ALERT: COMPROMISED EMAIL/WIRE INSTRUCTIONS FRAUD CONTINUES TO TARGET NORTH CAROLINA LAWYERS

The State Bar first alerted North Carolina lawyers to the compromised email wire instructions fraud scheme in April 2015. Unfortunately, over two years later, North Carolina lawyers continue to fall prey to this scam, causing millions of dollars of losses to clients and law firms. Information about this scam is available through title insurance companies (such as Investors Title’s W.I.R.E. brochure and checklist), malpractice insurance carriers (Lawyers Mutual has published numerous articles and videos), and other cyber security websites. Here is a recent article about the scam and how it affected a couple in North Carolina. This video is a chilling reminder of the devastation this scam can bring to your clients.

In 2011 FEO 7, the State Bar’s Ethics Committee opined that a lawyer has “affirmative duties to educate himself regularly as to the security risks of online banking; to actively maintain end-user security at the law firm through safety practices such as strong password policies and procedures, the use of encryption and security software, and the hiring of an information technology consultant to advise the lawyer or firm employees; and to insure that all staff members who assist with the management of the trust account receive training on and abide by the security measures adopted by the firm.”

The opinion specifies that lawyers must stay educated on current cyber security risks to prevent client harm and avoid potential disciplinary action. Failure to implement reasonable security measures to protect entrusted funds can cost a lawyer financially and professionally. In fact, the State Bar is aware of numerous instances where lawyers spent hundreds of thousands of dollars of their own money reimbursing clients for losses caused by this scam, instantly wiping out a career’s worth of retirement savings.

If your firm has been the subject of an attempted or successful fraud, please contact the State Bar at pbolac@ncbar.gov or (919) 828-4620.