The following is an excerpt from a fraud alert recently posted to the Lawyers Indemnity Fund website (a division of the Law Society of British Columbia), with scenarios that could also threaten Nova Scotia lawyers “Fraudsters strike two BC firms amid summer surge in attacks” (August 6, 2025):
LIF has received reports of one funds transfer fraud and one identity fraud in BC so far this summer. Here are the details:
Funds transfer fraud
A lawyer in the Interior narrowly escaped a funds transfer fraud. The lawyer was representing a client in a civil litigation matter and had successfully reached a settlement. Shortly thereafter, she received an email appearing to originate from her client but was actually from the fraudster, requesting that the settlement funds be wired to a Canadian bank account. The payment instructions came from the client’s email address, and the bank details provided matched the institution previously used by the client, but the account details were different. Fortunately, the lawyer followed secondary verification protocol. She initiated a telephone confirmation and, due to her suspicions, also arranged an in-person meeting with the client. During that meeting, she hand-delivered a cheque to the client for the settlement funds and confirmed the fraud attempt. Initially, she believed that only the client’s email had been compromised. However, after following our recommendation, she consulted both her IT service provider and Coalition. A subsequent investigation revealed that her firm’s IT system had in fact been breached and several other potential fraud attempts were stopped.
What can you do about funds transfer fraud?
Cybercriminals hack into law firms’ networks to intercept communications and trick lawyers into redirecting wire transfers based on emails that appear to come from clients, opposing counsel, or other parties related to the matter. Traditional red flags — such as a change in payment instructions, spelling mistakes, or reference to a foreign bank — are rarely seen. Today’s sophisticated fraudsters break in and monitor communications, waiting for opportunities. They sometimes get in at the front end by providing the initial payment instructions. Secondary verification of all payment instructions is therefore essential.
Before paying out funds in any matter, verify that the payment instructions your firm received by email are legitimate through direct phone or in-person contact with the instructing party. Use a checklist for every payment instruction to avoid becoming the next victim. If you have fallen victim to a funds transfer fraud, immediately notify your bank and request a claw-back of the funds. Next, contact your cyber insurer and IT department to ensure the fraudster is not lurking in your system.
Impersonation scams
Physical impersonation of a lawyer: A Vancouver personal injury lawyer acted for an elderly client. A fraudster visited the client’s home, falsely claiming to have been sent by the lawyer and requested that she sign documents allegedly related to her property. The client complied, believing the individual was acting on her lawyer’s behalf.
Later, she contacted the lawyer to ask what additional steps were required. The lawyer informed her that he had not sent anyone to her residence and had no knowledge of the documents in question. Unfortunately, the client is unsure what she signed and is taking further steps. An investigation is currently underway to determine if the law firm’s IT systems and client information were compromised.
Virtual impersonation of a lawyer: Clients have also been victimized by cybercriminals who have impersonated lawyers and their staff by phone and email to redirect client funds to themselves.
How can you protect your clients?
To help safeguard your clients, inform them about these threats. When you provide clients with your trust account information, consider advising them in writing that you will not change it. Encourage your clients to contact your office directly by phone to confirm your account information before wiring any funds to you.
Review the NSBS Regulations made pursuant to the Legal Profession Act, S.N.S 2004, c.28, including 4.12: Cash Transactions; and 4.13: Client Identification.
Before you open a new client file, be vigilant with every request for services that you receive. Fraudulent requests for services can be made by email, paper mail and courier, as well as individuals who arrive in person to retain you and use your trust account to receive and disburse funds. Be cautious with all cheques received, especially if they exceed an agreed upon amount. When in doubt, contact LIANS for more information on current reported scams and how to avoid them. Remember that you must always confirm a prospective client’s identification in accordance with the Anti-Money Laundering (Client ID) Regulations of the Nova Scotia Barristers’ Society.
In order to avoid fraud in real estate transactions, it is prudent to confirm the legitimacy of the letter with the financial institution that had prepared the letter. If you decide to proceed with a transaction, be sure to go to the bank website to verify branch transit number, address and phone number on the cheque. Wait until the bank confirms that the funds are legitimate and are safe to withdraw from the deposit. You may also choose to use the Bank of Canada’s Lynx system, an electronic funds transfer system in which settlement occurs after the clearing of each individual payment, resulting in the transfer of funds in central bank money from one participant to another. Once settled, a payment is final and irrevocable.