This Div is a JS Trigger
Issue 41 | September 2016

LIANSWERS

This newsletter includes information to help lawyers reduce the likelihood of being sued for malpractice. The material presented is not intended to establish, report, or create the standard of care for lawyers. The articles do not represent a complete analysis of the topics presented, and readers should conduct their own appropriate legal research.
Trust account cheque fraud: Are you running regular bank reconciliations?

LIANS receives regular reports of fake and altered cheques sent to practices all over Nova Scotia in scams designed to debit a lawyer’s trust account. Although most financial institutions have sophisticated their security processes in recent years, bank reconciliations are still required monthly under the Legal Profession Act regulation 10.4.2(ii), to protect your trust accounts and warn you when fraudulent cheques have tested the system.

Shortfalls worth tens of thousands of dollars have occurred despite blatant forgeries of firm trust cheques being used in the transactions. Flags include:

  • the serial number on the cheque is out of sequence with the firm’s ledger  
  • noticeably forged signatures
  • no memo/explanation line on the cheque
  • the payee address (as well as the payee name) being included on the cheque, and
  • no record of the client listed on the cheques

You can also protect yourself using the Positive Pay service offered through most banking institutions. For a minimal monthly fee, this service allows a firm to electronically share the register of all its written cheques with the bank. The bank will then only pay cheques listed in the register as long as the specifications are exact (amount, payee, serial number, etc.). Check with your bank to discuss options for reducing this and other types of cheque fraud, to protect your practice as well as your peace of mind.