen.

He also argued the court has jurisdiction to resolve the dispute in a judicial review, even though the Legal Professional Ordinance gives the Law Society the power to intervene in a law firm under specific circumstances.

One of the affected clients, surnamed Li, who attended the hearing, told High Court judge Russell Coleman that she hoped the court could take the clients’ views into account when reaching his decision.

Speaking on behalf of around 120 affected clients, Li said they hoped the Law Society could return the full amount of their deposited funds in the firm as soon as possible.

But she also said they were told that they would probably have to wait for a few years to get their money back, and may not receive the full amount in the end.

Li said many of the affected clients urgently need to get their money back.

She said she had to postpone her operation after HK$5.4 million deposited in the firm’s account was frozen. She added that others needed their money for retirement.

But senior counsel Abraham Chan, who represented the Law Society, argued that its intervention was the only established avenue to handle the matter, and a judicial review would disrupt the ongoing process and further delay the return of clients' funds.

Chan also said the firm’s accounting records were in disarray, and the best available solution is to let professional hands comb through them.

The counsel added that although the society fully understands the frustrations and grievances of the affected clients, granting a judicial review would not help the situation.

Justice Coleman said he would reserve his judgement to a later date.