On behalf a bank client, KFP won a summary judgment motion in a check conversion case under the Uniform Commercial Code. The Circuit Court of Cook County Commercial Calendar judge issued a ruling applying an important principle of causation. The ruling is expected to be published by WestLaw and Lexis.

In Henry v. Olson (December 28, 2008), the plaintiff hired a collection agency to collect a judgment. The collection agency hired a lawyer on a contingent fee. The lawyer settled the case and received two checks, both jointly payable to the lawyer and the client. The lawyer sent the checks to the collection agency to obtain the endorsement of the client. Once the collection agency returned the checks with endorsements, the lawyer also endorsed the items and deposited them to his attorney-client trust account. He then drew checks on the account payable to the client for her share of the settlement and sent the checks to the collection agency to deliver them to the client. The collection agency was run by a crook, who apparently forged the client's endorsement on the original settlement checks.

The client sued the lawyer's bank (KFP's client) in a conversion action for taking the checks for deposit. The court granted summary judgment for the bank on two independent grounds. First, the court held as a factual matter that the bank did not fail to exercise ordinary care under UCC § 3-405(b). (The court had previously ruled that the collection agency was the client's employee with responsibility under § 3-405, so the comparative negligence scheme of § 3-405(b) applied.) The testimony of two expert witnesses, one from the banking industry and one an expert in law firm management, persuaded the court.

Second, the court held as a matter of law that the deposit of the checks did not "substantially contribute" to the client's loss because the checks had been deposited to the lawyer-client trust account for the benefit of the client. The client only suffered damages when the lawyer withdrew the funds out of the account several days later and failed to deliver them to the client.

Mark E. Wilson and Meghan A. Welch represented the bank in this matter.