Foreign fee scammers target U.S. lawyers

By Diane Karpman

A major truth of the legal profession is that while we were upstairs studying torts, some of our clients were on the streets studying crime. Some of our clients are actually sophisticated criminals. We sort of want to forget that, often to our own disadvantage.

Each and every day, I expect to receive a friendly email soliciting my services because a citizen from another county is attempting to collect alimony, a contract claim or whatever the scam du jour is. It’s gotten to the point that unless I know the sender, I delete any foreign solicitation for employment.

The generic Nigerian Mail Scam is now on steroids. It has become extremely sophisticated, therefore causing more law firms and lawyers to fall prey. The current scam targets U.S. law firm trust accounts. Sidebar — anything involving trust accounts is automatically toxic, and should be considered radioactive.

Here is the scam: Prospective client contacts lawyer via email for help in the recovery of funds owed by an American-based company from a real estate transaction, divorce settlement or whatever. Basically, prospective client needs legal assistance in the collection of a debt. Asian names are being used and the bank accounts are in Singapore, Japan and China. The lawyer is offered a generous legal fee, but this is an intricate web which mimics the steps of a genuine debt collection procedure. Within days, a large check is sent to the lawyer/firm. Knowing the level of suspicion in the legal community, a master forger creates a perfect copy of a real company check, including the company phone number and a representative to be contacted. When called, the “company spokesperson” verifies the check. What the lawyer doesn’t know is that the person contacted is another cog in this scam machinery. The lawyer puts the funds in the trust account, takes his $50,000 fee and forwards the remaining amount to the designated bank account. The money is immediately removed from the trust account by the fraudsters before the check bounces.

According to federal court documents, one group of scammers obtained $29 million from 70 different law firm trust accounts in the U.S. and Canada during a two-year period. An international investigation is being conducted by the U.S. Postal Service, the FBI, the Secret Service, Toronto Police Services, the Royal Canadian Mounted Police and the Nigerian Economic and Financial Crimes Commission.

Last week at an ethics committee meeting, we discussed the typical Nigerian scam. One member said that his firm forwards these emails to the authorities. Other members cautioned that this should not be done, because it could be a communication from a prospective client. Remember, even if you are not retained, a lawyer owes a duty of confidentially to a prospective client regarding his or her disclosed information. (See Los Angeles County Bar Association Ethics Op. No. 506). This resulted in a long and heated discussion. These ethics committees, which exist all over the state are terrific for ethics nerds, especially if you want to debate how many angels can dance on the head of a pin. They are actually fun and very interesting.

Evan Jenness (a terrific defense lawyer and president of the Federal Bar Association) shared a number of authorities that indicate that an unsolicited email is not confidential: San Diego County Bar Association No. 2006-1, Bar of the City of NY 2001-1, State of Nevada Opn. 32 and others.

Another idea expressed was the principle that a client cannot unilaterally create an attorney-client relationship. There must be some level of mutuality. In addition, of course, it must involve legal issues, because not everything said to a lawyer is an “attorney-client communication.”

Step back and imagine the state of affairs if any unsolicited email could give rise to ethical obligations. What a nightmare!

Legal ethics expert Diane Karpman can be contacted at 310 887-3900 or karpethics@aol.com.