Are you a solo practitioner? Do you have a small or medium sized law firm? This article is for you to protect your assets, your business and your reputation from fraudsters who have already defrauded hundreds of attorneys and corrupted many practices.
The story line may develop in many ways, but conceptually it goes as follows. First, you receive an email with a simple question: Do you handle breach of contract claims? If you do or if you don’t but are willing to inquire about it, and then say yes, you will receive a follow-up email with a short description of the problem:
We appreciate giving us an opportunity to discuss our case. We placed an order for some XXXXXX merchandise back in August 2014 and the terms of the sales contract require that we pay 50% of the total cost of the ordered merchandise before delivery and the balance after we receive the same merchandise. However, after we made the initial 50% deposit, we did not receive any goods as requested. The goods were supposed to be delivered in September 2014. They were given more time to deliver the goods they could not meet. Hence, we asked for a refund.
We have made many efforts to refund their initial deposit, but to no avail. So we decided to resort to legal means since there was an agreement in place before the deal. Find the supplier details below to check for conflict.
The email also indicates that the customer’s company is abroad, and they may have difficulties in coming due to the distance. You can apply your due diligence and surf the internet to see if the foreign company and the local offending company are real. Both exist and are usually serious companies with nimble websites.
So far, good standard situation between buyer and seller, typical breach of contract – first year of law school. You reply that your fee is based on the contingency, and you will charge 33% of the recovery. You are also saying – of course you want to represent a foreign company and may be marketing yourself from the perspective of an IBC – that because the client incurs losses as a result of the violation, they are also entitled to consequential damages. Moreover, it asks them for more documents to assess the condition and losses.
On the same day, you will find the reply in your email inbox:
Upon our request for a refund, they resumed setting up the payment in two installments over a monthly period, the first installment of which was paid on 20 November 2014 in the amount of $497,500.00 after much reminders and threats to engage an attorney (payment receipt attached as well). The balance was due in December 2014, and since then our efforts to transfer the funds have proven to be a failure. All details are contained in our correspondence attached with XXXXXX.
in summarizing;
Total Quantity of Goods Ordered: $2,540,891.00
Initial deposit made for XXXXXX: (ie 50% of the total amount): $1,270,445.00
Refund (on November 20, 2014): $497,500.00
Balance amount due to Kyoei Steel Ltd: $772,945.00
“Oh my God, this is the state I’ve been waiting for, my prayer has been answered: I’ll pay my loans and buy a new car; I’ll also vacation in Hawaii and buy a Pomeranian for my daughter.” Not so fast, breath. They asked for the power of attorney, which you will send to them. They also attached all the documents: a contract for the sale of goods, a payment order, a bank transfer request, correspondence with the local company, etc. Check everything carefully: the names, the dates, the goods, the name of the banks: everything looks legit! Well, maybe you’re crafting a standard predicate that you’ll likely read in full for the first time and fondly attach it to your reply email: inhale, exhale, send. Now, you are waiting nervously when the CEO of the wealthy foreign company will analyze the power of attorney and signal the green light.
You look at Salvador Dali’s famous painting “The Constancy of Memory” because time has slowed down dramatically, and you haven’t slept for 3 days thinking of a Pomeranian. On that fun, sunny morning you’ll never forget, when you receive an email from the foreign CEO congratulating you on a new appointment and attaching the last page of the agent’s signature. You burst into tears, hugged your wife, and did a victory dance. For the first time in years, she says “hello” to the front desk staff, smiles, and gives an air kiss to the cleaning lady who amazes them for hours. You fly like a butterfly.
compliment today. After reviewing your power of attorney agreement, we are unanimously satisfied with the details described in it and have decided to employ the services of your company to assist in bringing legal action against XXXXXX for breach of contract of sale.
Find the attached signed fee agreement page and the corresponding mail form XXXXXX. We have notified debtor XXXXXX of our desire to retain your law firm to take legal action against them. Thus, we received a response from them. Any matching mail received from XXXXXX will be directed to your attention.
Once you arrive at the office, you email the local infringing company to let them know that you are representing the offshore company in case of breach of the contract claim and all communications between companies must cease. The contract also provides for the attorney’s fees for the prevailing party. You now own it.
You begin to formulate a complaint and strategize your litigation pattern. But you can’t believe your eyes when you get an email asking you not to sue because XXXXXX magically decided to comply after a year of negotiations. Well, that’s definitely because you’re set. The offending company now pledges to issue a partial payment within days:
We implore you to give us a week to make the full payment. A partial payment of $489,650.00 will be transferred between today and Wednesday. We assure you that you will have your money/damages caused by our company in less than seven working days to avoid taking the case to court, as this will damage our company reputation.
Day X has come. You have penne a la vodka with a Greek salad ordered from the local Italian restaurant, when the secretary brings you an envelope containing the back address of the local offending company XXXXXX. You get goosebumps. With a handshake you open the envelope and … you withhold, because you received the check with partial payment of $489,659.00 from XXXXXX Corporation and the letter promising to issue another check with the balance within a week.
You’re lying on the floor with a silly smile and staring at the ceiling. When your employees bring you back to consciousness, you begin to act quickly. First, send an email to the client; Second, deposit the check into a trust account; Third, place an order for a three-month-old Pomeranian, and order a pack of Cuban cigars.
You walk into a local bank like a boss. You are not looking at anyone. Everyone feels as energetic as you. The branch manager rushes up to you, shakes your hand, and asks if he can help. You slowly take the checkout out of your folder and hand it over to the manager. You see how his pupils dilate, his breath drops, and sweat oozes out on his forehead. You know exactly what he thinks. He returned to his office and from that moment on the chaos settled in the bank. When the check is deposited, you walk out of the bank like a hero: the manager is holding the door for you, and everyone is looking at you because they know: you made it through your life.
Your customer is pleased. They thank you and praise you, they want to hug and kiss you, but they can’t because they’re all out. The customer requires you to transfer the funds (minus 33% for the contingency of $163,219.67) within 24 hours since they have responsibilities under other contracts. At this moment, you do not see, hear, speak or understand. Carefully subtract the contingency benefits from the total and immediately send $326,439.33 to the foreign bank and close the office earlier with everyone given two paid days. Life is wonderful!
Two days pass. You are driving to your office listening to the latest news that Donald Trump has just filed a dark forces lawsuit asking for an injunction, when your banker calls you and tells you that the check you posted a few days ago has bounced…
You are parked at a Shell gas station. You look frankly at passersby with cars and people. Seconds turned into minutes, minutes into days, and days into eternity. Wild cognition is slowly taking over your mind.
Don’t you want this to happen to you? Here are some tips for identifying a scam:
• Contact the allegedly infringing local company and inquire about the issue of the contract.
• Look at the sample email address you receive the emails from: make sure it’s from the same server as the company’s website and not from @comcast.net; @ XXX.edu and the like.
• If the company is abroad, calculate the time difference and keep track of when you receive emails from them: Check if the accounts match the schedule of a normal or perhaps extended business day in the country where the customer is from.
• Be aware of the client’s competence in the legal field. The more experience a customer has, the more suspicious you are.
• Request a Skype call.
• Use common sense and listen to your courage.