Another settlement agent sued for failing to protect buyer in email diversion

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My first blog of 2018 discussed a novel lawsuit (at least novel to me) brought in York County against a residential closing law firm. A home purchaser had lost $50,000 in closing funds that were diverted by a third-party criminal posing as the transaction’s real estate agent. Did you hear that? The real estate agent was hacked. The law firm was not hacked and was only involved in the loss because it was the settlement agent. 

The law firm’s paralegal and the purchaser had discussed the funds necessary to close by telephone, but no mention was made in that conversation of the wiring instructions. The complaint stated causes of action in negligence and legal malpractice and listed the following breaches of duty:

  • Requiring the purchaser to wire funds without counseling the purchaser about methods by which the secure delivery of wired funds could be compromised;
  • Failing to counsel the purchaser about the risks and insecurity of email communications, particularly of private, sensitive and financial closing information; and
  • Failing to be alerted by the circumstances of the purchaser’s telephone call to the firm’s paralegal.

email fish hook

American Land Title Association’s ALTA News, dated March 9, reports on a similar lawsuit filed in Wisconsin. The original news story was written by Brian Huber and reported by gmtoday on March 8. 

In the Wisconsin lawsuit, the email of the settlement agent, Merit Title, was apparently compromised. According to the complaint, a Merit Title employee used an unsecured system to email the closing statement and wiring instructions to the purchaser. The following month, the purchaser received an email purportedly from Merit Title, but with a missing “T” in the domain name (merititle instead of merittitle). The second email provided wiring instructions that were similar in format, structure and design to the ones sent by Merit, according to the complaint. The purchaser lost $82,000 in the scam.

The lawsuit claims Merit “had knowledge or should have had knowledge of a cybercriminal epidemic whereby hackers target title companies to learn about real estate transactions occurring and the hackers then send fraudulent wire instructions to the buyers prior to the closing.” Merit Title should have known of preventive steps to protect the buyers, the complaint stated.

My guess is that we are about to see numerous suits like this, seeking payment from the deepest pockets involved in real estate transactions. As I asked in the earlier blog, would the processes established by your law firm for the protection of your clients defend against this type of fraud?  If not, get busy and make changes.

ALTA has a list of resources that can be used to provide the appropriate safeguards, and your title insurance company should be able to assist you in implementing the appropriate resources in your office. Most of the protective procedures involve making sure your own systems are secure. But these lawsuits seems to indicate that consumers must also be advised of the dangers of dealing with others involved in closings who do not use secure systems. You don’t want to be left holding the bag for a comprised email system of a real estate agent!

SC Supreme Court holds email provides sufficient written notice

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….for at least one purpose

This blog is about dirt, but from time to time, dirt lawyers should review the rules our brother and sister litigators follow. Why? Sometimes those rules bleed over into our world, and sometimes, unfortunately, the transactions we handle are subject to litigation. And in this “ever changing world in which we live in”*, we should pay particular attention to changing rules involving technology. This is one of those changes.

The South Carolina Supreme Court held on February 28 that an email that provides written notice of entry of an order or judgment, if sent from the court, an attorney or record, or a party, triggers the time to serve a notice of appeal under Rule 203(b)(1) of the South Carolina Appellate Court Rules (SCACR)*.  And the Court held that this is such a novel question of law that its holding applies only prospectively, and not to the case at hand.

Here’s the background. On December 15, 2014, the master-in-equity denied the foreclosure defendants’ petition for an order of appraisal. That same day, the master’s administrative assistant emailed a signed and stamped copy of the order and Form 4 to the bank and the defendants. Three days later, the defendants received a copy of both documents in the mail.

Believing the time to appeal began on the day they received the documents in the mail, the defendants served notice of appeal on January 15, 2015, which was thirty-one days after the email and twenty-eight days after they received the documents in the mail.

The Court of Appeals held that the email triggered the time to serve notice of appeal. On appeal to the Supreme Court, the petitioners did not dispute that the email constituted written notice of entry of the order or judgment. But they argued that the time to serve notice of an intent to appeal is only triggered when written notice is received by mail or hand delivery according to Rule 5 of the South Carolina Rules of Civil Procedure (SCRCP). The Supreme Court held that the SCRCP do not apply to appellate procedure.

