There are two critical times to check your checks: Before you send them out and after they come back.
In the hectic environment of a law firm, we may accidentally grab the wrong checkbook, paying firm expenses with a trust check or attempting to disburse trust proceeds with a check drawn on our business account instead. We may also confuse these two accounts when depositing funds. These errors may overdraw our IOLTA accounts, get reported to Bar Counsel and prompt further investigation.
One way to detect these mistakes is through monthly account reconciliations. But an ounce of prevention is worth a pound of cure. Keep your checkbooks in different locations within your office. Print your trust checks in a different color and style from checks designed for your business account. And, while this isn't always practical, it would probably be a good idea to use separate banks for each account. Anything that makes it harder to confuse these accounts will reduce errors and inadvertent infractions.
Later on, when your bank sends you copies of cancelled checks, you must exercise similar vigilance in checking your checks:
➤ Is that really your signature?
➤ Were they properly endorsed?
➤ Are there checks paid to persons or entities you don't recognize?
➤ Are the checks in sequence?
➤ Were any of these checks made out to "cash"?
➤ Does anything else seem suspicious?
This is an essential way to protect yourself and your clients from fraudulent transactions and other serious problems.
