Is Your Law Firm Protected Against Embezzlement?

“Embezzlement: The fraudulent conversion of another’s property by a person who is in a position of trust, such as an agent or employee.”  Encyclopedia.com

The white-collar crime of embezzlement is featured in the NL October eNewsletter. We’re giving you a little nudge to read it, because you need to know about an important new service the NL is offering that can help to protect your firm against huge internal losses. Yes! It really could happen to you!

It happens all the time!

John W. Olmstead, MBA, Ph.D, CMC, reports in his June 1, 2011 blog posting, “During the past 25 years that I have been working with law firms, I have been amazed at the number of embezzlements caused by unscrupulous attorneys, bookkeepers, office managers and other staff members. And yes – even partners. One out of five law firms in my client sample has actually lost funds due to some form of embezzlement and caught the offenders.”

Prevention, prevention, prevention!

If embezzlement is that common, what can you do to keep it from happening or to cut your losses if it does?

Olmstead’s post goes on to list 4 areas where you can work on prevention through internal control (check them out here), and then gives some very specific suggestions like, “Obtain adequate fidelity bonding insurance coverage.” Also in the October issue of the newsletter, read about Gary Riek and the industry-specific insurance opportunities he can provide to NL members. We’ll be giving you more information shortly explaining why you’ll want to compare your security needs with what Riek can provide. You’ll also find other tips for stopping embezzlement before it starts.

Payback not likely!

Apparently, even if the perpetrator is caught, the money is not easy to recover. Five years after a former bookkeeper at Washington’s Fried, Frank, Harris, Shriver & Jacobson pleaded guilty to a 12-year embezzlement scheme, new court filings show she has yet to pay back the more than $300,000 she owes the firm. A quick perusal of a few recent cases shows losses of $75,000, $350,000, $502,000, $880,000 and $1.3 million! In the March 2011 issue of The Legal Intelligencer, Joseph S. Barbagallo says, “A typical organization loses 5 percent of its annual revenue to fraud, while the median loss caused by the occupational fraud cases was $160,000.” This is more proof that a law firm needs insurance against what could be huge losses, and why the NL is promoting Gary Riek as an insurance broker who understands the special protection needed by collection attorneys.

Keep an eye on The N List!

Occasionally, attorneys steal money from their clients. We will address this scenario in a future blog and include real-life examples. This unfortunate situation is why the insurance program offered directly from the National List can be so valuable. At no cost to our clients and with proper notification, the NL protects the accounts placed for collection with our recommended collection law firms up to $3.5 Million. NL insurance does not cover employee theft or embezzlement. That is why we are recommending that our readers research additional insurance coverage. For Terms & Conditions of the NL Insurance, Click Here.

Don’t be a victim! Be alert to the telltale signs that embezzlement could be a threat to your firm. Do everything you can to prevent it and to ensure that, if you do get stung, you have adequate protection against loss.

by Nancy Lender of The National List

 



Categories: Business Relationships, NL Insider

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