I have unfortunately worked at two law firms that experienced the heartbreaking situation of being betrayed by a trusted insider. Sadly, such incidents are not rare. Law firms are prime targets for those who have the opportunity, motivation, and justification to commit theft.

This frequently happens, and it is almost always a highly trusted individual who commits the crime, as they are the ones with: 1) the opportunity to steal (having more access to the firm's resources) and 2) the incentive (gaining wealth through theft or securing a larger bonus by altering financial records). Add a desperate personal situation that rationalizes their actions—whether they genuinely need the money or feel entitled to more due to some perceived unfair treatment—and suddenly, your firm is at significant financial risk. This person exhibits the three main elements of the fraud triangle, which are known to heighten the risk of fraud.

In both firms, these individuals embezzled funds over many years. It was a gradual siphoning that didn't trigger alarms, and in both instances, they were discovered in very random ways, not through the systems or controls that had been trusted for so long.

The issues? Unfortunately, there are numerous. The good news is that the risks can be mitigated with a few changes in your firm's procedures. Often, the controls are designed by the person committing the crime. Additionally, attorneys are extremely busy and cannot review every financial document and billing client simultaneously. Another factor at play is that most law firms are small and, therefore, cannot economically implement proper segregation of duties to completely rule out all fraud.

The good news? There are many different avenues that you can take to greatly reduce the chances that you will fall victim to fraud and / or embezzlement.

Give me a call to discuss ways I can help!