The Good Book is right – the love of money is the root of all evil. Since June 2006, three high profile cases of lawyers absconding with clients’ money have made the headlines and the second case was after Chief Justice Chan Sek Keong suggested imposing stricter rules on how small firms handle their clients’ money.

As the President of the Law Society, Michael Hwang SC opined, “Whatever system you have, you can’t stop outright, deliberate, malicious embezzlement. All you can do is try and make it more difficult.”

So what is the best way out of this conundrum? I think the key lies in the words ‘whatever system’. Suppose you get rid of the system. Huh?

One way is to ask if ‘business as usual’ can go on without lawyers having to act as middle-men where large sums of money is concerned.

Think about it – do we really need to deposit cash with lawyers so that they can deposit it in their ‘segregated’ accounts and earn all that interest while your deal takes its time to go through the process? Instead of giving cash, give a collateral-backed instrument, e.g. a bank guarantee (BG). Deposit this BG with the lawyer instead of cash and you have taken away the temptation that the weak-kneed lawyer will succumb to.

Sure, there is bound to be objections, but once the onion is peeled, you will see that there is really no reason why the BG is not acceptable. BGs are usually collateralised by cash or credit-worthy assets and backed by the bank issuing them. It is cheaper than giving cash as your collateral (cash or other assets) is sitting somewhere earning you interest or rent (if you use a property as collateral) or it could be even more productively lubricating your business machinery in the form of cash-flow.

When it comes to earnest money, the big guys are using paper rather than cash. Most people doing regular transactions do not realise though that they could just as easily go to a bank, pay about 0.5%-2% fee (of the face value of the BG) and the bank will issue a piece of paper just as ‘earnest-able’ as cash. Lawyers do not encourage it because they say it is too slow or cumbersome – but hey, it is not too slow, it just takes a trip to the bank but you know that you have peace of mind and you get to keep all that interest you earn. For those of you who have private bankers, all you need is a phone call. Some banks will even earmark (i.e. freeze or set aside the stated amount so you can’t withdraw/ or consider it as available cash) the amount already maintained as balance in your account.

Some lawyers are proposing a form of independent body to hold or administer the money. This may seem the most obvious solution but this would impose bureaucracy and add to the cost of legal services – which is already prohibitive. When people do a transaction, they don’t want hassle and red tape. They want a safe and simple way and we already have a mechanism in place in the form of banks and financial institutions, which are insured and (usually) well capitalised.

Since we started with root causes, it would be remiss not to end with root causes. One innovation many business schools implemented in the late eighties and early nineties in response to the corporate excesses and lapses in ethical judgment was to introduce courses in ethics and character building. Perhaps law schools in Singapore should study the effects of these implementations to see if it was effective. After all, the Good Book did exhort us to teach a child in the way he should go, so that when he is grown, he will not depart from the path that he has been taught. Some sage once said that we get our name from our ancestors, but from our virtues come our honour. How true! 

George Ichitagan is a first year law student who has chosen to write under a pen name.