All of us are subject to scammers in many parts of our lives. Indeed, people routinely receive scam emails, text messages, and other communications trying to acquire money or private information from the victim. As many attorneys know from firsthand experience, small firm lawyers are often approached by well-organized and sophisticated scammers. Such scammers prey on the fact that lawyers may have trust accounts with client money and might be hungry to originate new business. Unfortunately, there is not a lot of awareness of common scamming tactics used against small firm lawyers, and I have heard about colleagues who have been victimized by scammers. I am far from an expert on scammers and their techniques, but it is important to convey information about these scammers so lawyers can protect themselves and their clients from being targets of scammers.
Common Scams Against Small Firm Lawyers
In my experience, there are several common scams employed against lawyers and their clients. One involves wire fraud whereby scammers spoof email addresses to make it look like a lawyer is sending an email to a client about wire details. In some situations, the fake email address is off by a letter, and the scammers copy the signature block of a lawyer so clients quickly glancing at the email think that the email originated from their lawyer and that the wire details are genuine. Sometimes, lawyers themselves are subject to such spoofing, and it is important to check all email addresses to ensure they are legitimate.
Another common scam is the asset-purchase agreement fraud. A client will ask a lawyer to handle an asset purchase and act as the escrow agent for the transaction. A wire is made into the lawyer’s trust account, and then the lawyer writes a check to the scammers with proceeds. Then, the wire is reversed and any legitimate money in the lawyer’s account leaves with the check written to the scammer. As an extension of this, scammers also sometimes falsely engage a lawyer to handle an employment law matter, breach of contract case, or other issue that settles quickly. The lawyer receives a settlement check that looks legitimate and deposits the check into their trust account. The lawyer then writes a real check from their trust account, and the attorney later discovers the check they deposited was not legitimate — but any real money in their trust account leaves with the real check they wrote. Scammers may try variations of these scams as well.
Many law firms accept solicitations from the internet, so attorneys need to carefully discern warning signs of questionable matters. Scammers almost never wish to speak on the phone and will almost always try to communicate exclusively through email. In addition, scammers will almost never negotiate terms in a retainer agreement, and they will always insist that attorneys’ fees come from funds to be held in escrow so that they can avoid paying real money to retain the lawyer’s services. Moreover, scammers usually have inconsistencies in their operations. For instance, they may list a telephone number and an address in different geographic locations, and they may not understand how transactions work. As another example, a scammer may tell you that documents will be mailed to your office when email is the normal way a transaction is handled so they can avoid providing information immediately.
Moreover, all of the warning signs people use to detect phishing, spoofing, and other scamming activities apply to lawyers. For instance, scammers may not have a good grasp of English and write documents with spelling and grammatical errors. In addition, scammers may provide compensation terms that are simply too good to be true because the transaction is fake.
There are steps that lawyers can take to more conclusively prove whether a matter is a scam. For one, lawyers should try to never accept work unless they have at least spoken to a potential client on the phone. Scammers may also make false websites and email addresses in order to perpetuate their scam. However, lawyers can check the ICANN directory and search the domain name for email addresses and websites created by the scammers. If the domains were registered recently using unusual registrars and with addresses that seem suspicious, it is more likely that the potential clients are scammers.
If you receive a check that is questionable, you should call the bank listed on the check if the paper purports to be a certified check, and the individual or business purportedly issuing the check in other instances. Banks and companies are usually appreciative and helpful when assisting lawyers in verifying the legitimacy of transactions. Moreover, lawyers should not write checks from trust accounts until funds have settled, and lawyers should wait as long as possible before issuing checks to have the most time possible for the legitimacy of funds to be verified. Lawyers should, above all else, use common sense when dealing with potential scammers and not let the desire to originate new business keep them from conducting due diligence.
In sum, all of us know that scammers exist in many facets of our lives, and we understand how bad actors attempt to acquire money and private information from others. Although lawyers are common targets of scammers, with some understanding of typical scams and how to conduct due diligence to avoid scammers, lawyers can help protect themselves and clients from bad actors.
Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at firstname.lastname@example.org.