For now though, the plan is as vague as scamming is vast: $1.026 trillion is lost to scams globally, 62% of New Zealanders encounter a scam once a month, and an estimated 35% of people report scams to law enforcement.
The scenario is a little too close to the bone, seeing as I bore the brunt of a phishing scam earlier this year. Long story short, I came out on top, but the shame and horror of the experience still brings me to my knees.
Digression aside, it’s no surprise lawyers aren’t immune to this frightening trend, which is made worse by the fact that lawyers handle extremely confidential client data. There’s also the norm where lawyers are commonly perceived as being the custodians of large sums of money on behalf of their clients.
“An active cyber attack could bring your practice to an absolute halt, ignore this threat at your peril,” Sheddan Pritchard Law’s John Sheddan said in one of a series of Law Society sessions held this year in collaboration with ANZ.
Types of scams targeting lawyers
In the series, the Law Society outlined two main fraud and scam scenarios.
Firstly, “email spoofing” is where scammers impersonate people and email addresses that at first glance look legitimate. This could include an email to a lawyer that alleges it’s from a senior leader in their firm requesting funds be urgently transferred for an emergency settlement.
Secondly, “email hijacking” involves the act of infiltrating a law firm’s IT system. A scammer may request services and exchange locked documents that require a lawyer’s email address or password.
The firm’s information is then harvested and a scammer may then impersonate a lawyer and send invoices to clients, who then transfer money to a scammer’s bank account.
In a practice briefing issued this year, the Law Society said scammers have also approached lawyers seeking assistance for recovering an unpaid portion of a loan made to a business or person living in the lawyer’s “jurisdiction”, for example.
Scammers have also used methods such as trying to recover a matrimonial settlement; enforcing an agreement for their ex to pay alimony; representing a company doing business in North America; purchasing and paying for a house; and chasing the repayment or possibly litigating a loan.
Essentially, scammers tend to use stolen or false names (Rupert Murdoch and Paul McCartney have been used in the past, interestingly) to procure the help of a lawyer to complete or formalise a relatively straightforward process, the practice briefing read.
Ethical and professional considerations
On one hand, the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care Rules) 2008 and the Privacy Act 2020 require lawyers to protect and hold in strict confidence all information concerning a client acquired during the professional relationship.
On the other, lawyers aren’t allowed to turn down clients (supposing scammers are convincingly good) willynilly. Mind you, Rule 4.1 of the Conduct and Client Care Rules lists when a lawyer has good cause to refuse instructions.
This could include instructions falling outside a lawyer’s normal field of practice or in breach of any professional obligations, issues with paying fees, or time limitations, for example.
Equally, Rule 2.4 prohibits lawyers from advising clients or engaging in conduct that a lawyer knows to be fraudulent or criminal.
What happens then, if a lawyer denies work on the ground they think they’re dealing with a scammer, when in fact they are not?
If a scam turns out to be a genuine instruction and ends up being a complaint, a lawyer standards committee would be more inclined to view the matter in a lawyer’s favour if they have taken some identifiable steps to support their suspicion, the briefing read.
“Lawyers need to adopt a balancing act between being available to act, with a healthy amount of scepticism, to avoid becoming a victim of an email scam.”
Ultimately, if lawyers find themselves falling victim to a scam, the consequences are dire. On top of the obvious financial losses, there’s the reputational harm and breaches of professional obligations.
The advice couldn’t be clearer – lawyers must tread extremely carefully.
