There can be a number of reasons claims arise where trust funds are held by a law firm. In some claims trust funds were paid by the law firm to the wrong party, while in others trust funds were not invested in accordance with the client’s instructions or the option to invest was not raised with the client.
A recent claim also highlights the importance of ensuring trust funds held by a law firm are correctly dealt with.
The firm acted for the executors of a deceased estate. Some of the beneficiaries resided overseas and all but one beneficiary received payment by cheque. One beneficiary sought a telegraphic transfer due to the requirements of their bank.
The beneficiary requested the funds be transferred in Australian dollars and they would arrange the conversion on their end as they believed they would obtain a more favorable exchange rate in their own country.
Unfortunately the person transferring the funds was not aware of this request and exchanged the funds to the local currency of the beneficiary prior to the transfer.
The naturally upset beneficiary sought compensation for the difference and a payment was made of a few thousand dollars in settlement of the claim.
The following tips will assist practitioners transferring funds internationally for any reason to avoid claims.
- Whenever money is being sent overseas, clear written instructions should be obtained as to the currency in which the money is to be transferred.
- Ensure that staff arranging for the transfer of funds understand the issues and only act on clear written instructions as to the currency to be used.
For more information about transferring client funds refer to two LPLC publications Converting $s causes claims and Moving money overseas.
