PRACTICE WATCH, by Barbara Buchanan, Practice Advisor

Watch for: anti-spam law, confidentiality in marketing, settlement agreements, undertakings, scams and more

“Marketing” to potential clients? Get ready for Canada’s new anti-spam law

Bill C-28, Canada’s new anti-spam law (frequently referred to as “CASL”), received Royal Assent and is expected to come into effect sometime in mid-2012. The legislation will deal with threats to electronic commerce, including spam, against individuals, businesses and organizations. Industry Canada has received comments from the public regarding draft regulations related to the legislation and is preparing to move to the next stage.

How will CASL affect law firm marketing? Lawyers and law firms will generally be prohibited from sending emails or electronic newsletters to prospective clients without the intended recipient’s consent. You are encouraged to become familiar with CASL and to establish policies and procedures regarding electronic marketing. The penalties for violating the Act are up to $1 million per violation for an individual and up to $10 million per violation for any other “person” (a defined term in section 1). The Canadian Radio-television and Telecommunications Commission, the Competition Bureau and the Office of the Privacy Commissioner of Canada will be responsible for enforcing the law. Individuals and organizations will also have a right to bring a separate private action.

See the federal government website (www.fightspam.gc.ca) for more information about the new law as well as tips to protect yourself and your firm from spam and other threats to electronic commerce. A spam reporting centre is being established to identify and analyze trends and accept reports of spam and electronic threats, such as phony debt collection scams.

Bragging rights? Not so fast

You’ve seen magazines, newspapers, books and law firm websites where lawyers ­publicize large transactional or other work that they’ve done on behalf of named clients. Though it can be interesting reading, remember that you need your client’s authority to disclose confidential information. And, while you may disclose information with your client’s implied authority, getting express authority in writing minimizes the chances of misunderstanding and upset.

Some clients, including large entities, do not want their names in the media, so consider whether publishing such information is in the best interest of the client and not just for self-promotion. Chapter 8, Rule 24 of the Professional Conduct Handbook requires that, before making a public statement, you must be satisfied that any communication is in the client’s best interest. Also, keep in mind the confidentiality provisions of Chapter 5 of the Handbook, in particular Rules 1 to 14. Generally speaking, you are required to hold in strict confidence all information concerning the business and affairs of a client acquired in the course of a professional relationship, regardless of the nature or source of the information or of the fact that others may share the knowledge.

people in elevatorElevator talk with colleagues? Carefully consider with whom you may speak at your firm about your client’s affairs and where you do that. Unless a client directs otherwise, you may disclose a client’s affairs to partners, associates and articled students and, to the extent necessary, to legal assistants and non-lawyer staff who you use to provide services to that client (Chapter 5, Rule 11(b)). However, avoid elevator talk, talk in the reception area or any public place. Stress upon associates, employees, students and other lawyers under contract with you or your firm the importance of confidentiality, both during their employment and afterwards.

Most Handbook rules have counterparts in the new Code of Professional Conduct for British Columbia (the “BC Code”). BC Code Rule 6.05 deals with public appearances and public statements while Rule 2.03 deals with confidentiality obligations. These two BC Code Rules are approved with an effective date yet to be established.

BC Code Rule 2.02(4) – Encouraging compromise or settlement a must

Chapter 8, Rule 1(a) of the Handbook prohibits lawyers from instituting or prosecuting proceedings that, although legal in themselves, are clearly motivated by malice on the client’s part and are brought solely for the purpose of injuring another party. Rule 4.01(2)(a) is the counterpart to Rule 1(a) in the new BC Code. In addition, BC Code Rule 2.02(4) requires lawyers to encourage clients to compromise or settle a dispute on a reasonable basis.

Encouraging Compromise or Settlement

2.02(4) A lawyer must advise and encourage a client to compromise or settle a dispute whenever it is possible to do so on a reasonable basis and must discourage the client from commencing or continuing useless legal proceedings.

Commentary

A lawyer should consider the use of alternative dispute resolution (ADR) when appropriate, inform the client of ADR options and, if so instructed, take steps to pursue those options.

Undertakings in your control?

It has come to my attention that some lawyers are giving or accepting undertakings that are not within their ability to ­control. This is an example of a bad undertaking: “I undertake to have my client execute the document by December 31, 2011.” This undertaking is not within the lawyer’s control because it’s up to the client whether or not the client executes the document. If the client does not execute the document, the lawyer has breached the undertaking and is subject to being reported to the Law Society. Never give or accept an undertaking that is not within your control. If a client is supposed to do something, be clear that you aren’t assuming the client’s obligations.

