Law Firm Employee Theft

When you hire new lawyers and support staff, are you thoroughly checking their references? Are their references real? Do you perform a criminal records check? You may do all these things with new employees; however, in many cases, it is a long-term faithful employee, one who is familiar with your accounts, systems, passwords, and signature, who ends up stealing. Employee theft may include stealing cash, issuing phony invoices, forging cheques, helping themselves to business equipment, and data theft (e.g. theft of credit card information, client contact and identity information, SIN numbers).

General Tips to Protect Yourself From Employee Theft

Consider these tips to help protect you and your firm from inside threats. 

• Establish a policy that blank trust cheques must not be signed and store trust cheques securely. In one case in British Columbia, a lawyer left a series of signed blank cheques with her bookkeeper. The hearing panel found, among other things, that she failed to properly supervise her bookkeeper and improperly delegated her trust accounting responsibilities. A theft of about $7.5 million of client trust funds occurred that the lawyer was obligated to replace. 
• Separate office functions so that one employee is not responsible for opening the mail, and as well for all accounting, bookkeeping, and banking functions. 
• With existing lawyers and staff, be alert to changes in lifestyle or behaviour (e.g., if an employee seems to be living beyond their means). 
• Maintain direct supervision of your non-lawyer staff and proper delegation. Train your staff to recognize issues and bring them to your attention in a timely manner. You remain responsible to exercise your professional judgment. See Code section 6-1 (Supervision) with respect to work that must not be delegated. 
• Consider purchasing commercial insurance to protect yourself from employee theft or other wrongful or unlawful conduct of an employee.