Risk management

Theft of cheques and mailNo risk management system is perfect, and solicitors may think that there are some risks which are beyond their control or even outside their responsibility.

For example, what if mail is stolen after it has left your office en route to the intended recipient? What steps can you take to avoid risk in these circumstances? Before any mail containing cheques leaves your office, think about the following points:l Am I sure that this is going to the right person, at the right address?l Is there any other way of transferring these funds?l If it were to fall into the wrong hands, could the recipient fraudulently convert it?To some extent you cannot protect against theft once the mail has left your office - it is up to the mail provider to ensure that their systems are secure.

However, you can take steps to reduce the possible consequences if such a theft were to take place.Recently there have been a number of incidents of theft involving cheques sent to building societies, in particular cheques intended to redeem a mortgage following sale of a property.

Frequently these cheques are simply made payable to 'Anytown Building Society' and the identifying details are contained in a covering letter.

The thief intercepts the cheque, and is able to pay it into their personal account with the Anytown Society.

Of course, the funds can usually be traced, but invariably by that time the account has been emptied and the account-holder turns out to have given false details.

The sums involved can be substantial.The first consideration is whether you can avoid sending a cheque at all - is this something that could be dealt with by a direct transfer of funds? If this is not possible, then ensure that the 'payee' line of the cheque includes the client's name and mortgage account number.This will ensure that it can only be paid into that account and not any other.

Make a diary note to ensure that you receive an electronic notification of discharge (ENDs) acknowledgement or form DS1 and follow the matter up if necessary.This is equally applicable to cheques sent to other parties.

Where possible, make payment by direct transfer or ask the clients to collect them in person.

Do not make cheques payable to anyone other than the client (or named beneficiary) unless you have written instructions to do so.

It goes without saying that addresses should always be double-checked, especially those of beneficiaries under a will that may have been written a number of years previously.Have you received direct confirmation that the named person is still there? There are still claims received where a cheque has mistakenly been dispatched to a beneficiary who has actually predeceased the testator.Finally, remember that claims against law firms do not just arise as a result of the negligence of fee-earners.

Review the procedures of your post room and accounts department to avoid potentially costly errors.l This column was prepared by the St.

Paul risk management team.