Law Firms

As Hundreds of Law Firms Report E-Mail Scams, One Loses Bid for Insurance Coverage


The plight of a law firm in Albany, N.Y., serves as a cautionary tale for other small-firm lawyers who are increasingly targeted in e-mail collection scams.

Lombardi, Walsh, Wakeman, Harrison, Amodeo & Davenport is among hundreds of law firms that have been victimized in the counterfeit check scams, the New York Law Journal reports. The firm’s troubles were compounded when a judge ruled last month that its malpractice insurer did not have to pay for the loss.

Since 2007, the FBI has received hundreds of complaints from law firms claiming millions of dollars in losses in e-mail scams, according to Jason Boone, a research assistant at the nonprofit National White Collar Crime Center who spoke to the publication.

Lombardi Walsh’s troubles started in February 2009 when it received an e-mail from a man identifying himself as Albert Chang, the CEO of a Taiwanese manufacturer, according to the opinion (PDF posted by the New York Law Journal). The firm agreed to help Chang collect funds. Later the firm collected $384,700 and deposited the check in the Berkshire Bank, wiring all but its fees to a bank in South Korea.

The check turned out to be fraudulent, and the Berkshire Bank sued Lombardi Walsh to recover the loss. After settling, the firm sued its malpractice insurer to recover the cost of litigation and pay for the loss.

In the April 7 opinion, Judge Thomas McNamara ruled that the insurer did not have to pay because the Berkshire Bank claim was not based on legal services provided by the law firm.

“The causes of action are all factually based on the relationship between Lombardi, Walsh and Berkshire Bank as depositor and banker,” McNamara wrote. “As such, the attorney-client relationship between Lombardi, Walsh and [Chang’s purported company] merely furnished the circumstances under which the claim by Berkshire Bank arose.”

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