Lawyers: One of the fastest ways to get into serious trouble is to release stakeholder money to the wrong person.
In our debt recovery practice, we recover a lot of money into our stakeholder account because we are the ones chasing the debtor and collecting payment on behalf of the client.
So quite often, once payment comes in, the client will tell us where to remit the money.
Most of the time, straightforward lah. We remit it back to the client’s (claimaint's/plaintiff's) own account.
But once in a while, we get unusual requests like “can you transfer this to another account instead?”
It could be a director’s personal account, another company or even a totally unrelated 3rd party account.
This is a clear red flag that puts us on high alert.
If the money belongs to a company, one director cannot simply give us an instruction to release company monies to a third party and expect us to blindly follow. We need proper authority and we need to be satisfied that the company itself has properly authorized the payment, especially where the receiving account does not belong to the client.
If there is a dispute later and the other directors or shareholders say, “Who authorised this transfer?”, the lawyer cannot simply say, “One director WhatsApp me, so I follow lor.”
Releasing stakeholder sums without proper authority can potentially amount to misappropriation of client monies. For a lawyer, that is about as serious as it gets.
So even if the client says urgent, even if they say, “Just transfer first, settle the paperwork later,” we will not do it unless the authority is clear.
When you are holding someone else’s money, your duty is not just to assume. You must verify to the highest standard.
Rudi Cheu (rudi@rulecolaw.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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