There are a lot of ethics lessons in a recent lawsuit out of Connecticut.
William Cote, the lawyer for the seller in a real estate transaction, had $159,000 that he was supposed to wire to the Freedom Mortgage Corp. He had received a correct payoff statement with accurate wire instructions, but before he completed the payment, his paralegal received an email from the seller—it claimed— changing the wiring information. The new statement specified wire instructions for a different bank and account, and the paralegal passed in on to Cote, who then wired the money to the designated account—which had been set up by a scamster to snatch the money away.
Cote didn’t realize the gravamen of his error until more than a month later when the seller said he received a statement from the Freedom Mortgage Corp. reflecting a balance still owed on his loan. The buyer of the property is now suing both the seller and Cote because the title to the home she purchased is still encumbered by the seller’s mortgage.
Well…
- Lawyers are responsible for the ethical conduct of their non-lawyer employees, including basic competence. Neglecting their training is an ethics violation.
- The invasion of technology into every aspect of the legal profession requires vigilance and ongoing education. A firm or lawyer that does not have procedures and software in place to check the validity of emails is asking for a disaster. More than that, regular trainings of staff, including legal and non-legal, on technology advances and emerging perils are crucial. As with the non-lawyer trainings, they are too often skipped or made perfunctory.
- Cope was probably busy with other matters when his paralegal passed along the phony change to the wiring instructions. Obviously, he should have asked some crucial questions, but instead just acted on trust. Trusting one’s staff is a good thing, but when so much money is involved, it is the lawyer’s duty to make sure a non-lawyer assistant hasn’t missed anything. Meanwhile, distracted law practice is as dangerous as distracted driving.
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Source: ABA Journal
Ethics Alarms 
I’ve worked with lawyers only a handful of times, but every time across two different lawyers and three different services I’ve found the name of some other client in the space that mine or my spouse should have been.
That’s a pretty well-known scam. I’m surprised that a lawyer that deals with real estate transactions didn’t have more awareness of the possibility that a request for a change like that was bogus. I’m an old lady who doesn’t deal with those kinds of financial transactions, but I’d still know to call the mortgage company (using a known number or one I found on their website, not one that was included in the email) to confirm the change.
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