I like to think that I am technologically competent. My kids might say otherwise, but in the office, I am pretty 21st century. I have adapted to and adopted the rapidly evolving office and CRE tech. In fact, because I started practicing law in the late 80’s, I actually “grew up” with the technology. I went to college with a typewriter, law school with an Apple IIC and started practice without a computer on my desk. I learned how to use all things tech for the office as it was introduced to the working world – word processing, fax, e-mail and the internet, to name a few. In real estate, I learned how to do closing statements by hand long before there was closing software. We reviewed abstracts before search engines were available.

I could go on, but even I feel like I am old. But I want to make the point that technology has evolved so quickly, that what was new and a time saver one minute, became old and a burden the next minute. Specifically, I reference fax. When fax machines first came to our offices in the early 90’s we thought it was the greatest invention ever. It was so time saving that we instantly hated it. Why? Because where we once had several days to receive and review documents sent to us and received by mail, suddenly, opposing attorneys were calling us within an hour after sending a document by fax to confirm receipt and ask for comments. Somehow, we were supposed to review those shiny, slick pieces of paper instantly, no matter what else we were working on.

As fast as fax machines came about, they also have disappeared, thanks to e-mail, scanning and pdf. Fax has become so uncommon that I don’t even know my fax number anymore. Our fax machine rarely “rings”. While the quality of fax documents is as good as any pdf or e-mail, there is no need for it because of the ability to e-mail right from your desk and have the document arrive on someone else’s desk or phone instantly.

So why is it that some large financial institutions require that we send completed loan packages back to loan administration BY FAX for funding authorization? Or, that we send applications for mortgage modifications or short sale for approval BY FAX? In the last 10 days, we have sent 3 such packages, all more than 100 pages (some close to 200 pages) to large banks by fax. Could there be any more inefficient use of time or inefficient way to transmit documents? Fax just doesn’t work in today’s fast paced business environment. First of all, you still get busy signals from fax machines. When else today can you get a busy signal? We scan the fax in, walk away and come back to check 30-60 minutes later only to find out that large financial institution didn’t receive the fax because the line was busy. The process begins again. Hopefully, by the end of the day, the package will get through.

Remember how often the fax line would either cut off or there would be some kind of blip so that the entire fax wouldn’t go through and then you had to figure out what pages the recipient didn’t get?   Even with digital lines and high quality scanners, this still happens. And, because these faxes go to some general mailbox, there is no one to talk with to determine which pages are missing. Therefore, most of the time, the entire fax has to be resent in which case you run the risk of busy signal or partial fax again. This is a double or triple waste of time and effort.

On that same theme, fax machines used to be monitored full time, at least in big companies and firms. As technology improved, e-fax came about and, in theory, faxes were delivered, like e-mail, directly to the intended recipient. One would think this to be the case with these banks. However, the closers, administrators, underwriters and others, all monitor all files, in theory. They are supposed to pull the files out of the fax box as they come in. Anyone should be able to look at a file and answer a question or authorize funding. In practice, this does not occur. Your closer is your closer. You loan administrator or short sale processor is who you are supposed to deal with. When you send a loan package in for funding, if you can’t e-mail directly and are required to fax to the general number, you have to wait for him/her to find it. Another delay occurs.

Technology is ever advancing. Big companies, like banks and financial institutions, should be at the forefront of the revolution. Fax was a great advancement 25 years ago. But its time has come and gone. So, you know who you are big banks. Get with the times and dump your fax machines!

The scammers and fraudsters are alive and active. The Boards of Realtors, Title Companies, Bar Associations and local and national news media have all written warnings.  Frequently.  I have even written about it (see my blog HERE). Yet, some people miss the warning signs and get caught.

Unfortunately, I am in the middle of one such situation – the other side. I represent the seller of the assets of a small business.  We closed 2 months ago.  As per the contract, $50,000 of the seller’s proceeds were held in escrow at closing by the buyer’s attorney to give the buyer time to determine whether any undisclosed liabilities pertaining the assets popped up.  The escrow was to last for 60 days.  10 days ago, on the 61st day, on behalf of my client, the seller, I e-mailed the escrow agent and requested that the escrow agent, buyer’s attorney, release the money to the seller.  I directed the escrow agent to wire the funds to the same account as used for closing pursuant to the same wire instructions.  The escrow agent responded shortly thereafter via e-mail that she would do so but that she would need both the buyer and seller to execute a release and that she would prepare and send one to me that afternoon.  The next day, Friday, the release was signed by both the buyer and seller.  The escrow agent indicated that she would process the wire.