The Supreme Court examined Rule 203(b)(1), SCACR, which requires that a notice of appeal must be served within thirty days after receiving written notice of entry of the order or judgment and held that there is no requirement of service. All that is required, according to the Court, is that the parties receive notice. Further, there is nothing in the appellate court rules suggesting that the manner in which a party may receive notice is limited to the methods used to effectuate service.

Got it, dirt lawyers?  It’s technical, but this holding suggests that our Court is gradually accepting the technology we use every day as sufficient for notice purposes. One lesson for us is that we should be careful what we say in our emails as we handle our transactional practices! Another lesson for us is that we should all check our spam and junk email files to make sure we receive all communications that may create responsibility or liability for us.

*…with sincere apologies to Sir Paul McCartney.

**Wells Fargo Bank, N.A. v. Fallon Properties South Carolina, LLC, South Carolina Supreme Court Opinion 27773, February 28, 2018.

Thirty-year fixed-rate mortgages

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Are they still the most logical choice for all buyers?

Is the mortgage industry due for a facelift?

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I recently saw an interesting article from MReport via American Land Title’s Newsletter dated February 26, entitled, “A Mortgage Best Fit; Lenders are bypassing the 30-year fixed-rate mortgage in favor of loans that are tailored to specific borrower niches”. I recommend that all dirt lawyers read this article to understand that the mortgages you may be closing in the future may not be the same as the mortgages you closed in the past. You can read the article in its entirety here.

My husband and I built a house and closed a mortgage loan in 2011, and, although we told the lender and real estate agent we intended to pay the loan off quickly, both insisted on the old-fashioned 30-year fixed rate mortgage with a twenty-percent down payment. The lender didn’t even offer alternatives. In 2011, the housing market was just returning from the financial debacle that began in 2007, so everyone was being extremely careful. (I remember being questioned about why our income tax picture had changed in the years leading up to 2011 and having to write a letter explaining that children grow up and leave home.) I’m not sure we would be approached in the same way today, based on this article.

First-time buyers often choose 30-year mortgages because no one explains other options and because it’s the product their parents understand and recommend. The traditional mortgage is generally the safest option because of its reliable, consistent monthly payment. Interest rates have been low for many years now, and this fact also supports the wide-spread use of the traditional mortgage. Why risk a variable rate when the fixed rate is low?

This article suggests, however, that millennials and other first-time buyers may now be more inclined to select shorter-term and adjustable-rate options. Someone who is just entering into the housing market may envision living in their starter home for only a few years and may prefer an adjustable rate mortgage to take advantage of the low interest rate up front. This article suggests that millennials may be saddled with student debt and may be a more transient group, so they don’t want to commit to anything that lasts thirty years. Few envision themselves working for a single company for any length of time. They believe they must change jobs to increase their incomes. This article also suggests that millennials may not be loyal to a geographic area.

In addition to variable rate mortgages, this article suggests the concept of the equity-sharing mortgage, where an investor shares in the appreciation in the home value in exchange for down payment assistance or lower payments. These new-fangled products may enable low- and moderate- income borrowers to enter the housing market.

Some lenders are recognizing that these trends mean that the entire underwriting process needs to be reexamined to accommodate the millennial market. And they also recognize that veterans may have difficulty getting the service and products they need to buy homes because VA loans are a little more expensive for lenders to close. More education for veterans and training for loan officers may be needed to accommodate the veteran population. Online and mobile-friendly mortgages are also likely to change the face of the mortgage industry in the future.

Fake news? No, a fake homeowners’ association!

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The schemes fraudsters use to dupe property owners out of their hard earned money seem to get stranger and creepier! On February 8, a television station in Kansas City, Missouri, FOX4, reported on a homeowners’ association scam involving a quiet neighborhood in Northland Missouri.

The station reported that for years, people living in the Summerfield subdivision ignored the invoices that arrived in the mail demanding payment to a homeowners’ association. Summerfield has no owners’ association! “Summerfield Homeowners’ Association” has no board and provides no services, but someone in its behalf mailed invoices and later filed liens against the neighborhood homes.

One homeowner reported that when he moved into the neighborhood in late 2017, he was told that there was no owners’ association and no monthly assessments. But just before Christmas, a $445 lien was filed against his home as well as thirty other homes in the neighborhood.

The liens made reference to a telephone number for a company that manages the association, Column’s Park, LLC, but the man who answered the telephone at that number, according to the news report, was “some random guy” who said the number had belonged to him for five years and had nothing to do with Summerfield subdivision. The man purported told callers to let everyone in the subdivision know that he had not caused the problem, and that he was convinced it was a scam. He was apparently weary of fielding the telephone calls of the frustrated homeowners.

