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Remote Deposit Capture for Law Firms – Quick Practice Tips

Posted on 09/03/2019 by beverlym
2

Nothing is easier than using mobile banking apps or desktop check scanners to deposit client payments. To avoid frustration, protect client funds, and ensure proper recordkeeping follow these tips when using remote deposit capture:

Endorsements

If using an app, consider adding “For mobile deposit only” to your signature endorsement on the paper check. Your bank may not require it, but including this restriction reduces the possibility that someone might redeposit the check intentionally or in error.

Deposit Limits

All banks place limits on mobile app deposits. Unfortunately, those limitations are often not communicated to customers. This issue tends to affect lawyers more than other businesses due to the type of transactions we handle. Retainers are apt to be in the thousands; settlements or other proceeds in the tens of thousands – or more. To avoid frustration, talk to your banker. It may make sense to transition to a more formal method of deposit capture (using a scanner and online deposit system). Limits still apply, but are extremely generous.

Keeping Paper Checks

Retention of paper checks after electronic deposit can be tricky. Some banks want customers to destroy the check as soon as funds appear in the account. Others require checks to be held 60-90 days. Know what your bank expects. Store deposited checks in a secure location. When eligible for destruction, dispose of paper checks in a manner that prevents fraud and protects client confidentiality and privacy.

Fund Availability vs. Collection

In most instances, firms have immediate access to funds deposited electronically, but not always. Regardless, remember that funds must be fully collected before you can draw against them. This is an absolute when it comes to deposits made to your lawyer trust account (IOLTA), and a wise business practice for your operating account.

Check Clearing for the 21st Century Act

If you are interested in the legality of remote deposit capture, known as the Check 21 Act, you can read all about it on the FDIC website.

All Rights Reserved 2019 Beverly Michaelis

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Posted in Collections, Fees, Financial Management, IOLTA | Tagged Beverly Michaelis, Check 21 Act, collection of funds, deposit by phone, eDeposits, Fees, Finances, fund availability, IOLTA, lawyer trust account, Oregon law practice management, RDC, remote deposit capture, scanning checks, trust account, trust accounting | 2 Replies

Quick Tip: Who Gets the Money?

Posted on 06/10/2019 by beverlym
1

There are always ample opportunities for confusion when it comes to depositing IOLTA funds. If you are licensed in Oregon and Washington and your sole office is situated here, which IOLTA account should you use?

The Rules of Professional Conduct Committee has issued an advisory opinion (#959) that if trust account funds accrue as a result of a lawyer’s practice under the lawyer’s Washington license, then those funds should be handled as required by the Washington rules. The key consideration is whether the representation of the client was undertaken using your Washington license.

Managing Client Trust Accounts Rules, Regulations, and Common Sense, published by the Washington State Bar Association.

If you are not using your Washington license, then deposit the funds in your Oregon IOLTA account – assuming no other jurisdiction is in play.

All Rights Reserved 2019 Beverly Michaelis

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Posted in Ethics, IOLTA | Tagged Beverly Michaelis, IOLTA, IOLTA banking, jurisdiction, lawyer trust account, multi-jurisdictional practice, Oregon law practice management, trust account | 1 Reply

The Best Legal Research Tools at Your Fingertips

Posted on 09/26/2016 by beverlym
Reply

If you’re an Oregon lawyer, the best legal research tools are only a mouse-click away on the OSB website.  Best of all, they’re free thanks to the revamped BarBooks platform.

