Lawsuit accuses US law firm of wiring over a million dollars to scammers in email hack

U.S. law firm Clark Hill is facing legal action after allegedly wiring US$ 1.1 million meant for settlement funds to fraudsters, Reuters reported.

 Sinacom North America, an engineering and manufacturing company, has filed a lawsuit against Clark Hill PLC and its lawyer, Steven Richman, in Pennsylvania state court, claiming they fell for "an obvious scam."

Richman has been Sinacom’s corporate attorney for several decades. When Richman became employed by Clark Hill in 2015, he brought Sinacom with him as a client. Richman is a partner at Clark Hill. He specializes in business law.

The Detroit-based law firm represented Sinacom in a dispute with manufacturing company Golden Technologies (GTI), which agreed in August 2023 to settle for US$ 1.1 million. The settlement required GTI to pay Sinacom directly. However, the complaint alleged that Richman, for reasons not disclosed, instructed the settlement to be routed through the firm's trust account instead.

According to the lawsuit, scammers hacked Sinacom's email system and impersonated company executives. They reportedly also created a fake email account for Richman. On August 24, Richman received an email with grammatical errors and typos, purportedly from Sinacom's president, directing him to wire the funds to a JP Morgan Chase account associated with a non-existent company. Despite these red flags and previous valid instructions to send the money to a Bank of America account, Richman proceeded with the transfer on September 11 without verifying the information with his actual clients. Clark Hill has stated it intends to vigorously contest the allegations.

According to Reuters, the case highlights a growing concern over cybersecurity within the legal sector, which often holds sensitive and confidential client information. Law firms are increasingly targeted not just for data breaches but also for direct financial scams, as evidenced by a series of similar incidents in recent years. This lawsuit emphasized the importance of stringent verification processes in law firms' handling of financial transactions, especially when instructions are received electronically.