Coverage Question Series – Part 55
Post on May 17th, 2019
This is a continuing series in which we address policy coverage questions that we routinely discuss with you and your colleagues. The answers provided are based on the basic policy form, currently LPLP-1s (effective for all policies new or renewed as of May 1, 2018). Refer to your specific policy and any endorsements attached thereto that may change coverage or the answers provided here.
I wanted to believe that out-of-state email looking for an attorney for a collection matter; am I covered now that I discovered the check I deposited into my IOLTA was fraudulent and client funds were paid to satisfy the check I wrote?
Come on, this scam has been around for a while! You have received how many emails from Gretchen Mote warning you about these? 300? Why would someone in China contact you to do little to no work in collecting a debt for a significant attorney fee? I promise you that your website is not that effective. (Laughing with you, not at you – smile!)
Exclusion (q) and the sections CONDITIONS, I. LIMITS OF LIABILITY and II. INNOCENT INSUREDS limit coverage for these types of losses to only those lost “client funds.” If you think it is too be good to be true, but you really want it to be true, call Gretchen and she can tell you those red flags are actually bonafide mines. Don’t lose a limb trying to make a quick buck!
Practice Pro-tip: Do your due diligence when considering new work. Contact the parties using independent and known contact information. Give all deposited funds at least TEN (10) days before issuing disbursements out of your account and make sure your bank has actually received the funds. Be upfront with the purported client that you need to wait before wiring the funds. Ohio Disciplinary Counsel will be looking to you when the check bounces and overdraws your IOLTA.
As you should expect, these Q&A scenarios are based on simple hypotheticals. Coverage determinations for an actual claim are ultimately based on the unique facts, applicable law, and the Terms, Conditions, Limitations, Exclusions, and Endorsements of your policy.
Carl Marsh, Esq.