Washington Lawyer - July/August 2024 - 50

SPEAKING OF ETHICS
Attorney Beware: Protect
Your Practice From Scams
By Nakia L. Matthews
A
nyone can be a victim of
fraud. However, lawyers
have a heightened duty to
remain vigilant and to take
reasonable steps to guard against
these schemes, especially those
who are entrusted to safeguard
client funds.
Scams perpetrated against attorneys often
fall into at least one of these three categories:
(1) imposter, (2) business and job opportunity,
and (3) foreign money and fake check scams.
An imposter scam, as defined by the Federal
Trade Commission, occurs when someone posing
as an individual or organization trusted by
the target requests payment or personal information.
Business and job opportunity scams
often involve employment services. These may
include " prospective client " schemes in which
the lawyer is led to believe the scammer is a legitimate
client seeking their legal services. Lastly,
foreign money and fake check scams are situations
in which someone is paid (or overpaid)
with a counterfeit check and is asked to refund
all or part of the sum immediately after depositing
the check. This often leaves the victim responsible
for the funds withdrawn, which for
lawyers can include trust funds that belong to
other clients.
Jurisdictions have addressed scams against
attorneys in various ways. North Carolina1
New York City,2 for example, have issued deand
tailed
legal ethics opinions. The North Carolina
opinions specifically address trust account
fraud. Recently, North Carolina has also pursued
discipline against lawyers who have failed
to heed the opinions' warnings and practical
advice.3
Other jurisdictions have addressed the
issue less formally, through their bar publications
and websites.4
50 WASHINGTON LAWYER
* JULY/AUGUST 2024
Here, learn about the different scams that lawyers
may fall victim to and tips for avoiding
them.
THE SCAMS
First, the imposter client.5
While the actual person
or entity may exist, the person with whom
you are communicating is not that individual or
entity. With the rise of artificial intelligence, this
scam may become more prevalent, and attorneys
should take steps to ensure they are dealing
with the actual client.
Second, business and job opportunity scams
can take various forms, including fraudulently
being hired to collect a debt or to facilitate the
sale of services or property. This is often a new
client; however, con artists may sometimes build
trust by waiting until the second time they engage
you for legal services to pull this scam. The
second engagement often comes in quick succession
to the first. This scam may seem too
good to be true. Usually, attorneys obtain their
full fee even though they didn't do any work because,
soon after engagement, the client miraculously
settles the debt. The client pays the attorney
for their services, but the check is for an
amount greater than what the attorney earned.
The client then aggressively demands return of
the excess funds, prompting the attorney to do
so without waiting for the funds to clear.
The business and job opportunity scams are
often tied to foreign money and fake check
scams, where the client is often an international
company or engaging the attorney to collect
funds from an international entity. Those matters
may also miraculously settle soon after engaging
the attorney, with the attorney having
done little to no work for the client. The attorney
is often granted their full fee by the client.
Soon after the attorney receives the check from
the opposing party, the client demands immediate
payment of the funds and may even
threaten to file a bar complaint if the funds are
not transferred to them immediately.
Another variation involves a lawyer with a legitimate
client and legal matter who receives an
email at the last minute (seemingly from the
legitimate client's email and often providing
a phone number to call to confirm) seeking
to change the client's wire transfer instructions.
Calling the number provided will result in a
confirmation of the new wire instructions by
the same scammer who usurped the legitimate
client's email.
THE ETHICS RULES
Generally, lawyers are not ethically responsible
for the crimes perpetrated against them. However,
attorneys must exercise care and due diligence
when using third-party services (such
as banks) that hold client funds. This does not
mean that all lawyers who fail to stop a con artist
from scamming them violate the Rules of
Professional Conduct. However, because simple
awareness and reasonable precautions may
significantly protect lawyers and clients, failure
to take reasonable steps in light of warning
signs may implicate lawyers' obligations under
the following D.C. Rules.
Rule 1.1 (Competence) requires that lawyers not
only be competent in the substantive law, but
also possess the knowledge and skills necessary
to carry out the representation. This includes
the competent use of technology (understanding
its risks and benefits) and the
protection of client funds.6
Rule 1.15 (Safekeeping Property) requires a lawyer
to hold property of others with the care required
of a professional fiduciary.7
North Carolina,
for example, clarifies that " a lawyer must
also make efforts to educate him or herself on
the potential risks associated with the transfer
of funds. " 8
Such efforts include a " continuing
obligation to educate [themselves] about the
relevant and evolving risks associated with the
lawyer's practice and handling of entrusted client
funds. " 9
Lawyers should also understand
the relationship between the bank and the de
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