INDUSTRY SOLUTIONS
Debunking the
Security Myths of Interest- Only Lawyer Accounts
855.274.2800 .
Your banking partner can help protect your clients ’ funds and reduce the firm ’ s risk .
A major , risky misconception amongst law firms is that interest-only lawyer accounts ( IOLAs ) are automatically protected from fraud . Protecting client funds in your possession requires positive action , something that your banking partner can help you with .
Consider using sub-accounts to support your firms master IOLA account . “ If someone gains fraudulent access to the master account , and there are no sub-accounts , all of the funds in the IOLA — potentially millions of dollars — are at risk ,” says Jeffrey Mercado , CFP , MBA , Sr . Managing Director and Head of Law Firm Banking at Sterling .
Sub-account numbers will be only used by your bank , so it ’ s highly unlikely that someone will fraudulently gain access to those sub-account numbers . Without access to these sub-account numbers , any attempt to withdraw money from the IOLA will be fruitless . You ’ ll also want to consider check fraud , as paper checks are incredibly vulnerable to fraud and counterfeiting , as are wire and ACH fraud , during which fraudulent requests , made to look legitimate , are used to trick employees into mistakes .
Make sure you implement a standard daily practice to review accounts and ensure nothing fraudulent has occurred ; and take advantage of the various tools and tactics your banking partner makes available to you to further reduce the risk of fraud .
THE RIGHT ATTITUDE TO REDUCE FRAUD RISK
While tools and techniques implemented by your banking partner can be a great asset in reducing the risk of fraud , protecting against fraud starts with your company culture and mindset . Consider these perspective shifts that can help your law firm guard client funds .
NEVER ASSUME CHECKS ARE VALID . Checks , including bank-issued checks , can be forged . Using services such as Positive Pay can detect fraudulent , altered , or counterfeit checks before the payment is processed . ACH Payables also is a cost-efficient and seamless way to send funds electronically through a national ACH network .
LIMIT ACCESS . The higher the number of employees with access to bank accounts , the higher the vulnerability of that account due to internal fraud or unintentional actions resulting in fraud , such as instigating a wire transfer based on a forged request from a client .
SET UP ALERTS . When it comes to detecting an unauthorized transfer , the more eyes there are on money movement , the greater the chances the unauthorized transfer will be caught . Setting alerts for large wire transfers will notify you and all partners any time an outgoing wire exceeds a particular amount , ensuring that unauthorized transfers are realized quickly .
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