Not the "Pee Pee Tape," But the "PP Post"- and just as bad

[captainsblog]

As jubliant as Sunday was, yesterday was one for the Books of the Dead.  I had a lot of catching up of work to do, we had to shlep the hybrid to the dealer at the end of the day to have its cord checked out, so losing my entire morning to a financial clusterfuck was not what I'd planned on.

I missed the call when it came in right after 9 a.m.:

Hi, this is Mary from [law firm that wrote the settlement check I picked up last week]. Um, that check's probably going to come back, so can you redeposit it when it's returned? Thanks.

Translation: We bounced a check to you out of our trust account, and it's going to cause a bunch of YOUR trust account checks to bounce and probably checks out of the other business and personal accounts you transferred your fee to, and the court system will be notified and you're going to spend a week in a Grievance Committee audit. No biggie!

How. The. FUCK?!? could that happen?

Here's how: there's a new service being offered to bank customers such as law firms called "Positive Pay," and its designed to prevent fraud.  My simple analogy is this:

If you want to stop burglars (or as my mom called them, "burgulurrs")  from breaking into your house, install an alarm, or shatterproof glass, or get a dog. Do NOT install a trip wire attached to a loaded assault rifle or run high voltage through the window frame like that lady did on Fargo, cause that's just unsafe, yaknow?

On a similar note, if you want to stop fraudsters from breaking into your trust account, restrict access to the account number and deposit slips, be careful of any last minute changes in wire instructions, and monitor your transactions daily. Do NOT sign up for a service your bank may offer called "Positive Pay," which will automatically bounce any check you wrote on a trust account that their A.I. algorithm flags for any or no reason unless you tell them to pay that check within two hours, even on the 5th of July. That's just not trustworthy, youbetcha!

Which is exactly what happened.

The check in question was delivered to me late on Tuesday the 2nd. I just missed the closing time of the branch of my trust account bank in the same building as the law firm; that might, or might not, have moved the whole kerfuffle up one business day and caused the thing not to have happened. But it was a trust account check from a large reputable law firm, which they had made me wait a whole week to be sure it cleared into their trust account, so I deposited it Wednesday, waited until Friday to be sure my bank had made the funds available, and then wrote the checks to me for my fee and to the client for its remaining portion that afternoon.

Meanwhile, the law firm, which had signed up for this anti-fraud service, got this email on Friday morning like they always do on business days:



I redacted the amount, but there was no doubt: it was the check they wrote to me. Any other business day, their accounting department would have seen the email and "decisioned" it in my favor. But Friday was one of those weird not-holiday-holidays, recently referred to by a karma-inviting blogger as one of those  “revenge of the private workforce“ occasions when we get to take the day off while the banks, post office and government offices still have to go do their jobs.

Boy howdy did their bank do its job. Despite that office, and my office, all being closed, the KeyBot, not getting a decision from their accountant, proceeded to bounce that trust account check.

I went to my bank’s own site, and sure enough, at that moment my trust account was over $11,000 short.  This had to be fixed by the end of the day, or else my bank would be obligated to snitch on me to the Grievance Committee, and while my explanation would be simple and convincing, it would probably not stop them from doing a full seven year audit of every jot and tittle of records of deposits into, and checks out of, my trust account. That is exactly what happened to people in my Rochester office when a former attorney there did some bad math on one occasion and resulted in investigators spending a whole week digging through their paper records.

This made me angry. You wouldn’t like me when I’m angry. First I wanted to figure out what the “payee name conflict“ was, so I looked at the image of the check that I deposited. Yup, they spelled my last name with an extra letter in the middle, like about 60% of people do on the first try. It is never a problem with my own bank. They deposit checks with one L or two in the middle, written to Ray or Raymond, and they would probably take a check to “hey you“ if I presented one of those. I also discovered that the big law firm, regardless of what trouble they might get in for bouncing a check out of THEIR trust account, had already and repeatedly committed another violation: the checks on their account are not labeled as being from a “trust account.“ Mine always have had that, and I even at one point threw out a remaining stack of them and had another set printed  with the magic and mandatory letters IOLA included. THAT stands for “Interest On Lawyer Accounts,“  and is a once laudatory and now mandatory way for lawyers to deal with the tiny amounts of interest that accumulate on client trust fund balances that are all mixed together.