From the Member Login link on the OSB home page, select Enter BarBooks, and choose Explore.  In addition to the familiar OSB Legal Publications – 44 books that cover everything from Administering Oregon Estates to Worker’s Compensation – you will also find:

Other OSB Publications

  • Disciplinary Board Reporter (1998 – 2015)
  • Oregon Formal Ethics Opinions (2016 rev.)
  • Oregon Rules of Professional Conduct Annotated (2016 edition)
  • Oregon Legislation Highlights (2005 – 2016)
  • UPL Advisory Opinions (2013-2014)

OSB Seminar Handbooks

A whopping 132 handbooks from OSB CLEs.  Here are just a few of the topics covered:

  • Advanced Estate Planning
  • Advanced Topics in Nonprofit Law
  • Bankruptcy Basics: The ABCs of Filing Chapter 13
  • Basic Estate Planning and Administration
  • Broadbrush Taxation
  • Business Law
  • Constitutional Law
  • Defending DUII Cases in Oregon
  • Deposition Techniques and Strategy with David Markowitz
  • Drafting Family Law Documents
  • Elder Law
  • Evolving Issues of Labor and Employment Law in the Modern Workplace
  • Fundamentals of Oregon Civil Trial Procedure
  • Intellectual Property Review
  • Legal Ethics—Best Practices
  • Litigation Institute and Retreat
  • Northwest Bankruptcy Institute
  • Real Estate and Land Use Fall Forum
  • Technology Law

Click the nifty download button to save any of these publications or handbooks to your desktop.download

Don’t Forget About Fastcase

All of this is in addition to Fastcase legal research, a good starting point for any research project.

Trust Accounting and Practice Management

While logged into BarBooks, you can also search the Oregon Statutory Time Limitations Handbook from the Professional Liability Fund (PLF).  BUT, the best place to download PLF handbooks is still the PLF website, where you have four to choose from – all available at no cost to Oregon lawyers:
  •  A Guide to Setting Up and Running Your Law Office
  • A Guide to Setting Up and Using Your Lawyer Trust Account
  • Oregon Statutory Time Limitations Handbook
  • Planning Ahead: A Guide to Protecting Your Clients’ Interests in the Event of Your Disability or Death

Even More Online Resources for Lawyers

The OSB Internet Resources for Oregon Lawyers page offers links to more free resources:

  • Oregon Law – links to courts, cases, statutes, legislative history, and rules
  • US Federal Law – links to cases, statutes, rules, and publications
  • Government – links to Oregon OnLine/Oregon Bluebook, BOLI, DOJ, and more
  • Libraries – links to all three law schools + law library values

Take advantage!

[All Rights Reserved 2016 Beverly Michaelis]

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Posted in Ethics, Legal Research, Legislation, Resources | Tagged BarBooks, Beverly Michaelis, CLE, Continuing Legal Education, Disciplinary Board Reporter, ethics opinions, IOLTA, lawyer trust account, New admittee, new bar member, new lawyer, Oregon law practice management, OSB CLE Seminar handbooks, OSB Legislation Highlights, OSB publications, PLF, PLF handbooks, Professional Liability Fund, protecting clients, Resources, running a law office, setting up a law firm, Solo Practice, time limitations, trust account, Unauthorized practice of law, UPL | Leave a reply

Do Lawyers Have an Ethical Duty to Replace Hacked Funds?

Posted on 01/25/2016 by beverlym
1

In October 2015, the North Carolina Bar Association concluded that lawyers who have taken reasonable security measures to safeguard their computer network aren’t ethically obligated to replace client funds if hackers steal client money.  A summary of the opinion appears in Bloomberg.  A subsequent story in the ABA Journal described it this way:

  • Lawyers who don’t take reasonable precautions may have an ethical responsibility to replace stolen client funds if the failure is the proximate cause of trust account theft, the opinion says.
  • Lawyers may also have a responsibility to replace stolen client funds in a different scenario involving a hacked email and a lack of reasonable care. In that hypothetical, a hacker gains information about a real estate transaction by hacking the email of the lawyer or other parties such as the realtor or the seller. The hacker then creates a “spoof” email address that is similar to that of the realtor or seller. The spoof email instructs the lawyer to wire funds to an identified account, despite previous instructions to mail the check. The lawyer wires the money without first contacting the seller by telephone.  The lawyer has an ethical responsibility to replace the funds, the opinion says, because the lawyer failed to take reasonable security measures such as contacting the seller or confirming the seller’s email address. The lawyer could be reimbursed if the bank is found to be legally responsible or insurance covers the stolen funds.
  • Under all circumstances involving third-party theft of client funds, the lawyer owes duties to clients whose money was stolen, including notifying the clients of the theft and helping them identify ways to cover the losses, the opinion says.
Takeaways

