"AvoidAClaim" Blog

Family law matters seem to be the new flavour of the month when it comes to bad-cheque scams. In the past few weeks Ontario lawyers have sent me almost 20 different emails from fraudsters seeking help on matters involving the collection spousal and/or child support.

One message in particular is making the rounds as I have had at least a dozen lawyers send me a copy of it in the last week alone. A copy of that message follows:

To: (lawyer’s personal email address)

Usually these types of messages are a reasonably obvious attempt at a fraud, and they don’t deserve a reply or acknowledgement. Remember that sending a reply to a spammer confirms your email address as a good one which in turn can encourage more spam to that address as spammers can sell lists of live addresses for more money.

However, I have had a few lawyers ask me how the handle these types messages where it is not immediately obvious whether the request for help is legitimate or not.

On the questionable ones I think more care is warranted, both in terms of checking to see if there is a real client there and to be sceptical and watch for red flags that will indicate if it is a fraud. If it looks like the email might be from a legitimate client, send a reply indicating that you can’t act unless your firm completes proper a client identification verification and is properly retained (include payment of a retainer). Where things don’t add up, asking for more details about the circumstances of the matter can also help you determine if it is legitimate or not (if pushed hard enough to explain things that don’t make sense fraudsters will disappear).

As we approach the holidays remember that in the past we have seen more attempted and successful counterfeit certified cheque or bank draft frauds around long weekends and other holidays. Fraudsters like to execute frauds around holiday times as law firm staff can be distracted and bank holidays mean the fraud won’t discovered as quickly.

Keep your guard up so that you don’t become a victim of bad cheque or bank draft fraud.

Remember to use the fraud prevention resources on the practicePRO Fraud Page (www.practicepro.ca/fraud) to help the lawyers and staff in your firm avoid being duped.

Cross posted on Slaw.ca

We have received various questions and comments on the enhanced coverage for counterfeit certified cheques and bank drafts that we are providing under the 2010 LAWPRO insurance program and policy. To respond to those questions and comments, we’ve prepared an extensive list of FAQs (Frequently Asked Questions) that help explain this new enhanced coverage>, and also to provide some tips and guidance on how to make the coverage requirements work in your law practice.

These FAQs should help answer your questions as some recent media coverage about this new enhanced fraud coverage was not accurate as to what is and is not covered.

Any assertion that lawyers “effectively have no insurance coverage for such fraud” is incorrect. Lawyers DO and always have had coverage in situations where funds of legitimate clients were inadvertently paid out to fraudsters before the lawyer discovered that the instrument was counterfeit. Moreover, you do not need to make any changes in the way you practise for this protection to continue be in effect.

LAWPRO is now enhancing the existing protection: If your trust account is in an overdraft position because of a counterfeit certified cheque or bank draft, and the shortfall is strictly between the bank and you (no legitimate client funds are taken, or the amount of funds disbursed exceeded that belonging to legitimate clients), you will now have protection – at no additional cost - under the insurance program, provided that you comply with certain coverage requirements. (See FAQ #4 for information about these requirements.)

Moreover, this coverage is intended to help protect ALL segments of the bar; it was not, as has been suggested in the media, introduced to only address the particular challenges faced by the real estate bar. Fraud is very much a reality for all members of the bar. Litigators are being targeted on sham collection matters. Business lawyers are being targeted on bogus commercial loan matters. This enhanced coverage attempts to better protect all lawyers against the reality of fraud.

But at the same time, LAWPRO has a mandate to operate in a commercially reasonable manner and risk rate the insurance program. Hence the coverage requirements (e.g. waiting 8 business days before disbursing funds as instructed): These practice requirements help ensure that we moderate the risk to which the insurance program is exposed through this enhanced coverage. They also help equalize the likely impact on the insurance program arising from the different practice areas.

Making this enhanced coverage work is itself a work in progress, and we look forward to working with the profession to help lawyers avoid being victimized by fraudulent clients.

Call LAWPRO immediately at 1-800-410-1013 (416-598-5899) if you suspect you have completed or are acting on a matter that appears like it might be a fraud. We will talk you through the common fraud scenarios we are seeing and help you spot red flags that may indicate you are being duped. This will help you ask appropriate questions of your client to determine if the matter is legitimate or not. In the event the matter you are acting is a fraud and there is a potential claim, we will work with you to prevent the fraud and minimize potential claims costs.

As always, we welcome your questions, comments and suggestions.

Cross posted at Slaw.ca

While we have been receiving great feedback on the various articles on social media in the latest issue of LawPRO Magazine, the surprise front-runner for most popular article in this issue has had over 300 downloads in the first four days – Yvonne Diedrick’s article on the Apology Act, 2009. Perhaps not a real surprise as many lawyers I have talked to are not familiar with this new legislation.

