Last Updated on 5th March 2025
Cyber fraud is a growing problem in the legal sector, with the press regularly reporting on the success that scammers have enjoyed at the expense of unwary firms of solicitors.
The estimated loss of client funds in 2016 alone ran into many millions, with three quarters of cyber-crime reports relating to Friday afternoon frauds – the traditional day for property transactions to be completed in a solicitor’s office.
One increasingly common problem is people selling property they don’t actually own to unwary purchasers
Solicitors and their insurers and regulators are understandably concerned, especially as firms can be held legally responsible for their client’s losses.
A solicitor is under a duty of care to keep a careful eye open for unusual features that might cause alarm bells to ring.
Potential red flags include unoccupied properties with a high value, transactions where the seller’s address is not the same as the property being sold, situations where the seller is in a rush to speed the transaction through, sellers with limited knowledge of the property they are selling or who do not hold key documents.
Very high standards of care are expected from solicitors and clients who lose out in these frauds can usually expect to receive the benefit of any doubt.
Solicitors who unwittingly act for the fraudsters who are selling property are also in danger of facing liability, though in general they don’t owe a duty of care to a buyer or the buyer’s solicitor.
Another type of cyber fraud is where criminals intercept emails between the solicitor and their client and ‘arrange’ for monies intended for a property transaction to be diverted to their account.
Again solicitors are expected to be vigilant and on the look out for signs of the fraud. Suspicion might be aroused for instance where:
1. a solicitor is asked to pay money to a third party,
2. an ‘odd’ email address is given,
3. the solicitor is notified at the last minute of a change to the payee’s bank account.
A solicitor who isn’t alive to these issues and fails to detect signs of fraud could well find themselves facing a claim against them.
