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More than 1,000 clients left scrambling

As Heydary files languish, LSUC compensation fund may be on hook
|Written By Yamri Taddese

In excess of 1,000 former clients of Heydary Hamilton PC are scrambling to manage their files after the law firm’s demise, according to the Law Society of Upper Canada.

A manager at Red Seal Notary says business is ongoing at the company. Photo: Glenn Kauth

Heydary Hamilton’s sole director, Javad Heydary, died in November shortly after leaving the country amidst concerns over missing client funds. Two of Heydary’s former clients, Samira and Hassan Abuzour, say they’re out $3.6 million held in trust for them by Heydary Hamilton.

After Heydary’s disappearance, the law society took trusteeship over Heydary Hamilton and is now transferring its client files “in accordance with [the clients’] directions,” says law society spokesman Roy Thomas.

The law society is also assisting clients affected by the loss of funds from Heydary Hamilton’s trust account.

“Any clients who are directly affected by the trust account shortages are being advised and provided with information on the process for making claims to the law society’s compensation fund,” says Thomas.

In an e-mail to Law Times, former Heydary Hamilton client Mark Stever said he’s one of the many clients who have signed a direction to transfer his file.

Following the events surrounding Heydary Hamilton, Stever says he may now have to represent himself in trademark disputes at the Federal Court as well as the Superior Court of Justice.

Stever says he paid $70,000 for the initial retainer and an additional $150,000 to see his case through to completion. As a client, he was happy with the way the lawyers at Heydary Hamilton treated him.

“They never brushed me off,” he says.

In fact, he says Heydary himself gave him a call a number of times to discuss his case and promised — “about a dozen times” — that the firm would never abandon him.

“If Heydary was worried about money, he never let on,” Stever says.

“He was excited about law.”

Now, of course, things are different. “After one and one-half years in motions court, my actions in both Federal [Court] and Superior Court had been postponed in the discovery process due to the recent events of Javad Heydary and trusteeship of Heydary Hamilton by Law Society of Upper Canada,” said Stever.

“I am now one of many . . . adversely affected and harmed by these events. I had paid a significant sum to Heydary Hamilton to be represented on the two actions. I am now in the very difficult position of determining a means of proceeding with or without new counsel.”

The situation is different for Javad Khatiri, who first went to Heydary Hamilton to retain a lawyer for a franchise case in 2006 and has been in a dispute with the law firm ever since. In 2011, Heydary Hamilton launched a $700,000 libel lawsuit against Khatiri for embarking on “a campaign of libel and defamation with the express purpose of embarrassing the plaintiff and injuring its reputation and business.”

According to the statement of claim, Khatiri paid an initial consultation fee of $500 to the law firm and agreed to have it represent him on a contingency-fee basis. But when asked to pay $10,000 as an initial retainer, he decided not to hire the law firm.

Khatiri admits he had been sending many e-mails to the law firm asking for the return of his $500 payment. Although the law society told him it didn’t find any wrongdoing, Khatiri still believes Heydary Hamilton defrauded him and thinks the recent events surrounding the firm should convince the LSUC he was right.

Like Heydary, Khatiri is of Iranian descent. In the statement of claim, Heydary Hamilton said Khatiri’s alleged campaign of defamation was primarily conducted via e-mail to “prominent members of the Persian-Canadian community and others.”

Besides its clients, Heydary Hamilton also had involvement with Red Seal Notary, a company that provides notary public and commissioner of oath services. The company’s web site notes it’s affiliated with Heydary Hamilton but is an independent private company. A manager who didn’t want her name published says business is ongoing at the company but wouldn’t give any more details.

For more, see "Clients to seek millions from Heydary's estate."

  • Peter Shabota
    The most interesting is how all of his five law firms failed except his own family business!! His share in Red Seal Notary should be given to whom money has been lost from trust accounts.
  • Greg Shields
    The Law Society of Upper Canada, through LawPro required Professional Liability or Errors and Omissions (E&O) insurance be in place for all Lawyers, with a $1 million limit of liability per claim and $2 million in the aggregate for all claims, and this includes a sub-limit for Innocent Party Coverage ($250,000) to protect clients from fraud by the lawyer, associate or employee. But separate Crime (aka Fidelity) Insurance policies and 'excess E&O' policies are available to law firms. Crime insurance doesn't protect the perpetrator of the fraud, it protects the assets of the firm and the firm's trust, so defrauded clients can be protected. Any person or company contracting with a service provider should request documented evidence this insurance, E&O, Crime, and even Cyber/Private insurance, is in place. For most lawyers the mandatory limits are not enough and clients should determine what 'Excess' or additional policy limits would make them comfortable to engage that firm.
  • sheldon tenenbaum
    One might have thought that the incident would merit a mention on the firm's website: www.heydary.com
  • Albin
    It seems to me these situations involving client money in trust accounts should be fully insured under the E&O regime, rather than under some discretionary Law Society comp fund. Surprising that an absconding lawyer whose practice has been foreclosed would be a problem for clients wanting return of their trust deposits. It's sinful to talk about "client losses" in this context. These liabilities should be fully insured.
  • Timothy Sullivan
    Professional insurance is about negligence to protect lawyers and their clients from mistakes which cost money and which can lead to an action of negligence against the insured -- the lawyer. Taking money from a trust fund is theft and it is intentional. I cannot imagine what insurance company would insure against intentional theft or what premiums there would be to insure that liability.
    "Fortuitous" events -- 'luck' as it were, is what insurance protects against.
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