Fake law firm website using BC lawyer’s website content

A BC lawyer was recently surprised to see that a scamster copied content from the lawyer’s website, including testimonials, to set up a fake law firm website with a fake lawyer’s name and contact information outside of BC. However the scamster failed to completely delete the real lawyer’s name in every spot and the scam came to light. This website was taken down quickly after the police and the web host were alerted. This isn’t the first phony law firm that we’ve seen (see the May 2, 2011 Notice to the Profession about how a fake law firm website was used in a new variation of the bad cheque scam). Consider monitoring the use of your name on the Internet, if you are not already doing so. It can be as simple as using Google Alerts, or you can use a more sophisticated approach. Discuss your options with a professional.

More bad cheque scams

Editor's note: This fraud alert includes names used by fraudsters in BC. Real people with the same names may be the victims of a fraudster or of coincidence, but are not suspected of wrongdoing.

Fraudsters posing as clients continue to ask lawyers to pay money out of trust based on a bad cheque, often under the guise of collecting on a phony debt. Some of the different fraud scenarios and names that fraudsters have used in BC are set out below:

  • Commercial loan agreement – David Lawson, James Gillard, Mark Rudic, Yu Shengli, Dr. Richard Abramovic, Izzabin Bin Aris, Aris Izaddin, Ma Li Ni, Larry Mason, Edward Williams, Fred Williams, George Graham, Christine Gilbert, Daniel Smith, John Fischer,* Noriko Kudou,* Peter Jackson, William Brock, Prateep Ponimdang,* Lisa Lambert*
  • Personal loanPrateep Ponimdang* loan to friend, Ms. Lisa Jin
  • Personal injury settlement between employer and employee – Terry Sullivan,* Patrick Cluster, Graham Jackie Lynn, Tammy Savage
  • Commercial invoices – Mark Branson, Alice Wood, Bessant James, Shi Quen, Qui Xiandong, Chongan Lee,* Pete Basu*
  • Matrimonial, including collaborative divorce agreement – Donna Chipman, Kathy Scotia, Mima Oshiro, Masako Kazue, Rika Takahashi, Tanako Masato, Julie Burany, Brenda Blumenkrantz, Alice Goldbery, Zaria Hoshiko, Hikari Yamato, Akemi Kobayashi, Crystal Masaru,* Diana Hamasaki,* Jacklyn Kaidence,* Umeko Mizuki*
  • Real estate – Jyoung Chung Tu, Young Chung Tu, Shiukmoda Joji

* An asterisk marks the names commonly used recently; however the old names still pop up and new names and email addresses appear regularly, usually with a Gmail, Hotmail or Yahoo address.

“Mr. Prateep Ponimdang from Thailand” – personal loan agreement scam

A scamster calling himself “Mr. Prateep Ponimdang” has recently been emailing BC lawyers for help to collect on a fake loan. He’s been using the email address prateep42@yahoo.co.th or prateep_23@yahoo.co.th. The scamster provides a scan of his Thai passport and a loan agreement by email. (Remember that, if the client is outside of Canada, a lawyer must enter into an agreement with an agent to verify the client’s identity — a new client sending you a scan of his passport isn’t sufficient (Law Society Rule 3-97(5).)

Like all phony collection scams, the “client” needs a trusting lawyer who will pay out on a certified cheque or bank draft deposited to the lawyer’s trust account before discovering the instrument is bad. Waiting for a cheque to clear may help but not eliminate the risk. For example, a cheque that’s drawn on an ­actual bank account may clear initially, but when the financial institution later finds that the instrument was bad, the lawyer will have a trust shortage. Below is an example of some actual content of the scamster’s emails, including spelling, grammar and punctuation errors.

From: Mr. Prateep Ponimdang prateep_23 @yahoo.co.th
Date: Sun, 23 Oct 2011
To: lawyer name
Subject: Ref: Legal inquiry

I am Mr Prateep Ponimdang from Thailand.I need the service of a lawyer to collect the money i loan to a friend who now reside in Canada.

Please let me know if this matter is within the areas of your practice.

Sincerely
Mr Prateep Ponimdang

A lawyer who responded received the further email:

Figure 1: Scan of Prateep Ponimdang’s passportFrom: Mr. Prateep Ponimdang prateep_23 @yahoo.co.th
Date: Tues, 25 Oct 2011
To: lawyer name
Subject: Ref: Legal inquiry

Thanks for your response. It was a personal loan which I granted to her as she needed it for her business then in Thailand, but she now reside presently in Kelowna, BC Canada.