Unable to resolve the conundrum themselves, the neighbors called FOX4 Problem Solvers for help. The television station traced the liens to two individuals, one residing in a federal prison, convicted on an earlier charge of mortgage fraud. This convict apparently came up with a new idea for duping consumers out of money. The other individual said she believed the subdivision should have an owners’ association to pay for the upkeep of a neighborhood drainage basin. The connection between the two individuals was unclear.

The owners finally took action by hiring an attorney to assist them in eradicating the liens.  What a story! Hopefully, we won’t see this one in South Carolina.

You learn something new every day!

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Question gives insight into IRS collection procedures against JTROS properties

In August of last year, an excellent South Carolina real estate lawyer raised this issue with Underwriting Counsel in our office:

The property owners are Sally Seller and Samuel Seller, as joint tenants with right of survivorship. Sally Seller died January 7, 2017. A federal tax lien was filed against Sally Single, Mrs. Seller’s maiden name, March 3, 2014. Mr. and Mrs. Seller were married in April 20, 2015. Please confirm that we should either pay off this lien at closing or obtain a release from the IRS.

Title insurance underwriting is all about pre-closing risk prevention and risk management, and I always joke that underwriting is more of an art than a science. This is true, in part, because few issues in the law are black and white. Most lawyers will confirm that a fair amount of gray area exists in most legal questions. But I digress.

The truth is that when a trusted, intelligent real estate lawyer calls her friendly South Carolina title insurance underwriter and says, in effect, “I should deal with this title problem at closing, shouldn’t I?”… that is an easy answer! Unless the Underwriter knows of a magic solution to eliminate the title issue, the friendly title insurance Underwriter will almost always respond, “Yes, please take care of that issue at closing.”  That’s exactly what our Underwriter did in this case last August.

Around Halloween, a follow-up question was raised:

The sellers’ attorney has been working on obtaining a satisfaction for the IRS lien, but the IRS has told him that the lien will not be released or satisfied because the taxpayer is deceased. IRS Agent Arnold Adams (IRS ID#10000797284)* referred me to Notice 2003-60. The IRS agent further said it will not file a release of lien for the convenience of title insurance companies and mortgage lenders**, but that the tax lien upon the death of a joint tenant is extinguished and not collectable on the basis of U.S. vs. Craft*** and its application.

The IRS notice linked above is entitled “Collection Issues Related to Entireties Property”. Every South Carolina dirt lawyer knows that we do not have a tenancy by the entirety form of ownership in South Carolina. If we don’t have that form of ownership, then does this IRS Notice have any application in South Carolina?

Married couples in South Carolina can own properties as tenants in common, joint tenants with right of survivorship or joint tenants with an indestructible right of survivorship under Smith v. Cutler.****

Several years ago, my friend and fellow South Carolina dirt lawyer, Paul Dillingham, called me to twist my arm to write an article with him for the Bar’s South Carolina Lawyer magazine, linked here, about a couple of deed drafting traps that were troubling him. In that article, we questioned whether Smith v. Cutler had created, in effect, a tenancy by the entirety form of ownership. That case dealt with property owned by couple pursuant to a deed with this language:

“for and during their joint lives and upon the death of either of them, then to the survivor of them, his or her heirs and assigns forever in fee simple”

The case held that property owned pursuant to the quoted language cannot be partitioned. If the property cannot be partitioned by the creditor of one owner, then the IRS Notice would have application in South Carolina. Apparently the IRS agent who was questioned for this closing believes the notice does apply in the Palmetto State, but please note that the question before the IRS agent didn’t deal with the Smith v. Cutler form of ownership. It dealt with a standard joint tenancy with the right of survivorship.

Did the IRS Agent give our South Carolina good advice? Would all IRS agents give the same advice? Can we ignore this IRS lien for the purposes of closing? What do you think?

* This is fictitious name and number. Don’t try to contact this IRS agent!

** That wasn’t very friendly!

*** 545 U.S. 274 (2002)

**** 366 S.C. 546, 623 S.E.2d 644 (2005)

Constitutionality of CFPB upheld

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cfpb-logoThe D.C. Circuit Court of Appeals upheld the constitutionality of the Consumer Financial Protection Bureau (CFPB) in a case decided last week. This decision reverses the October 11, 2016 holding of a three-judge panel which ruled unanimously that the structure of the CFPB allowed its director to wield too much power.

