Bar News - March 19, 2010
Check Your Checks and Balances
By: James L Rhyner
In some law firms, financial responsibilities are limited to a small group or an individual, allowing the rest of the firmís attorneys to focus on the practice of law rather than running the business. This format may work in some contexts, but it is not without risk. If only one person is responsible for keeping the firmís books and signing the checks, the opportunity for that individual to commit theft or fraud is heightened Ė and it reduces the likelihood that others in the firm will discover such behavior. Spreading financial responsibilities (such as billing, payroll, and reconciling the firmís expense account reporting) among several people makes it difficult for one greedy employee to cause trouble for the whole firm. Attorneys who arenít directly charged with managing finances can consider the tips below which may help reduce their firmís exposure to embezzlement and internal theft:
Ask questions and speak up Ė individual attorneys are ultimately responsible for safeguarding their clientsí funds; even if itís the senior partner whoís guilty of raiding the coffers, you could be held personally responsible, so trust your instincts if you think something is amiss;
Get it in writing Ė make sure that all of the firmís transactions/payments are recorded;
Check the checks Ė two signatures on every check a firm issues ensures that no one person has total control of the finances.
James L Rhyner is vice president and World Wide Lawyers Professional Product Manager for Chubb Group of Insurance Companies in NJ. This post appeared in the blog, Counsel to Counsel, and is reprinted with permission of the author.