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Watching for signs of fraud inside your law firm

As an attorney, you know that the misappropriation of a client's funds is one of the most serious things that can happen. If it happens in your firm, you can expect the Bar Association to come down hard on anybody that was even remotely involved.

It's always wisest to avoid problems before they start. While all businesses are vulnerable to fraud, law firms tend to be among the most susceptible -- simply because they deal with so much money on a regular basis.

Here are some basics that you need to keep in mind as part of your "due diligence" when hiring and managing your firm's employees:

  1. Always do a background check on every job candidate. No matter what position you are attempting to fill, you need to be alert to problems in the employee's past with criminal behavior. Verify references and other important pieces of information.
  2. Know the major motivators for employee theft and fraud. An employee who is having obvious financial problems, seems to live beyond their means, has an addiction to gambling or a substance abuse problem could have a powerful motivator to steal.
  3. Have checks and balances in place in your business regarding the cash flow. Too often, attorneys get caught up in the legal end of their practice and leave the business dealings to their other employees. That's a potential mistake that could ultimately get you in trouble with the Bar if your lack of oversight contributed to the fraud.

As always, it's important to emphasize a culture of honesty and ethical behavior among your employees. Training sessions should emphasize that, and the message should be reiterated regularly through oral and written communications.

If you are in trouble with the California Bar Association because of the misappropriation of funds that happened in your office, don't risk your professional reputation or your license. Get experienced legal assistance for your problem.

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Law Office of Zachary D. Wechsler

21515 Hawthorne Blvd., #610
Torrance, CA 90503

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