The highly publicized case began when PHH Corp. was ordered by former CFPB Director Richard Cordray to pay $109 million in restitution resulting from illegal kickbacks to mortgage insurers pursuant to Section 8 of RESPA. An administrative law judge had ordered a $6 million penalty at the trial level, but former Director Cordray apparently wanted to set an example and ordered the “ill-gotten gains” to be disgorged. The trial court had limited the violations to loans that closed on or after July 21, 2008. Director Cordray applied the fines retroactively.

PHH brought suit, arguing that the CFPB is unconstitutional because the Director has the sole authority to issue final decisions, rendering the CFPB’s structure to be in violation of the separation of powers doctrine. The petition stated, “Never before has so much power been consolidated in the hands of one individual, shielded from the President’s control and Congress’s power of the purse.” The petition argued that the Director is only removable for cause, distancing him from the power of the President, and that the agency is distanced from Congress’s power to refuse funding by allowing for funding directly from the Federal Reserve.

The lower Court agreed, writing, “Because the Director alone heads the agency without Presidential supervision, and in light of the CFPB’s broad authority over the U.S. economy, the Director enjoys significantly more unilateral power than any single member of any other independent agency.” The lower Court removed the restriction that the Director can only be removed for cause, giving the President the power to remove the Director at will. The lower Court also reversed former Director Cordray’s retroactive applicability of fines.

The Court of Appeals upheld the constitutionality of the CFPB, preserving the single-director leadership and the independence of the agency. The ruling indicates the President can only fire the Director for cause and allows the current five-year terms to remain in place. Five-year terms will, of course, mean that directors of the agency may remain in place after the termination of the term of the president who appointed him or her.

The CFPB is largely the brain child of the Democratic Party, and Acting Director Mulvaney has taken steps to rein in its power since he was appointed by President Trump. The Court of Appeals ruling was mostly decided on ideological lines. One Republican appointee joined the Democratic appointed judges in upholding the CFPB’s structure.

The Court did rule in favor of PHH by rejecting the large penalty imposed by former Director Cordray. The decision requires that the penalty be reviewed again by the CFPB.

Federal class action seeks to invalidate non-condo HOA foreclosures

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Is there authority for these foreclosures under SC law…or not?

On January 9, a lawsuit was filed in the Federal Court in Charleston seeking to certify a class of plaintiffs who have faced foreclosure in situations where the Horizontal Property Regime Act was not involved. In other words, the properties are not condominiums and are not subject to the statutory scheme that establishes lien and foreclosure rights in owners’ associations. The power to foreclose these properties is supported only by restrictive covenants, that is, only by contract.

subdivision

The complaint refers to a good faith estimate that one-third of all South Carolinians own property subject to restrictive covenants establishing owners’ associations, and those associations manage more than $100 billion in assets. Many of the properties are separate lots of land in contrast to “slices of air” in condominium projects.

The defendants in this class action suit include five homeowners’ associations in various counties in South Carolina, four law firms who represent the associations in their foreclosure actions, and five management companies who manage the business of the associations in various counties in South Carolina. All are said to be representative of the associations, law firms and management companies who do business across the state.

The class intends to exclude all associations governed by the Horizontal Property Regime Act. It also excludes employees, owners, officers, partners and management of the law firm and management defendants. The law firm and management defendants are alleged to be agents of the owners’ associations.

The main issue in the suit is whether non-condominium associations have the right to file liens and prosecute foreclosures for unpaid property assessments under South Carolina law. Underlying issues include whether the defendants have violated the Fair Debt Collection Practices Act, whether they have interfered with the plaintiffs’ contracts with their mortgage holders, and whether they have the power to lawfully evict homeowners for unpaid assessments.

The owners’ associations are typically established as non-profit corporations, and the suit questions whether non-profit corporations have the power to create liens for unpaid dues or assessments prior to obtaining judicial judgments.

The suit accuses the defendants of seeking to use the equitable remedy of foreclosure in actions that seek monetary damages for contractual breaches. The inability to use equitable remedies to collect money damages is well established in South Carolina law, according to the complaint. The complaint further states that the remedy of foreclosure is used to frighten the plaintiffs to settle their claims to avoid losing their homes.

