Oct. 17, 2013
Ralph O. Williams III
See more on Ralph O. Williams IIIADR Services Inc. Los Angeles Specialties: insurance, business litigation, real estate, employment, legal/accounting malpractice
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Consider one of Williams' recent mediations:
A lawyer responded to an email from what he thought was a potential client who wanted to hire him for a six-figure collection matter.
The purported client e-signs an hourly engagement agreement, and the lawyer writes a demand letter to the potential defendant, who agrees to pay up.
The lawyer collects the debtor's check and deposits it in his trust account. After conferring with a bank clerk who mistakenly tells him that the check has cleared, the lawyer then wires the funds offshore, less his fees.
"That's where the wheels came off the wagon," Williams said.
The check bounces and the lawyer is sued by his bank for overdrawing his trust account.
"The lawyer's malpractice insurance carrier reserves rights, because the trust account administration, vis-a-vis the bank, is not considered to be rendering professional services for others," Williams explained.
This was a classic Internet Nigerian check scam, he said, adding, "Seasoned lawyers have fallen for it. Most lawyers do not understand banking law very well, unless they are specialists. They don't know that they are responsible. The bank is not in the fraud-prevention business."
The case is still being mediated, but Williams said that he is confident it will settle.
"When similar cases go to verdict, the bank has the advantage," he said. "Most settle. Usually the lawyer's malpractice carrier picks up a part of the settlement."
It just makes good business sense, Williams said, adding, "These cases cost a fortune to defend. It's in the interest of the bank to recover the money, the lawyer to get rid of the obligation, and the insurance company to close the lawsuit. If everybody takes a bit of a haircut and is sensible, the case can resolve."
- Pat Broderick
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