Tools are available to protect trust accounts from nefarious actors
'The biggest nightmare I had when I started my own firm was making sure that my trust accounting was in order. And then when this happened, it really ruined my day.'
Tad Yates, a solo practitioner who serves on the Board of Governors, rushed nervously to his keyboard a few weeks ago to pull up his bank’s website.
His bookkeeper had just flagged an unauthorized withdrawal from the firm’s trust account. When he logged in, Yates spotted a second one.
“It was somebody paying credit card bills,” he said. “Together, they were about $5,000.”
The bank quickly refunded the money and Yates dutifully reported the incident to The Florida Bar.
“The people at the Bar told me this type of fraud is happening all of the time,” he said.
Yates was a little chagrined when he learned the incident could have been easily prevented.
His bank, Truist, offers a free automated service called, “Fraud Inspector.” Yates quickly signed up.
Now, he gets an email every time money is about to flow from his trust account.
He has until 2 p.m. that day to halt the transaction. If he takes no action, it goes through.
If more Florida Bar members took advantage of service like this, it could prevent a lot of headaches, Yates said.
Cybersecurity experts warn that lawyers, especially solo and small firm practitioners who lack an IT department, are “low hanging fruit” for hackers and ransomware attacks.
Theft from law firm trust accounts is by no means uncommon, said Shanell Schuyler, intake director of the Bar’s Attorney/Consumer Assistance Program (ACAP).
“We’ve just seen an explosion of these kinds of issues that have come up on trust accounts,” she said. “There have been fake checks, counterfeit checks, signatures have been lifted.”
It’s not just a Florida problem, Schuyler said.
“I’ve done a presentation now on this at the national level,” she said. “Other jurisdictions are seeing this type of activity against their members’ trust accounts.”
Truist’s Fraud Inspector isn’t the only free or affordable service available to Florida lawyers, Schuyler stresses.
She points to “Positive Pay.”
LegalFuel, The Practice Resource Center of The Florida Bar, offers a wealth of free forms and other resources related to trust accounts and Chapter 5 of Bar rules that govern trust accounts.
“When opening your account, we strongly recommend that you request that your bank activate Positive Pay on your trust account,” Legal Fuel advises.
The link includes a description of Positive Pay.
According to the LegalFuel description, Positive Pay provides a way for the bank to match the date, check number, dollar amount, and account number of each check presented against a list provided by the account holder.
“These services are free, they’re easy, they just add that extra level of protection to make sure that nothing is leaving that trust account that shouldn’t be leaving,” Schuyler said.
Yates couldn’t agree more.
“The biggest nightmare I had when I started my own firm was making sure that my trust accounting was in order,” he said. “And then when this happened, it really ruined my day.”