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Attorneys and Wire Scams

2020 Formal Ethics Opinion 5

In recent years, there has been a marked increase in the number of attempts to defraud attorneys of their clients’ funds in trust accounts. Now con artists are stealing from clients directly by using “inside information.” These scams are constantly evolving and are becoming much more sophisticated, as many processes that attorneys use are now digital. This includes sensitive data about an attorney and their office that may be used as part of a scam.

Scammers often pretend to be attorneys and their staff. Extensive online profiles and leaks of client data have combined to make these scams more convincing and sophisticated. For instance, in the real estate context, wire transfers of funds from clients to attorneys are more commonplace. In one scam, the fraudster will somehow learn of a closing date and email the client from a spoofed email (disguised and seeming to be official) while pretending to be the attorney or their staff. They will provide fraudulent wire transfer instructions that will cause the client to transfer funds into the scammer’s account. Sometimes, the scammer is simply testing the client by requesting some sort of email response from them first and then sending the fraudulent instructions. This fraud is separate from stealing from the trust account, as the client’s funds are not yet in the trust account.

So how should the client prepare for such actions? First is to recognize that in major fund transfers, the attorney will very likely discuss the instructions and procedure for the transfer, and that no deviation from the transfer procedure will be conveyed in an email or telephone correspondence. Second, the attorney should ask that the client call the office when initiating the transfer as a form of secondary verification of the transfer procedure, including instructions on where to send the funds. These steps, although inconvenient, should be required as a method to prevent fraud. An attorney has an obligation to have the necessary education to communicate with clients and staff about many of the evolving risks that come with advancements in technology. This includes informing clients of the risk of fraud before the attorney receives a client’s property. While these monetary concerns are less present in family law matters, your attorney will keep you informed of such scams.