A Victoria personal injury lawyer has been found to have committed professional misconduct for how he held thousands of dollars in client legal fees in a trust account while failing to pay taxes.
Monte William Prior has agreed to pay $20,000 after the Law Society of B.C. found he misused his trust account by failing to withdraw some or all of the $760,000 from clients as soon as practicable, by having more than $300 of his own money in the trust and not paying owed taxes in a timely way.
Prior has been practising law in B.C. for more than three decades and has been with Victoria’s Pearlman Lindholm Law Corporation since 1997, where he’s primarily a personal injury lawyer.
An agreement that will now be on Prior’s conduct record includes that he agrees to a statement of facts and that he committed professional misconduct.
Prior’s firm was audited by the Law Society’s Trust Assurance Department for the period between October 2018 and January 2020. That audit determined he used his trust account to hold fees, disbursements and taxes for extended periods of time. The lawyer also charged his clients PST and GST on the legal fees but didn’t pay those funds to the Canada Revenue Agency or the province’s Ministry of Finance as required.
After investigating further, the law society learned Prior – in relation to 55 client matters – held a total of $759,934 in legal fees, PST and GST in his trust for between 60 and 565 days past the final invoice date. Since they were held in the trust for an extended period of time, the legal fees weren’t included in the firm’s corporate income tax return for the corresponding year of the legal services. The fees were then included in the firm’s 2020 tax return.
The law society said the lawyer is remorseful, acknowledged his misconduct and assured that he won’t commit similar wrongdoing in the future. Mitigating factors in the case included how Prior hadn’t misappropriated client funds, the monies were not exposed to any risk, his conduct wasn’t motivated by bad faith and Prior cooperated at all times.
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