Fraud Alert: New and Old Scams Targeting Attorneys

Because of the COVID-19 pandemic, many attorneys are working at home or in other locations outside of their normal offices. This change is providing fraudsters with new opportunities for scams, including some that target attorneys and law firms. Recently, the State Bar has received reports of a new COVID-19 variant of a very old scam. Please see below for details on common scams targeting California attorneys:

Trust account scams

You receive what appears to be a legitimate inquiry from a prospective client, often (but not always) from another state or country. Here’s how the scam proceeds from there:

  • After the client signs a retainer agreement, they quickly contact you with good news: the threat of legal action has led the other parties to pay the client what is owed, so no legal remedy is required. Now the scam begins.
  • You receive a cashier’s check for settlement, which you deposit into your trust account.
  • The client asks you to wire a distribution of settlement funds from your trust account to another account, often at a foreign bank, with a deduction for your fee.
  • After you have wired funds as directed, you learn that the cashier’s check was fraudulent, your trust account is now overdrawn, and you are liable to the bank for the deficit.

Here is a new variant employing the urgency of the COVID-19 pandemic:

  • Calls originate from what appears to be a legitimate medical equipment company, looking for an attorney to draft a lease agreement.
  • After agreeing to do the work, you receive a cashier’s check, which you deposit in your trust account.
  • The client asks you to make a wire transfer from your trust account to another account.
  • After you have wired funds as directed, you learn that the cashier’s check was fraudulent, your trust account is now overdrawn, and you are liable to the bank for the deficit.

Scams like these have been active for more than a decade but are reoccurring now. The FBI has been notified. Read a detailed State Bar Ethics Alert from 2011 on Internet scams targeting attorneys.

Phishing schemes

These scams take many forms, with the goal of obtaining valuable, confidential information about a law firm’s partners, employees, clients, or financial accounts.

In typical phishing schemes, fraudsters request information (urgently!) by email, phone, fax, or text, and may pose as regulators, clients, law enforcement agencies, or others. Common features of phishing attempts are that they say an account has been compromised and you need to reset your password ASAP or that your account will expire unless you act by the end of the day.

To avoid falling victim to phishing schemes, be wary of any requests marked urgent and take the time to confirm requests for confidential information. For example, if a caller says they are contacting you from your bank, you should end the call and contact your bank directly. Likewise, be wary of calls claiming to be from someone at the State Bar requesting contact information that we already have on file. Some attorneys have reported receiving such calls, which did not originate with the State Bar and appear to be phishing attempts.

If you think you have received fraudulent emails, contact the Federal Bureau of Investigation’s Internet Crime Complaint Center.

If you have questions about how to respond to a possibly fraudulent solicitation of any kind, you may also contact the State Bar’s Ethics Hotline for research assistance. Ethics Hotline staff can also guide you to professional responsibility resources such as those listed below.

And remember: you should never click on links in a suspicious email. These links may launch viruses, ransomware, or other malicious code into your computer or network.

Identity theft

When an attorney’s identity is stolen, damages are magnified because they can extend beyond the attorney to others targeted for fraud. Here are two examples:

  • Timeshare scammers use a California attorney’s name and State Bar number to set up a bogus law firm to hold funds in escrow pending sales of timeshare properties. After payment, both the funds and the scammers disappear, and the real attorney is targeted for complaints from angry “clients.”
  • A California attorney is contacted by a woman from out-of-state, who says she has received phone calls from someone claiming to be the attorney. The scammer had threatened to file suit against her if she does not pay debts she never owed.

If you believe your identity as an attorney has been stolen, here are some steps to take:

  • Contact the State Bar’s Office of Licensee Regulation & Compliance, AttorneyRegulation@calbar.ca.gov, 888-800-3400. The State Bar will place an internal note in your State Bar record about the potential identity theft.
  • File a formal Unauthorized Practice of Law Complaint with the State Bar.
  • File a police report with local law enforcement and with federal authorities, such as the US Postal Inspection Service and Federal Trade Commission, if fraud is evident.

Learn more

  • This article from the American Bar Association provides useful tips on how to avoid scams targeting attorneys (June 2020).
  • This article in The American Lawyer details scams related to wire transfers as well as related liability issues for attorneys (July 2020).
  • This advisory from the FBI and Cybersecurity and Infrastructure Security Agency outlines how cybercriminals have developed a new fraud campaign that takes advantage of the increased use of virtual private networks because of COVID-19 (August 2020).
  • The State Bar has a webpage with links to recent news articles on these issues.
  • The FBI’s website includes a useful list of Internet Fraud Consumer Alerts.
  • The New York City Bar Association issued this formal opinion on lawyers who fall victim to Internet scams.