A few weeks ago, I received an e-mail from a “prospective client” in the U.K. requesting help with a straight-forward contract matter. Contract litigation isn’t exactly why I went to law school, but something I do help out with from time to time…
(Identifying information redacted because I’m fairly sure the scammer stole the identity of an innocent person and company.)
We discuss more — both phone and e-mail — and he sends me a signed contract and invoices indicating that he was owed $150K for architecture services: CAD drawings of a residential home. No problem, I’m a California lawyer, you want to sue a California client for breach of contract, you have a signed writing, and if they can afford $150K just for architecture on their residence, they probably have some cash to collect. Good deal.
I send over a retainer agreement and he promptly returns it signed. Now all I need is the retainer deposit and — oh, wait, an e-mail indicating that the other side wants to settle the matter and I should hold on! Several days later, I receive a cashier’s check and a note from my client saying that they resolved it and he just needs me to deposit the check, take my fees out of it, and send me the money.
For the uninitiated, this is a variation of a classic check scam: someone purchases any kind of goods or services and overpays you in some way “by accident.” But, no problem, just deposit the check, send them what they ordered, and whatever the extra is, just wire it back to them! Of course, the check is a forgery and because American banks are still in many ways stuck in the 20th century, it often takes them several days to let you know, “hey asshole, you got robbed!” In the meantime, you’ve sent their order and a whole bunch of cash that you now owe the bank, and they’ve disappeared never to be seen again.
This would have cost my clients nearly $100,000 (as the check would be deposited into, and the soon-to-be-reversed proceeds wired from, my client trust account), which I’m quite sure the State Bar would expect me to repay out of my own funds. Your insurance may not cover this (the banks sure won’t — it was you who initiated the wire, right?). Spotting the scam early, I insisted that the “client” pay the retainer deposit first rather than take it out of the cashier’s check, which after a bit of arguing caused the “client” to take his business elsewhere.
Be wise, business owners… there are people trying to take advantage of you everywhere and they don’t care if you’re ruined as a result. In the law world, having a solid retainer agreement, requiring a deposit before beginning any legal services, and being suspicious of irrational client requests — like being “paid” to move $100K for an agreement I didn’t even negotiate — saves the day. And of course, make sure any check actually clears (not just becomes temporarily available, but call the bank and confirm they have the funds from the sender’s bank) before wiring money away.