Attorney trust accounts (IOLTA) - indorsements

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Question:

We have several attorney trust accounts (IOLTA) in the State of Florida. The attorneys receive checks made payable to their clients but deposit the checks without having their clients indorse them. The attorney will sign the check and use the deposit to the account of stamp or just use the stamp. What is our risk?

Answer:

The bank's risk is that any one of the check payees could file a claim of non-receipt of payment, which could ultimately end up on your doorstep as a claim of breach of your presentment and transfer warranties under the UCC, making you liable to the paying bank for the amount of the check. That would make the law firm or attorney liable to you on the indorsement to you.

In most cases, the attorney will have a contractual power of attorney from the check payee allowing the attorney (or law firm) to indorse and negotiate checks and hold the funds on behalf of the payee. Ideally, the checks would be indorsed by the payee or by the attorney/law firm under that power of attorney.