As reported in LawFuel recently, law firms are falling foul of an online scam
The scam whereby a seemingly genuine foreign company solicits a law practice to collect debts on its behalf has caught out at least one New Zealand law firm.
Anecdotal evidence reaching the Law Society indicates that those warnings have had some effect, though only just in time in some cases.
A number of firms have spotted the scam but the NZLS has heard of at least two where staff were about to pay out money when someone pointed out the LawTalk warnings.
The Law Society has now also directly emailed all trust account supervisors again warning them to beware of the scam and not to pay out any trust fund money until they are absolutely certain the related funds have been cleared.
"This is the most effective protection against the scam," Inspectorate Manager John Munson says, "as it depends on funds being paid out before a cheque has been cleared."
The scam involves law practices being approached by email to receive money from a New Zealand-based debtor.
The law practice agrees a retainer to undertake the debt collection and later is told the debtor has agreed to pay up. A cheque from a reputable bank is received and deposited in the trust account. The ‘client’ then pressures staff members to forward the funds, which are sent, minus the retainer, after which the cheque bounces.
The approach may appear to be genuine in that it purports to be on behalf of a well-established company. However, an actual approach directly to the company can indicate that it knows nothing of the email author.
Approaches that the NZLS has heard of have involved amounts ranging from approximately $150,000 to over $350,000.
Australian firms are being similarly targeted and it is understood that at least one mid-sized firm in New South Wales has fallen for the scam, reports the www.thenewlawyer.com.au website.
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