To date, these scams have been more prevalent among, although not exclusive to, collection and commercial lawyers, mainly because these practice areas make it easier for those initiating the scams to make them appear legitimate. However, such frauds have affected lawyers working in family law and other practice areas, as well.
The fraudsters perpetrating the scams engage in the following conduct:
1. The lawyer receives what appears to be a legitimate solicitation e-mail from a prospective client. The client may be a company or an individual. The e-mail sounds something like this: "We are a media publishing company in Japan. We have a breach of intellectual property agreement matter in your jurisdiction, we can forward you the agreement and other party information for your review to enable you run a conflict check." The client will be willing to forward seemingly legitimate incorporation documents.
2. The lawyer and client discuss a fee agreement by e-mail. Most commonly, the client will offer that the attorney may keep a certain sum in exchange for collecting on an unpaid debt. The lawyer signs the agreement, creating an ostensible attorney-client relationship.
3. The lawyer then receives a "congratulatory" e-mail from the new client announcing that they have received a settlement offer from the debtor, and that all the lawyer needs to do is deposit the settlement check and forward the proceeds of settlement, minus the lawyer's fees and expenses.
4. The lawyer quickly receives in the mail what appears to be a valid paper check from a reputable bank, which is deposited into the lawyer's trust account.
5. The client then demands an immediate wire distribution of the settlement proceeds (nearly always to a foreign bank).
6. The lawyer then wires the proceeds to the client from the trust account, as requested.
7. By that point, the lawyer's bank has discovered that the paper check is fraudulent and it is returned unpaid. By this time, the scammer is long gone, and the lawyer's trust account is overdrawn by the amount of the fraudulent check.
This chain of events leaves the victimized lawyer in a vulnerable position. The lawyer cannot easily press criminal charges, because of possible fear of violating client confidences. Second, the identity of the fraudster isn't even clear.
Further, the lawyer cannot easily recoup his losses. Malpractice insurers may not qualify the lost sum as "damages" from professional negligence.
The California Bar Association notes that, in choosing clients and accepting to represent them, it is better to err on the side of caution. Hitting the "delete" button may be the best course of action when receiving one of these "too good to be true" new client offers.