However, I learned 5 days later that my client never received the wire. When the broker and I inquired, the escrow agent advised that the seller had sent a confirming e-mail to the escrow agent acknowledging receipt of the wire on the Monday following.  The client denied sending the e-mail.  The escrow agent produced the e-mail and it was clear that the e-mail had not come from my client.  The e-mail account had been spoofed.  We then asked the escrow agent where she had sent the wire.  It turned out that 90 minutes after my initial e-mail to the escrow agent, the escrow agent had received a second e-mail purporting to come from me, forwarding an e-mail from my client which attached new wire instructions.  These wire instructions were to a 3rd party bank account in New Jersey.  The e-mail address from me was not my address, though it looked similar to mine (used my domain name in the sender field but had a mail.com domain name).  The client’s e-mail address was similarly spoofed.  The grammar and spelling in my e-mail and the client’s e-mail was poor and inconsistent with all prior correspondence with the escrow agent.  And, the client’s purported e-mail instructions to me were time stamped 2 hours prior to my initial e-mail to the escrow agent.

The timing of the contradictory wire instructions should have been a big enough red flag to the escrow agent for her to call me to confirm whether I had in fact sent those instructions. But, the e-mail addresses, the grammar and spelling, the time stamps on the e-mails, the 3rd party to receive the wire all should have given pause to the escrow agent.  Nevertheless, she wired the money to the wrong account.  She is a victim of the scam and is now responsible for making my client, the seller, whole.

This is a classic example of a common e-mail/wire scam. It could have been easily avoided with simple attention to detail and one phone call to verify the new wire instructions.  Best practice requires those who are responsible for wiring money to verify ALL wire instructions by telephone follow up, not just revised wire instructions.

At this point, the escrow agent, an attorney, will be responsible for making her trust account whole. While her malpractice policy may cover the shortfall, settlement might take some time.  Though this is clearly a theft of funds, it remains to be seen whether law enforcement will be able to track the perpetrator or whether law enforcement has an interest in the case.  Though $50,000 is a lot of money to the victim, wire fraud cases don’t generally get the attention of federal law enforcement until there are a lot more zeros involved.

Hopefully, a lesson has been learned. Verify all wire instructions by confirming on that antiquated device – the telephone!

You know that I like to quote Jimmy Buffett songs. In this case, I have been reflecting on how much my life as an attorney has changed since I started practicing back in the late 80’s.  I have been negotiating a lot of lengthy documents lately.  I don’t know if it’s been busier than normal but it got me to thinking back to those early days.  I was a young, somewhat aggressive associate at a large state-wide firm based in Ft. Lauderdale.  Like my fellow associates in the classes ahead of me, I guess I had a certain arrogance when it came to document negotiation.  We had the “biggest” clients, the best lawyers and the best documents.  But I found out quickly, when left to handle negotiations on my own, that more senior lawyers, particularly partners at other big firms, loved to take advantage of young cocky associates like me.  They basically bullied me because I didn’t know as much as I thought I did.  As a result, I had to show deference to the gray hairs until I could re-group and confer with my partners.  Fortunately, I had great mentors who taught me a lot and allowed me to develop my skills and style.

Negotiating and drafting back then was before the technology boom.  Computers had not yet found their way to attorneys’ desks.  We had to mark up documents by hand (and use Dictaphones) and send them to word processing and then wait a day or 2 to get work back.  We then mailed or hand delivered documents to the clients and to the other side (sometimes we even faxed!), with hand written red-lining.  We discussed changes on the phone and met in person to actually negotiate (and close).  We had to look our opponent in the eye to make tough demands.  It allowed us to build relationships and trust our adversaries and forced us to pick and choose our battles.  We did not argue, or even comment on, minor provisions and boilerplate.

Flash forward to 2017.  I am generally the old guy now in negotiations and deals.  I always try to keep this in mind and do not purposefully take advantage of a younger opponent.  But sometimes I have to make an exception.  Sometimes I come up against a young attorney from one of those big firms who thinks he/she knows everything and can’t be reasoned with.  Then, I remember how the senior guys in the old days handled it with me.  If the young attorney isn’t smart enough to retreat, make the right decision or ask for help, then their client will suffer or he/she will suffer the consequences when the client figures it out.  When I am told “we never do it that way” or “we can’t do it that way”, I’ll tell them to pull out their firm directory and find a partner among the 500 plus attorneys in the firm who has been around a while and ask what he thinks about the words “can’t” and “never”.

I have respect and patience with young attorneys from smaller firms or who are solo practitioners and are willing to learn.  I particularly appreciate those who tell me that they don’t know something or have never done something before and need time or need help.

The biggest changes, however, is that we don’t seem to talk any more.  We provide or receive documents.  The documents are reviewed, marked up and returned.  We use e-mail.  We don’t establish any personal connections or relationships and therefore, never gain a sense of trust or understanding.  We don’t take any time to get to know each other.  We simply finish the documents, finish the deal and move on.

Are we doing a quality job.  I think we continue to do our jobs technically well.  However, I think that there is an entire generation of real estate attorneys and other real estate professionals that are missing out because of the lack of human contact with their colleagues and opponents.  There is much to be learned from the other side.  I am thankful that I had that opportunity.

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