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By Michael A. France, Esq.
You have put out three client emergencies in the morning, tried your best to be accurate and articulate in Court in the early afternoon, met your colleagues for a late business lunch, and then taken clients to dinner after work. During the day, you also smoothed over a dispute with your partners, argued with your accountant over deductions, resolved all manner of staff disputes, and listened patiently to a potential new client who does not want to pay his mortgage because, well . . . because he just does not want to. If all of that was not enough and as though you needed something else to worry about, consider that scam artists are actively targeting lawyers' trust accounts and you may be next.
The following is a real report from one of our members (whom we will not identify), and is typical of the common approach.
The 'rest of the story' is that on Wednesday, two days following receipt of the check, I received an 'URGENT' e-mail from the client stating that his investment advisor had mistakenly sent too much money and directing me to wire $70,000.00 to a bank in Istanbul, where I knew he was traveling. I advised him to contact the [city] police department.
If this does not sound familiar, ask yourself this: have you been contacted via the internet for collection work for a foreign company that seems very anxious to send you retainer money? What about an out-of-state law firm that wants to send you a retainer to act as local counsel for a hearing or deposition? The law firm may be real, but that does not mean the person contacting you is who they say they are. Identity theft is not limited to individuals. As you may guess, the point of the scam is to give you a check that will ultimately prove worthless, but convince you to "return" good funds before that fact is revealed.
This is a variation of the Advanced Fee Scam. What makes the con work is the volume of attempts, the commonality of payments coming and going into a firm's trust account, and the fact that a foreign home buyer or company seeking help with collections are anything but uncommon in this environment. What are also key components of the scam are a failure to notice the clues that there may be trouble, and a common misunderstanding as to the workings of the bank deposit process. For example, if you are even a little suspicious, you may check the online statement and see that the deposited funds have been credited to your trust account. The check is legitimate right? Not necessarily.
Maybe you notice that a two-day hold that initially was placed on the deposit by your bank has been lifted or you are even told by your bank that the funds are "available." Now the funds are good right? No. Contrary to the way it may appear online and in contrast to what your bank may actually tell you, the lifting of a hold or a statement that funds are able to be accessed by you does not tell you anything about the true nature of the deposit. In reality, your bank has simply "loaned" the funds to your account pending clearance of the check. If it turns out to be bogus, the funds are "back charged" against your trust account and you are responsible for the difference. Under normal circumstances, a check may not actually "clear" from anywhere from a few days to a few weeks. Therefore, the time you are thinking your trust funds are sound and believing you are safe in returning funds to the new "client", can leave you dangerously exposed.
There are ways to avoid getting stung. First and most obvious, we all must realize that if it is too good to be true, it probably is. Although I have been flattered by the profuse e-mail praise used by alleged foreign clients who profess the need to hire only me, my ego must submit to the reality that the client may not be real. Second, when receiving a demand to return alleged retainer funds, you can simply validate that they are real before doing anything. This can initially be done by taking the check to the bank on which it was drawn, as our member did. In such cases, the lender should be able to immediately tell you if the check itself is a fabrication or if the account on which it was written is overdrawn.
If the scammer has the foresight to use a bank that does not have a branch in the area, you may not have any choice but to ride out the clearance process to its conclusion and not issue a penny until you are told in no uncertain terms that the original funds have cleared. This is not always easy as you are sure to receive daily demands to return the money, and possibly threats to report you to the Bar if you do not comply. Fortunately, Bar rules forbid you in assisting a client to commit a crime and that applies even when you are the potential victim.
Mr. France is the editor of the Sarasota County (Florida) Bar Association Docket and this article first appeared in that publication. It is published here with the permission of the author.
By Sarah Lightner
On March 25-27, the 2010 ABA TechShow was held in Chicago and a plethora of technology information was presented! This was my first time attending the show. When I first decided to sit down and choose what programs I wanted to attend, I was seriously overwhelmed! I had to get on their website just to figure out what seminars to attend. After careful consideration of all of the sections to attend, I decided to follow the social media, taking your office virtual, and becoming a paperless office tracks. I believe that due to time constraints it was somewhat difficult for the presenters to dig deep into any of the topics that were available. However, the little flash drive that was given to us as part of attending the show became a super helpful tool in gaining further information on any topic. The most insightful topic I attended was dealing with virtual law offices. Nicole Garton-Jones from Canada presented "Taking Your Office Virtual". She described how she operated her law office online from managing associate attorneys to contact with clients.
I truly believe that the law profession is being somewhat taken over by the virtual world. You can purchase contract documents, divorce packets, will packets, and numerous other packets online. So, why not offer your legal services in a so-called "packet" as well. Having the virtual presence seems to be thriving for those that I spoke with at the conference. Especially since the overhead of running a virtual office is substantially cut, therefore, putting more money in the attorney's pocket. Another perk to a virtual office is making more money in less time. We all love that! Time commuting to file documents and commuting to an office away from home can be virtually non-existent with a virtual office thus raising your bottom line. The biggest perk of a virtual office is that you can basically get work done anywhere you have internet access, whether it be at the local Biggby Coffee shop, or on the sandy shore of Lake Michigan. Many attorneys have family to take care of and have kid's games to attend, but with a conventional office that just does not seem possible. With the virtual office, they can work online anytime they choose and still maintain a stable family environment, which is very important to me as my husband and I are raising two young children.