The law firm defendants were accused of violating Professional Conduct Rule 3.3 by making deceitful arguments to courts. The law firms were also accused of demanding fees that are not proportionate to the hours devoted to the files in violation of Rule 1.5.

Threatening communications and pressure tactics are allegedly used to settle claims, typically without the advice of counsel because the amounts in controversy are often so small that the homeowners are unable to obtain legal counsel on a cost-effective basis. Typically, according to the complaint, holders of first mortgages are not named in the HOA foreclosures. The homeowners continue to be obligated to make their mortgage payments despite being evicted from their homes by their owners’ associations.

The first cause of action is violation of the Fair Debt Collection Practices Act on the theory that there is no right to use pre-suit liens or the equitable remedy of foreclosure by owners’ associations to collect damages in the form of past due assessments. The use of unjustified liens and foreclosures is alleged to constitute false, deceptive or misleading representations to collect debts.

The second cause of actions seeks a declaratory judgment that the activities of the defendants are unlawful. One point raised in this cause of action is that the homeowners are denied their statutory homestead exemption rights by the defendants’ actions.

The third cause of action is for intentional interference with the contractual relationship with the homeowners’ mortgage companies. The mortgage holders have a right to be named in actions that attempt to impair their interests in the subject properties, according to the complaint.

The complaint seeks actual, compensatory and consequential damages, in addition to punitive damages and attorneys’ fees. I can’t wait to see what happens with this one!

Department of Insurance files data security bill in SC legislature

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Bill is similar to model data security law adopted by NAIC

If you are a SC title agent, this bill will likely affect you if it passes!

The National Association of Insurance Commissioners (NAIC) adopted the Insurance Data Security Model Law, intending to promote rigorous cyber risk management practices, in October. And the South Carolina Department of Insurance (SCDOI) has introduced a similar bill in the South Carolina legislature. The South Carolina version, the South Carolina Insurance Data Security Act, is now in committee, and can be read here.

The model law creates data security standards for insurers and agents. The rules would apply to the real estate lawyers in South Carolina who are also title insurance agents. The rules require overseeing third-party providers, investigating data breaches and notifying consumers and regulators of data breaches.

security unlocked data breach

Insurers and agents will be required to have a written information security program for protecting sensitive date. Incident response plans and data recovery plans will also be required. Compliance certifications to the DOI will be required annually.

One important exemption applies to licensees with ten or fewer employees. This exemption will benefit small South Carolina law firms. Cyber security insurance may become a hotter commodity in South Carolina if this law passes, but the law is not intended to create a private cause of action.

We will watch this legislation and keep everyone posted on how it proceeds through the legislative process in South Carolina.

Did you hear the one about Katy Perry and the convent?

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It’s not a joke! It’s a true, real estate story!

Dirt lawyers, you know how your friendly title insurance underwriters are always harping about authority issues?  You have to carefully determine that the individuals with authority to sell or mortgage real estate are the individuals who actually sign the deeds and mortgages involved in your transactions.

katy perry nun

How do you solve a problem like Katy Perry?  (image from dailystar.co.uk)

And you know how the same friendly title insurance lawyers really harp about authority issues involving churches? Hardly a seminar goes by without the mention of a problematic closing or claim involving church property. I always say you should be particularly suspect if anyone, like a preacher, says he or she can act alone to sell or mortgage church property. Church transactions almost always involve multiple signatories.

Lawyers involved in transactions concerning church properties must ascertain whether the church is congregational, meaning it can act alone, or hierarchical, meaning a larger body at a conference, state or even national level must be involved in real estate transactions. In South Carolina, we have seen recent protracted litigation involving the Episcopal Church, making real estate transactions involving some of the loveliest and oldest church properties in our state problematic at best.

Lawyers must also determine, typically by reviewing church formation and authority documents, which individuals have authority to actually sign in behalf of the church. It is not at all unusual to find a church property titles in the names of long-deceased trustees.  It is always advisable to work with local underwriting counsel to resolve these thorny issues.

With that background, let’s dive into this Katy Perry story. The superstar decided to purchase an abandoned convent sitting on 8.5 acres in the beautiful Los Feliz neighborhood of Los Angeles for $14.5 million in 2015. Only five nuns were left in the order, The Sisters of the Most Holy and Immaculate Heart of the Blessed Virgin Mary. This order had previously occupied the convent for around forty years. Two of the nuns searched the web to find Katy Perry’s provocative videos and music and became uncomfortable with the sale. Instead, those two nuns, without proper authority, sold the property to a local businesswoman, Dana Hollister, for only $44,000 plus the promise to pay an additional $9.9 million in three years.

