LSO tribunal considers Indigenous background in sentencing lawyer for misappropriation of funds

First misappropriation case where unique circumstances led to lesser penalty than license revocation

LSO tribunal considers Indigenous background in sentencing lawyer for misappropriation of funds

The Law Society of Ontario has obtained an eight-month suspension order against an Indigenous lawyer who admitted to misappropriating over $100,000 from her firm’s mixed trust account to pay its operating expenses and failing to maintain books and records. The tribunal noted that this was the first case involving proven dishonesty such as misappropriation where exceptional circumstances have led to a penalty lesser than a license revocation.

In Law Society of Ontario v. McCullough, panel chair Peter Wardle wrote that Helen McCullough’s circumstances are directly connected to her life experience as an Indigenous woman and must be considered on the Gladue principles in cases involving Indigenous licensees.

The disciplinary panel held that McCullough’s circumstances were extraordinary and compelling. The considerations included the impacts of cultural displacement, her efforts to overcome experiences of hardship, disadvantage, and violence as a young person to become a lawyer at 41 years old and her ongoing service to an important community of clients, many of whom are Indigenous parents needing representation in child protection proceedings.

The panel considered that McCullough began her legal career when she adopted her four nieces and nephews who had complex special needs and the significant stress she faced at the time of the misconduct because of the financial support she was providing to family members.

“The parties agree that when these circumstances are considered in the context of Gladue principles, the result is that the penalty should not involve the loss of the lawyer’s licence,” Wardle wrote.

The tribunal ordered an eight-month suspension, imposed practice restrictions for the one year following McCullough’s return, and required her to meet with an elder or traditional teacher during her suspension. In addition, the tribunal awards costs of $5000 to the LSO.

The tribunal found that between January 2018 and October 2019, McCullough misappropriated $116,902.61 from funds held on clients’ behalf in her firm’s mixed trust account. She transferred the funds to pay the firm’s operating expenses when the general account had insufficient funds. McCullough reimbursed the trust account typically within days or weeks of the withdrawal.

Simultaneously, McCullough’s books and records were incomplete and not in compliance with by-law 9. For example, she did not update her trust reconciliations, general receipts, and disbursement journals and failed to maintain her fee books, journals, or chronological billing files. Furthermore, McCullough’s client identification was incorrect, and trust reconciliations did not include the client trust listing and bank charges taken from the trust account.

The tribunal noted that McCullough had corrected all the deficiencies in her books and records, including hiring a new bookkeeper, instituting new practice management software, laying off staff and reducing expenses.

The tribunal emphasized the principle in Bolton v. Law Society, which held that in cases of proven dishonesty, the tribunal has almost unfailingly ordered a license revocation. However, the tribunal also considered that in Mucha v. Law Society, a case involving knowing participation in mortgage fraud, the appeal panel concluded that only “exceptional circumstances of mitigation” could justify a departure from the ordinary disposition of license revocation. 

The tribunal wrote that while there was no reported decision since Mucha, where exceptional circumstances justified a penalty short of licence termination in a case involving proven dishonesty such as misappropriation, Mucha contemplated the possibility. The panel also considered the recent decision of Law Society of Ontario v. Suzor, which held that while the Bolton principle is inherently unforgiving, “it is not devoid of mercy.”

The panel further received information regarding the unique systemic and background factors which may have affected McCullough’s actions through a Gladue report.

McCullough was born and raised in Australia before moving to Ontario with little knowledge of her Indigenous culture. She is a status Indian and derives her Indigenous ancestry from her maternal grandmother. However, McCullough’s brother sold her into marriage at age 15, and she lost her status under the Indian Act because of marrying a non-Indigenous man. As a result, McCullough did not become a registered member of Nipissing First Nation until 2014.

“The Lawyer had a tumultuous youth, which included drug use and related illness, exploitation, dropping out of school, gender-based violence and becoming a parent to her son at age 17,” the tribunal wrote. McCullough eventually left the abusive marriage and remarried.

At age 28, McCullough graduated from York University and began working at Osgoode Hall as a conference coordinator. She began law school at Osgoode Hall at 36 and was called to the bar in 1997 at 41 years old.

In her first year as an associate, she adopted her four nieces and nephews, who ranged from two weeks to six years old, after being placed in foster care because of her sister’s drug addictions. 

After separating from her husband in 2008, McCullough relocated to Australia for one year with the children. One of her kids, Holly, remained behind upon their return to Canada. However, on June 6, 2012, Holly was murdered by her boyfriend in Australia. 

“After the death of their sister, the three other children struggled with mental health issues and substance abuse, with two children requiring youth residential mental health treatment.” 

Holly’s murder had a profound impact on McCullough, and in 2010, she was diagnosed with a medical condition which involved 18 months of chemotherapy treatment that resulted in depression.

At the time of the misconduct, McCullough’s daughter used drugs and alcohol and continued to do so after birthing a child. McCullough cared for them until her granddaughter was two years old while continuing to run her legal practice. 

The tribunal wrote that McCullough’s children are currently employed and drug and alcohol-free and that she regularly sees a psychiatrist. 

While now a member of her First Nation, the tribunal wrote that McCullough struggles with the cultural displacement and tensions from Nipissing community members towards her family. 

The Gladue report also explored the reality that because of the legacy of colonization and their disadvantaged circumstances, Indigenous girls and women are significantly more likely to experience exploitation and violence than non-Indigenous women.

“The Lawyer’s life experiences beginning as a teenager are consistent with this sad reality,” the tribunal wrote.

McCullough provided 11-character reference letters, ranging from her children, other relatives, former clients, psychiatrist, and staff. The tribunal wrote that a clear thread is that she is sincere, selfless, and a tireless worker who has spent a lifetime helping those around her.

“She is deeply remorseful and admits that after 30 years of an unblemished practice, she misused her trust account instead of applying for a line of credit. Each day she regrets those actions.”

Wynna Brown, the LSO director of external relations and communications says the tribunal’s analysis reflects the law society’s recognition of the important regulatory work of supporting Indigenous licensees and increasing the public’s access to legal services provided by Indigenous licensees.

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