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Q. Representing a Korean supplier of silicone for electronics, I demanded $90,000 from a U.S. company that failed to pay for these materials and immediately received a $90,000 cashier's check. My client wants me to wire its net recovery from my trust account to its Canadian bank. Any need to wait?
A. If this is a legitimate transaction and the funds have actually cleared your trust account, you wouldn't need to wait.
But this deal smells "phishy."
Lawyers are prime targets of email scams from purportedly foreign companies seeking representation in phony collections cases.
Here's how it generally works:
1. The attorney receives an email from a foreign company seeking assistance in collecting payment from an American firm. Often, this email is addressed to an unspecified "attorney" and lacks any indication of how the sender found the lawyer;
2. The initial inquiry requests a retainer agreement, which the "client" signs and returns right away;
3. A short time later, the "client" informs the lawyer that the debtor has agreed to make a payment to avoid legal action and will be sending a check directly to the attorney;
4. Getting what looks like a valid cashier's check, the lawyer deposits these "funds" into the trust account;
5. Acknowledging the lawyer's one-third contingency fee, the "client" requests that the remainder be wired immediately to a foreign account; and
6. After disbursing these "proceeds," this fraudulent check is returned unpaid to the lawyer's bank. The happy "client" has disappeared with the wired funds and the lawyer has overdrawn the trust account.
Another variation of the scam involves offers to wire funds into your IOLTA account, luring you to divulge sensitive account information which the scammer will use to take funds instead.
If lawyers didn't fall for these tricks, the spammers would stop phishing. Rather than take the bait, you must read all emails with a critical eye.
Can you spot the scam in the following emails?
If you read carefully, you saw the following clues:
Even if you miss these telltale signs, this scam won't work if you are properly managing your IOLTA account. Rather than wait for checks to clear, many banks will let you draw on an "available balance" which includes the deposit of checks that have yet to clear. But when it comes to trust accounts, you may only disburse funds that have actually been collected by the bank. So no matter how desperate this "client" may be to get its money, you would have caught the scam just in time if you had waited for the funds to clear.
Adding insult to injury, lawyers who have been caught in these phishing scams have been disciplined for IOLTA violations by overdrawing their accounts, by failing to safeguard client funds, and, if they really did take IOLTA funds as their "contingency fee," for commingling and misappropriation. If you manage your IOLTA account in accordance with the rules, you are less likely to get hooked.