While you may not be ethically bound to replace client funds, you may be liable for losses suffered by your clients.  Furthermore, any time there is a theft of client property, you are obligated to inform the client and may be additionally responsible for helping to mitigate the damages [such as covering the cost of credit monitoring if identity theft is involved].

All the above serves as a good reminder to remain vigilant.  For posts on scams, fraud, embezzlement, theft, and related issues, search my blog.

Beverly Michaelis – all rights reserved – 2016.

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Posted in Fees, Financial Management, Fraud Prevention, IOLTA | Tagged Beverly Michaelis, hack, malware, Oregon law practice management, privacy, security, stolen funds, trust account, virus | 1 Reply

Online Banking and IOLTA

Posted on 04/13/2015 by beverlym
Reply

Electronic banking has become the preferred means of receiving, disbursing, and transferring funds for many firms.  Depositing or writing checks has disappeared, much like the practice of sending letters.

Yet, there are lingering concerns.

Despite what some believe, there has never been an ethical prohibition against moving funds online.  The devil is in the details.  Bank confirmations alone do not generate a sufficiently clear audit trial of whose money was transferred and for what purpose.  Failing to document these additional details can lead to trust accounting errors – among them, duplicate transfers.  If you withdraw funds online and don’t record the transfer, you may not remember it.  If you don’t remember the transfer, you may take the funds again, believing you are paying yourself for the first time. Eventually this practice results in overdrawing the trust account.

The workaround is to create a procedure that captures the following details:

  • Date and time of transfer
  • Amount of funds transferred
  • Reason for transfer
  • Name or signature of lawyer authorizing transfer
  • Client and/or matter ID

The reason for transfer should be tied to proper documentation.  Examples include a receipt for an eFiling fee advanced by the firm or the firm’s invoice if the transfer is in payment of a monthly billing.  The reason for transfer should be as specific and complete as possible.

Funds should never be transferred by law firm staff on a lawyer’s verbal say-so.  Always obtain written authorization in some form – an email confirmation or signature/initials on a request form.  In a law firm, access to the trust account should be restricted, based on a reasonable separation of accounting duties designed to prevent theft.  Additionally, if trust accounting is delegated to staff, lawyers must provide proper supervision.  See In re Strader, 27 DB Rptr 219 (2013) (stipulated suspension for failure to supervise an office manager who embezzled nearly $500,000 from the lawyer’s trust account).

If your firm has a multi-jurisdictional practice, ensure that trust accounting procedures meet the strictest applicable standard.  For example, the Washington Rules of Professional Conduct (Washington RPC) prohibit nonlawyers from signing trust account checks: “Only a lawyer admitted to practice law may be an authorized signatory on the account.”  (Washington RPC 1.15A(h)(9)).  By reasonable extension, nonlawyers would not be permitted to disburse funds electronically.  Also of note is Washington RPC 1.15A(h)(5) which provides “All withdrawals must be made only to a named payee and not to cash. Withdrawals must be made by check or by electronic transfer.”  (i.e., withdrawing funds via telephone transfer is prohibited.)

All Rights Reserved [2015] Beverly Michaelis

 

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Posted in Ethics, Fees, Fraud Prevention, IOLTA | Tagged Accounting practices, ACH transactions, Beverly Michaelis, electronic banking, embezzlement, online banking, Oregon law practice management, Oregon RPC, Separation of accounting duties, theft, trust account, Washington RPC | Leave a reply

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