Almost a quarter of law firms have reported being targeted by scammers in the last year, a report published yesterday (28 April) by the Law Society has claimed.
The Law Society’s annual professional indemnity insurance survey, which looked at insurance claims among law firms of up to 25 partners, found that 15% of sole practitioners have reported an attempted scam, but that percentage grows with an increase in the number of partners. Within two-to-four partner law firms, 25% said they have been targeted by scammers, which, according to Law Society guidance, is defined as being targeted by fraudsters through emails or telephone calls, involving impersonation and infiltration, to obtain confidential financial information and data with the aim of stealing money from bank accounts.
In law firms of five-to-ten partners, 34% said they had been targeted, and in firms of 11-to-25 partners, that percentage increased to 44%.
The report did not look at very large law firms because of the differences in their professional indemnity insurance arrangements.
Among the law firms that were targeted, in 8% of cases it resulted in the theft of client-account money. This was highest in law firms of between two and four partners.
The report said: “Criminals use a variety of ever changing and increasingly sophisticated means, electronic and/or verbal, involving impersonation and/or infiltration, in an attempt to obtain confidential financial information and data with the aim of stealing money from bank accounts. A firm’s client account can be targeted in this way. Banks and clients can also be targeted in an attempt to defraud the client account.
“To make their scam appear credible, the criminals may use tactics, such as convincingly passing themselves off as calling from a bank or referring to the details of a genuine transaction which they have acquired dishonestly. Or they may use the names of law firms, solicitors, parties to a conveyancing transaction, beneficiaries of trusts and wills or persons linked directly or indirectly to a client account, to make their activity seem credible.”
In May 2015, the Law Society produced a practice note Protecting your firm if you fall victim to a scam. The practice note has been updated to reflect experience of the SRA’s implementation of the regulatory requirements.
Earlier this year, the Law Society launched a new webpage dedicated to scams-prevention advice, training and products. At the same time, the Society published common-sense tips for firms which cover handling client money; verifying bank-account details; risks associated with email, telephone calls and use of WiFi; security policies and training; technical preventative measures, and reporting scams.