The Apology Act came into force in Ontario on April 23, 2009. It allows the communication of expressions of sorrow or regret without worrying that the comments can later be used adversely in a civil court.

Many lawyers, and especially litigators, are likely not inclined to think of an apology as a method of dispute resolution. However, experience in other jurisdictions has shown that an apology can go a long way towards resolving a dispute. Ontario was the fourth Canadian jurisdiction to enact apology legislation, following British Columbia, Saskatchewan and Manitoba. More than 30 states in the U.S. have similar legislation in place.

Read this LAWPRO webzine article to understand the circumstances in which you can make an apology and those in which you should not — there are a number of exceptions under the Act.

Note that LAWPRO’s policy of insurance does not specifically prohibit apologies or expressions of sympathy or regret. It does, however, provide that an insured shall not voluntarily assume any liability. The Act assists lawyers in dealing with this issue and makes it easier for lawyers to apologize to their clients. We encourage you to explore this option in consultation with LAWPRO. Ultimately the legislation should help lawyers achieve the same goal as health care professionals hope to achieve of enhanced accountability and open communication between the lawyer and the client. It may even help you AvoidAClaim.

Cross-posted at Slaw.ca

While some lawyers are very tuned into social media sites like Twitter, Facebook and LinkedIn, many have yet to realize the communications potential of these tools. The newest issue of LawPRO Magazine aims to change this.

Here’s a sample of the topics covered:

• Social Media: Why? An overview of how social media are changing the legal landscape;
• Social Media: What? A guide through the many social media available PLUS inteviews with five lawyers who walk the social media talk;
• Social Media: How? A primer on social media as marketing and networking tools in law practice; and
• Social media pitfalls to avoid: the dangers inherent in social media tools.

You can access the rest of the articles in this issue on the magazine page of the LAWPRO site.

Almost every day lawyers send me copies of emails they have received that attempt to dupe them into acting on a matter involving a bad cheque or bank draft. Some of these messages are clearly attempts at fraud; others can look very legitimate. We have seen some one in which a lawyer is contacted and asked to refer the matter to another lawyer, presumably to fool the lawyer getting the referral.

Thankfully, most lawyers seem to recognize when they are being targeted. But we are still seeing some lawyers that are getting fooled – including one just this week on a collection matter.

The fraudsters continue to come up with new scenarios. One we have seen a few times recently involves the collection of outstanding support arrears. Indeed, several lawyers in Oklahoma were targeted over the American Thanksgiving holiday weekend by this exact type of fraud. The fraudsters pose as a potential client seeking to collect outstanding child or spousal support. They usually say that they have already worked out an agreement with their ex-spouses, but want the lawyer to be involved with finalizing the agreement and handling the payment (for a very healthy share of the proceeds of course). If someone wants to pay you five figures to serve as a cheque-cashing service, your internal “too good to be true” alarm should go off.

Keep your guard up. Make sure your client intake and identification processes are on
high alert. Be on the look-out for frauds involving collections, small business loans and real estate or mortgage transactions loans for commercial purposes. Typically, both the client and the lender institution are new to the firm, and the deals and certified cheques will look legitimate. But they will turn out to be counterfeit, leaving a shortfall in the lawyer’s trust account.

Watch for the common red flags on frauds:

• Client will be new to your firm (or may have retained you previously on a small matter)
• Source of referral is unknown or not recognized
• Client will provide only a cell number
• Client is in a rush to complete the deal
• You will be instructed to disburse the funds to a third party

How to protect yourself: Check out these and other free fraud prevention resources on the practicePRO fraud page (www.practicepro.ca/fraud)

• Download and read Lawyers as targets of fraud: the common misconceptionsto understand the recurring misconceptions that are preventing some lawyers from recognizing potential frauds.
• Download a 90-minute LAWPRO presentation on what frauds look like and how to avoid them. You can access the MP3 (audio) file at http://www.cmcgc.com/DEMO/OBA/09GEN0526T.mp3. The program Powerpoint presentation is available for free download at http://www.oba.org/en/pdf/09GEN0526T.pdf.
• Download copies of our Fraud Fact sheet and distribute them to the lawyers and staff in your office. It contains descriptions of the common fraud scenarios and lists the red flags to watch out for.

Call LAWPRO at 1-800-410-1013 (416-598-5899) if you suspect you have completed or are acting on a matter that appears like it might be a fraud. We will talk you through the common scenarios we are seeing to help you spot red flags and ask the appropriate questions of your client to determine if the matter is legitimate.

Cross posted on Slaw and LawyerSuccessTips