I then called the poor woman who had to report this news to me. I was not kind. I told her their anti-fraud programs were not my problem, and if those funds weren’t in my account within the next several hours, I was going to go all whup ass on them with the Grievance Committee. I sent her my wire instructions, got a confirmation within minutes that they had sent the replacement funds, and then called my own contact at my own bank. He promised to put a hold on any further rejections of any checks in transit while the problem was being worked out And by about 11 AM, when I obsessively checked my balance again, the replacement money was there, there will be no bad marks on my permanent record card, and the only cost to me, other than the temporary 200 point increase in my blood pressure, will be some minor fees for the return of the deposited check and an incoming wire charge. The other firm will be paying that as soon as I find out how much it is.

I have told several other lawyers, and so far at least one client, about this experience, to warn them about the potential problem and to explain why, from now on, I am not going to write anything against deposited funds for at least one full business day to make sure there’s no artificial intelligence canceling the transaction. One of the lawyers I spoke to raised some other ethical concerns. A law firm using the service may be sharing information from deposits with a third-party that runs this supposed anti-fraud protection program. They are seeing names of clients, names of recipient of checks, their amounts, and possibly what transactions they relate to. And all of that could be considered confidential client information- that we are ethically bound to not disclose and proactively protect from third parties.

Until this morning, none of the lawyers I spoke to, except one, had even heard of this program. It would never affect the Big Law firms using it the way it affected me, because they always have way more in their trust account balances at one time than I ever do, so if one of their incoming deposits gets flagged, they have plenty of OPM* to cover it until the problem gets resolved. That is exactly what we are not allowed to do: to use funds from one client to cover a shortfall in another's funds on hand. Each client must, at all times, maintain a positive balance in the trust account. So they trying to prevent fraud of one, they are enabling, and maybe even encouraging, a different kind.

The lawyer I spoke to today who had heard of it? Was in the process of handing me another large, though not quite as large, settlement check. I have told the client they can have their share of it on Friday, after I am much more sure that his trust account check to me won't be flagged by his bank as being fraudulent. He subscribes to a much saner variation of the program called "Reverse Positive Pay." Under this system, the checks are still reviewed, potential fraud scanned for, and his office notified of anything looking skeevy. BUT. Big difference: while he can approve or disapprove any transaction on that report, if he does nothing, the bank pays the check. That would have saved me the endless aggravation of yesterday's clusterfuck.

* OPM Leading Services was the name of one of the first bankruptcy cases I studied in a continuing ed seminar after joining my first law firm in 1984. It would have made Bernie Madoff proud. The fraudster team brazenly named their leasing company with those initials and told anyone who asked that it stood for "Other People's Money."


----

My day, which began with mad, wound up ending in sad, as I got news from the old neighborhood.

There are very few people still alive who I have known for more than 60 years. There is now one fewer:(



One of them who remains, his older sister and my oldest remaining friend outside of relatives, messaged me at the end of the day yesterday. The older of her two younger brothers, who I have also "known" in the vaguest of senses since he was born after his parents moved next door to us in 1962, has passed away.  When I spoke with her a few weeks ago after just learning of the passing of her mom last October, she told me Anthony had lost a leg to a long term case of diabetes and was being cared for at home by his younger brother and his aging dad.

Anthony was a chef, a son, a brother, an uncle and nephew. He helped take care of his aging parents until disease took much of his mobility and they needed to help care for him.

Dominick survives the loss of his son and is 91. I'm sure he's devastated. There is no funeral to attend, no arrangements being made.  I picked up sympathy cards today to send to the house in East Meadow and Theresa's home in Florida.

May his memory be a blessing.
 

Comments

[weofodthignen]

Poor Anthony, how sad.

I'm sorry for the poor employee, but that's a bit of a disgrace, and I'm very glad you were able to act in time for the damage to be limted to fees you can get that firm to pay. Do they pay their bank for that disaster-waiting-to-happen "service" that just indeed caused a narrowly averted disaster?