Proper authority for the sale should have involved Archdiocese Jose Gomez and the Vatican. Both were required to approve any sale of property valued at over $7.5 million. The Archdiocese believed Ms. Hollister took advantage of the nuns and brought suit. After a jury trial that lasted almost a month, the church and Ms. Perry were awarded $10 million on December 4. The jury found that that Ms. Hollister acted with malice to interfere with Perry’s purchase. Two thirds of the verdict are designated for the church and one third for Ms. Perry’s entity.

Assuming lawyers were involved in the Hollister closing, you would not want to be in their shoes! Always pay careful attention to authority issues in your real estate transactions. In South Carolina, real estate lawyers are in the best position to avoid problems like the ones in this story.

SC dirt lawyers sued for email funds diversion by a third-party criminal

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This is the first suit of this type I’ve seen. I’m confident it won’t be the last!

A dirt lawyer friend sent a copy to me of a hot-off-presses lawsuit filed in a circuit court in South Carolina against a closing law firm because the purchaser’s $50,000 in closing funds were diverted by a third-party criminal posing in an email exchange as the transaction’s real estate agent. My friend said he sent the case for my information. I think he sent it so I wouldn’t sleep!

Here are the facts as recited in the complaint. The names are being changed to protect all parties.

Paul and Penny Purchaser signed an Attorney Preference Form on March 28, 2017, selecting Ready and Able, LLC as their legal counsel for the purchase of a residential home and the closing of a purchase money mortgage with Remedy Mortgage, LLC.

On April 10, Paul and Penny Purchaser received Ready and Able, LLC’s “Purchaser’s Information Sheet” which required Paul and Penny to pay all closing funds over $500 to Ready and Able, LLC by wire transfer. The complaint states that these were silent as to the security of wire transfers, the security of private information to be conveyed between the purchasers and the law firm, and the security or lack of security of the use of email for closing information.

Also on April 10, Penny Purchaser telephoned the law firm and spoke with paralegal, Candy Competent, providing her with the purchasers’ Social Security numbers. The complaint states that Ms. Competent accepted the information and provided no wiring information or warnings.

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The complaint states that on April 14, Paul Purchaser received what purported and reasonably appeared to be an email from Regina Realtor, their real estate agent for the transaction, asking Mr. and Mrs. Purchaser to wire closing funds in the amount of $48,490.31 that day so that the closing scheduled for April 21 would not be delayed. Penny Purchaser replied to the email requesting wiring instructions. An attachment purporting to be wiring instructions for Ready and Able, LLC. was sent via reply email.  The complaint states that the wiring instructions reasonably appeared to be the correct wiring instructions for the law firm and appeared to be printed on law firm letterhead. This email exchange was actually with a third-party criminal.

Later on April 14, Penny Purchaser telephoned Candy Competent and requested the amount needed to close. Ms. Competent discussed the amount needed to close despite the fact, according to the complaint, that she knew or should have known that the law firm had not sent wiring instructions to the purchasers or the real estate agent.

On April 17, Ms. Competent sent an email to Mrs. Purchaser advising her to add $550 to the funds due to close to cover a survey bill that came in on April 14. No mention was made of wiring instructions in that email. The email also did not discuss the fact that the law firm had not yet provided an amount to close to the purchasers or to the real estate agent. Mrs. Purchaser wired $49,015.31 using the wiring instructions provided by the third-party criminal.

On April 21, Paul and Penny Purchaser learned for the first time that the wiring instructions were the work of a criminal third party, who received the funds and has failed to return the funds.

The complaint states two causes of action, negligence and legal malpractice, and lists the following breaches of duty committed by the law firm:

  • Requiring the plaintiffs to use wire closing funds to defendant, without counseling the plaintiffs about the methods by which the secure delivery of such funds could be compromised;
  • Failing to counsel the plaintiffs about the risks and insecurity of email communications, particularly of private, sensitive, or financial closing information; and
  • Failing to be alerted by the circumstances of Mrs. Purchaser’s telephone call on April 14, and therefore to warn her that no communication had been sent by the law firm.

Is this, in fact, negligence or legal malpractice?  We will have to wait to see.  Would the processes established by your law firm for the protection of your clients’ funds prevent this type of crime? That is the question of the day. Please discuss among yourselves!