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Dunedin lawyer John Milne, who is to face Law Society charges and is being separately investigated by the Serious Fraud Office, has been adjudged bankrupt, in the High Court at Christchurch.
The Otago branch of the Law Society's Otago branch is still processing three complaints against Mr Milne, over his allegedly having taken loans from clients in past years, which have been estimated, but not confirmed, to total between $2 million and $3.8 million.
The Otago branch intends to bring the charges before the New Zealand Lawyers and Conveyancers Disciplinary Tribunal, and also to prosecute the case.
Details of Mr Milne's insolvency are held by the Ministry of Economic Development Insolvency and Trustee Service, which says he was made insolvent by a debtor petition to the High Court on October 11.
The convener of the standards committee of the Otago branch of the Law Society, David More, was contacted and said Mr Milne's legal counsel had informed him of the bankruptcy.
Proceedings by the Otago branch would continue, with the only possible change being Mr Milne's ability to meet any legal costs, should costs be ordered against him by the disciplinary tribunal.
Mr Milne, who no longer has a practising certificate, had his legal practice in Dunedin for several decades before it was bought by Dunedin law firm Craig Paddon Law five years ago.
He later worked for that firm in Christchurch, beginning in July 2008, but ceased employment in about June this year.
The law firm had been unaware of Mr Milne borrowing money from clients.
• A two-month old register of affected persons, started by Dunedin solicitor Alistair Paterson, has in the past week grown from five to seven former clients; from a possible pool of up to 38 clients.
The register could collectively look at numerous issues around the clients' legal rights and possibility of compensation claims.