Law firms increasingly need banking services tailored to the needs of their firm and their firm’s specific practice areas. These can include security of wire transfers, trust fund accounting and loan facilities.
I had the pleasure of sitting down with Paragon Bank Senior Vice President Pat Barry O’Quinn to discuss banking issues specific to law firms. Raleigh-based Paragon Bank was established in 1999 and serves the private and commercial banking needs of professional firms, regional companies and individuals who appreciate a private banking experience. The bank has assets of over $1.2 billion.
O’Quinn works almost exclusively with small to mid-size law firms.
AALM: When a small or mid size law firm is selecting a bank, what do you believe is its primary concern?
O’QUINN: First priority is finding an experienced banker who understands their business, will pay attention to the needs of the firm, and is easy to reach. Then it’s a matter of how easy the bank makes it to do business together. For example, does the bank offer courier service to pick up deposits and documents? How quickly do they respond or process wire transfer requests? These are the kind of issues we hear from new clients when they move their business to Paragon.
Security is another concern, especially around trust accounts. No one believes fraud is going to happen to them until it does, so we consistently educate and review security precautions with our law firm clients.
AALM: What are some examples of security measures the bank provides to firms?
O’QUINN: As cyber crime has increased and become more sophisticated, we have enhanced our security measures around wire transfers. We promptly issue wire confirmation notices to the firms on incoming and out-going wires. The firm gets these notices within minutes of a transaction and then is able to verify them before it’s posted to the account.
Firms that conduct numerous real estate transactions are looking for efficient and safe processing of wire transfers. There are a lot of parties involved. You’ve got buyers and sellers and other attorneys, real estate professionals and a lot of the money moves via wire transfer. We have people in our wire department who become familiar with our clients. If a transaction comes through our wire department that does not look typical of the practice they will call the client to verify the transaction.
AALM: What are some examples of internal security measures you recommend to firms?
O’QUINN: We try to educate law firms with best practices, such as remembering to sign off when you are done with your online banking session. We also recommend firms have a terminal dedicated to online banking that is not receiving email, accessing other websites or clicking on links. The use of a dedicated terminal reduces the risk of fraud by helping to prevent access to sensitive data by hackers.
Further we recommend clients use Positive Pay, a check fraud protection program that helps to prevent fraudulent checks from clearing a firm’s account. This is a complimentary service to Paragon clients.
AALM: Law firms are paying close attention to their operating costs. One of the line items they are looking at is bank service fees. O’QUINN: The service fees can vary greatly from bank to bank. What most banks look at is the average balances in the account versus the activity in the account. One way to understand the pricing difference is to provide several recent statements to another bank you trust and have a cost comparison performed. This will point out any differences based on actual transaction history.
AALM: Trust fund reconciliations can be daunting especially for firms with real estate practices.
O’QUINN: Reconciliations of trust accounts are required by the North Carolina Bar on a quarterly basis. If you have a busy practice and you wait until the end of the quarter to do it, it’s a challenging and time consuming project. It’s a good security practice to have someone other than authorized signers on an account performing the reconciliation.
At Paragon Bank, we partner with a few key outside account reconciliation services to assist some of our clients with this task. It takes away a labor intensive task of reconciling the trust account and they can even reconcile accounts on a daily basis if preferred. This independent, third-party trust account specialist also adds another layer of assurance that the firm is complying with state bar regulations.
AALM: Speaking of regulations, changes that impact law firms can be challenging for a firm to keep up with. How can a bank help? O’QUINN: We keep up with these regulations on a regular basis to help our clients implement necessary changes before they take effect. I receive inquiries from clients on a regular basis and they can feel comfortable that I am delivering accurate information. For example, compliance with ALTA best practices for certain law firms that handle residential real estate will go into effect this year. We’re working with law firms to assist them with putting their best practices in place.
A week doesn’t go by that I don’t talk with a potential client who doesn’t feel some relief that I understand their business and can really advise them.