Overall, attending the TechShow was a great experience. I was able to gain useful knowledge along with a year or more supply of ink pens, highlighters, and notepads!
Sarah is a paralegal in the law firm of Past Chairman Burt Burleson where for 6 ½ years she has been bringing Burt into the world of law office technology.
Grand Rapids • September 29 to October 1
There's never been a better time to invest in yourself and your practice—and never a better occasion than your annual meeting! Whether you're ready to start your new practice or enhance your current one, the institute provides great programming from outstanding speakers on timely topics: marketing your practice, building a website that's more than cosmetic, selecting useful technology, substantive law updates and tips, techniques for increasing productivity, practices to reduce expense, and approaches to enhance the quality of your life! Four simultaneous break-out sessions featuring FIVE national speakers help you make the program your own. Hear from the best Michigan practitioners, apply their insights in your own office, and discover the secrets to a satisfying and successful work life. For best results, bring your whole staff to attend every session!
Speakers at the Solo & Small Firm Institute
Have you ever wished for a practice management CLE program that was really about what was on your mind? Well, the Law Practice Management & Legal Administrators Section is making that wish a reality.
On Friday, October 1, 2010, when the Solo & Small Firm Institute and the State Bar Annual Meeting take a two-hour lunch break, the LPM & LA Section will be there for you.
We'll have a room set up with some terrific practice management folks available to talk with you about what's on your mind with respect to technology, marketing, office management, efficiency, motivation, and any other law practice topic that you may have on your mind.
There will be no formal presentations—just knowledgeable and helpful experts to help field your questions on these critical law practice management topics. And if that wasn't enough, the Section will provide you with lunch. You must RSVP in advance so that we know how many lunches are needed. Bring your questions, ideas, appetite, and networking spirit to our October 1, 2010, meeting. See you there.
Seating is limited so send your reservation today to the Section Secretary Elizabeth Jolliffe at firstname.lastname@example.org.
By Austin Anderson
Law firm management should prepare and implement a shareholder transition plan. Many small and mid-size law firms are facing the departure of the lawyers who founded the firm. These firms must create a plan enabling the departing lawyers to leave feeling appreciated for their contributions to the firm yet assisting the departing lawyers in transitioning their clients to ensure the continued success of the firm.
Firms should have a formal retirement policy. The formal retirement policy will enable all shareholders to develop their retirement and transition plans in an orderly manner. In addition, the firm is assured of continuity in the development and succession of its younger lawyers. It also assures clients that they can count on the continued delivery of quality legal services from members of the firm.
Firms should establish an age at which all lawyers will retire from active practice with the firm. The retirement age assures younger firm members that there is "light at the end of the tunnel" with respect to advancement in the firm and that a pool of money will be available for reallocation as retiring lawyers leave the firm. An established retirement age for lawyers provides guidance to mid-career and senior lawyers in the planning of their professional and personal lives. Finally, an established retirement age at the firm enables the firm to address problems created by lawyers who wish to continue the practice but may not meet the professional standards associated with the practice of law at the firm. In addition, the retiring lawyers and the firm may develop a contractual arrangement to continue to practice law within guidelines established by the firm. The age at which shareholders are expected to retire varies from age 60 to 75, with intervals at 65 and 70. Few firms allow layers to continue active practice with the firm after the lawyer reaches 75.
The firm's transition plan should start before the lawyer reaches the retirement age and ordinarily concludes with the retirement of the lawyer. There are exceptions to this practice that enable a retiring lawyer to transition clients following formal retirement. During this period the retired lawyer is completing the transition of all his or her clients to other members of the firm.
Most law firm transition plans call for a lawyer to declare when he or she will retire and for the appropriate firm committee to receive a list of the clients the firm intend to transition to members. Accompanying the transitioning of clients is an income protection plan insuring that the lawyer will be compensated during the transition period. The plans call for the transition lawyer, at regular intervals, to advise the appropriate firm committee of the transfer of the clients.
In addition to the 401-k and/or pension and profit-sharing plans offered by the firms, some firms provide additional benefits to retiring and retired lawyers, including health insurance coverage. The health insurance benefits generally are paid until a shareholder reaches age 65 and qualifies for Medicare.
At this point the firm may pay the cost of the supplemental health insurance. The retiring or retired shareholder may be provided office space, often when the retired or retiring shareholder remains actively involved in client retention or attraction. Professional liability insurance may be provided to the retiring or retired lawyer until the firm decides the lawyer should no longer remain insured by the firm. The firm may continue to pay local and state bar association dues for the retired shareholder. This is often true when the firm is located in a state with a mandatory bar membership. Local practice and firm finances may play a role in the determination of benefits to be paid to retired shareholders.
An organized and well-developed law firm transition plan for shareholders will reduce the potential for conflict between the retiring shareholder and the law firm concerning the transfer of clients and payment for the efforts involved.
Austin G. Anderson, B.A., JD, Austin Anderson Consulting, LLC, serves as the business advisor to law firms which he shows how to improve their profitability, marketing efforts, financial discipline, effective human resource management, and engage in succession planning. He is the author or co-author of seven publications and numerous articles on the elements of effective law firm management. He is recognized in the following Who's Who publications: in the Midwest; in American Education; in America; in American Law and in the World. He can be reached at email@example.com or (734) 223-7893.