Ethics
Ethics and Attorney
Bank Accounts
Protect Your Legal Practice Against Financial Crimes,
Protect Yourself Against Liability Annie B. Hirsch
with contributions from M&T Bank F
raud schemes, including check counterfeiting losses, cost U.S.
companies and financial institutions more than $10 billion annually. Te
number of fraudulent checks presented increased 28 percent last year, according to an American Bankers Association fraud survey. Often the perpetrators escape detection and/ or prosecution, leaving the bank or the customer to incur the loss. Applicable law and contractual relationships may place liability on either the bank or its customer (the attorney/law firm) for fraud losses, depending on the facts specific to that loss. Attorneys, specifically, are often targeted by counterfeit check schemes. Tis is because we routinely represent a broad array of clients and handle large dollar transactions.
Tese wide variations allow
perpetrators to more easily slip by, undetected, as they attempt to infiltrate our operating and IOLTA accounts. In today’s day and age, attorneys need to be vigilant as financial crimes continue to increase in frequency and sophistication.
Types of Fraudulent Schemes Counterfeiting Counterfeiting is one of the most rapidly growing areas of
If strict protocols are not followed,
attorneys who fall victim to these crimes could themselves face possible charges of malpractice, possible ethical violations, and could be held civilly liable for the missing money. With advanced computer technology on the rise, fraud artists can now counterfeit checks and perpetrate fraudulent schemes with greater ease than ever before. Tis article is meant to serve as a warning for solo practitioners and larger firms alike. It will also serve as a guide for what to look for and what you can do to prevent your firm from falling prey to these financial predators.
check fraud. Since business checks are circulated with company checking account numbers and authorized signatures in “plain view,” scam artists have access to all the information they need to produce a counterfeit check. Using basic personal computers, Internet technology, computer software, color copiers and color printers, the perpetrator can easily produce counterfeit checks substantially or completely identical to genuine checks. Fraudulent schemes targeting attorneys,
typically, but
not always, involve a new “client” contacting the attorney for possible representation. Te “client” will typically describe an unremarkable factual scenario which, on its face, makes sense and requires legal representation. Shortly thereafter, the attorney will receive a purported cashier’s or corporate check (usually for an amount in excess of $100,000) consistent with the set of facts described by the “clients.” Te purported check will look legitimate, may appear to
be drawn on a large, well-known bank, and may contain little or no clues as to its fraudulent nature. Te “client” will have instructed the attorney to deposit the check into their attorney
Trial Reporter / Winter 2012 23
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