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Keeping Up Appearances Could Cost Your Firm

This guest post by Jim Rhyner, Worldwide Lawyers Professional Liability Insurance Product Manager, Chubb Group of Insurance Companies, is part of an effort to diversify the voices and opinions that appear in Counsel to Counsel.

From pro athletes to Wall Street executives, big paychecks beget big egos ? and the same is often true in the legal profession. And while there?s nothing wrong with enjoying the lifestyle that?s been well-earned, some law firms can run into big problems when a lawyer?s desire to live large eclipses his or her better judgment.

Sensational news stories about individuals raiding corporate funds are increasingly featuring attorneys at law firms. Just recently, the founding partner of a South Florida law firm was charged with raiding the law firm?s treasury for his own personal use. He allegedly used the firm?s money (reportedly up to $500 million) to fund a lavish lifestyle including the purchase of beachfront property, Lamborghinis, private jets and other trappings typically associated with extravagant lifestyles.

In the South Florida case, as well as the case of a prominent New York firm that experienced a similar scandal last year, it is noteworthy that both firms enjoyed huge growth just prior to these incidents. While in most instances, a steep increase in profits is a good thing ? occasionally, it can unfortunately become a trigger for greed. In firms where only one or two senior people hold the exclusive authorization and access to law firm funds, it can become much easier for fraudulent activity or theft to slip through the cracks, unnoticeable by a firm?s other attorneys until it may be too late.

I?ll share some tips for checks and balances at law firms in my next post ? in the meantime, what are your best practices for keeping law firm employees honest?

Posted by Jim Rhyner, Worldwide Lawyers Professional Liability Insurance Product Manager Chubb Group of Insurance Companies

Full post as published by Counsel to Counsel on December 14, 2009 (boomark / email).