The agreement was that the loan be paid back after 27 Months and the agreed period is past and she yet to pay back the money.

So i shall need your service in collecting this money from her, since she now reside within your legal boundaries .

I have just inform her of my intention to retain your firm to collect the money from her and from her responds she seem very much afraid of litigation and she don;t want this to result to a court case. So she is assuring me that she is ready to make the payment, so i advice that all funds should be directed to your office as that is the only way i can make her pay without any further delay.

Meanwhile, she has requested that i forward her the following information below from your firm to enable her issue a part payment to show her readiness to meet her obligation while the balance will be paid soonest.

1 Name to issue the cheque :
2. Your Address:
3. Your Telephone number :

Upon receipt of the payment you shall deduct you hourly charges and any other legal fee applicable for this kind of service. Hope to hear from you ASAP with the information above so that I can forward to her and i could also send her information to you for record purpose.

Attached is copies of the loan agreement and my ID for your file. [See Figures 1 and 2 right.]

Sincerely,
Mr. Prateep Ponimdang
 

The lawyer provided information about how to make out the cheque to the law firm and where to send it and then received the following two emails:

Figure 2: Scan of loan agreementFrom: Mr. Prateep Ponimdang prateep_23 @yahoo.co.th
Date: Sat, 29 Oct 2011
To: lawyer name
Subject: Ref: Legal inquiry

Dear (lawyer's name)

Your information was forwarded to Ms. Lisa Jin and this morning i got an email from her followed by a call that she has traveled down to Paris for an important business engagement, but not to worry to avoid any delay of the payment, she has handle everything regarding to the payment to her Investment Manager (Mr. Ryan Baileys) .

Also she inform me that Mr. Ryan Baileys will call you to inform you on when you shall be receiving the payment and also on the exact amount but she assured me that there will be no delay in making the payment .

Regards and let me know when you hear from Ryan Baileys.

Regards
Mr. Prateep Ponimdang

From: Ryan Baileys ryanbaileys@standard trustmanagement.com
Date: Mon, 31, Oct 2011
To: (lawyer's name)
Subject: “”NOTIFICATION LETTER””

Oct.31,2011

 (lawyer's name and address)

Dear Sir,

This is to officially inform you that we (Standard Trust Management); have been directed to forward funds to you on behalf of one of our customers-Ms. Lisa Jin, in conjunction with settlement money owed to your client,Mr. Prateep Ponimdang (Thailand)

We are an investment management firm and Ms.Jin has directed that we liquidate some of her stocks / shares (financial Investments / Assets), managed by our Institution, to enable him utilize the proceeds derived from the sale, to cater for all the liability owed to your client.

You are advised to get in touch with one of our Investment officer (Mr.Ryan Baileys), via his email address ryanbaileys@standardtrustmanagement.com or by telephone at his direct telephone #: 1 (613) 255-2239, to enable him to facilitate the payment.

Be aware that we do not release funds to third party, until some pertinent information has been satisfactorily provided to us. Our days of operation are Monday to Friday, between the hours of 9:30am to 7:30pm (EST).

Sincerely,
Ryan Baileys
INVESTMENT OFFICER

Keep informed and learn to recognize scams

Visit the Law Society’s website to find out more about how to identify and avoid being caught by scams (see Lawyers>Fraud Alerts>Bad Cheque and Other Negotiable Instrument Scams) or contact Practice Advisor Barbara Buchanan for confidential advice. If you are not sure if you are dealing with a scamster, protecting yourself could be as simple as not acting, or requiring the “debtor” to pay the “client” directly so that the funds do not go through your trust account.

Get advice from your financial institution about protecting yourself. Also visit the Canadian Anti-Fraud Centre’s (CAFC) website which used to be commonly known as Phonebusters (www.antifraudcentre.ca). CAFC, jointly managed by the RCMP, the Ontario Provincial Police and the Competition Bureau of Canada, is currently Canada’s central fraud data repository and its Call Centre Unit has 11 full-time call takers who are trained anti-fraud specialists. You can report a fraud to CAFC or get information. Eventually you will be able to report these scamsters to the spam reporting centre being established under Canada’s upcoming anti-spam law discussed earlier in this article.

Holidays coming – scamsters ­looking to line their pockets with your hard-earned cash

The winter holiday season is upon us. Scamsters like to prey on businesses when they think they may be short-staffed or rushed for time and not as careful as usual. Be extra vigilant at these times.

Further information

Contact Practice Advisor Barbara Buchanan at 604.697.5816 or bbuchanan@lsbc.org for confidential advice or more information regarding any items in Practice Watch. 

 
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