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Monday, June 08, 2009
Law - "Law firms are especially vulnerable to embezzlement"
Leigh Jones of The National Law Journal has a long article today on the topic. Some quotes:
Law firms are especially vulnerable to embezzlement for a number of reasons, said Michael Downey, a partner in the St. Louis office of Chicago-based Hinshaw & Culbertson. His practice focuses on legal ethics and professional service risk management. Embezzlement happens most frequently within solo and small firms, Downey said. (About 80 percent of the nation's 1.1 million attorneys work in law firms of 50 attorneys or fewer, according to the latest information available from the American Bar Foundation).Attorneys tend to delegate business matters to employees and provide too little oversight, he said. In small firms, one person often handles accounts payable and receivable. "It's someone whom they rely on for almost everything," Downey said. Lawyers are more interested in practicing law and too seldom trained to run businesses, he said; they're eager to hand over financial responsibilities to staff.
In addition, attorney ethics rules require lawyers to maintain separate accounts for clients' funds, meaning that large sums of money sit idle in office accounts, tempting workers desperate to cover a mortgage payment or a child's tuition bill. Busy lawyers also tend to cut corners when conducting background checks and following up on an applicant's references, Downey said.
Posted by Marcia Oddi on June 8, 2009 01:34 PM
Posted to General Law Related