Vermont Bar Journal, Vol. 40, No. 2 Fall 2015, Vol 41, No. 3 - Page 17

by Jordan K. Carpenter The Ethics of Dealing with Internet Scams Targeting Vermont Lawyers Introduction Scam artists target lawyers.1 Many of these scammers take advantage of the relative anonymity offered by the Internet and the eagerness of lawyers to take on new, money-making clients. The average scam is carried out under the guise of a quick settlement or transaction, usually under extraordinary, urgent circumstances. The scammers promise the lawyer will be entitled to a generous fee, contingent upon his or her quick execution of the requested representation. It sounds too good to be true, and it almost always is. Lawyers can avoid being taken in by a scam by performing the due diligence expected of every professional relationship formed.2 In fact, the New York City Bar has determined that each lawyer’s duty to provide competent legal representation—expressed in Rule 1.1 of the Vermont Rules of Professional Conduct3—“includes a duty to exercise reasonable diligence in identifying and avoiding common Internet-based scams, particularly where those scams can harm other existing clients.”4 Additionally, the Iowa Supreme Court cited that state’s corresponding competence rule when it suspended an attorney’s license for twelve months because a “cursory internet search ¼ would have revealed evidence that [the proposal] was probably based on a scam.”5 Apart from the general duty to provide competent legal representation, specific ethical considerations can arise in two separate instances: (1) to the prospective client (who may not actually be a scammer) when an attorney spots what she thinks is a scam; and (2) to the firm’s other clients when an attorney falls victim to a scam. the lawyer reasonably believes necessary ¼ to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer’s services.8 The gray area that exists between the duty of confidentiality owed to a prospective client and the duty to report a suspected fraudster imposes a responsibility on a Vermont lawyer to investigate someone who raises red flags in initial communications. Because “[t]he presumption of confidentiality gives way only if and when the lawyer reasonably concludes that the purported client was not actually seeking legal services,”9 a lawyer must maintain confidentiality while gathering information. However, a lawyer who determines the purported client is engaging in fraudulent activities may report that person to the proper authorities without fear of breaking confidentiality. Thus, a targeted lawyer has a few options when she receives a suspicious email. First, the lawyer could simply delete the email. The California State Bar Association Committee on Professional Responsibility and Conduct advised that “[h]itting the delete button may be the best course of action for the attorney.”10 Until a lawyer responds to an unsolicited email, she has no ethical obligations to the sender.11 If the lawyer does respond, she must take proper precautions to ensure that the prospective client is legitimate and maintain confidentiality until she determines that the solicitation is propagating a scam. When a lawyer is taken in by a scam, the resultant problems can affect other clients. A typical scam usually involves a check that a lawyer deposits in the “firm’s trust account and, once the check has ‘cleared,’ the attorney transfers his contingent fee into his operating account and wires the remainder of the funds to a foreign bank account designated by the email sender.”12 This chain of events often puts at risk other clients’ funds, which were also being held in the trust account. Rule 1.15 of the Vermont Rules of Professional Conduct governs the safekeeping of clients’ property in the lawyer’s possession; it dictates that “a lawyer shall not use, endanger, or encumber money held in trust for a client or third person for purposes of carrying out the business of another client or person without the permission of the owner given after full disclosure of the circumstances.”13 The rule also states that “a lawyer shall not disburse funds held for a client or third person Ethical Considerations When a lawyer receives a letter or email from “[a] person who, in good faith, discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter,” that person becomes a prospective client.6 A lawyer owes any prospective client a duty of confidentiality, governed by Rule 1.6 of the Vermont Rules of Professional Conduct.7 However, a lawyer does not owe the duty of confidentiality to someone who merely poses as a prospective client in order to defraud the lawyer. In fact, Rule 1.6 requires a ]