Business of Law

Staffers Stealing Is a Common Problem, But Many Law Firms Opt to Keep Quiet, Observers Say

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Faced with the embarrassing realization that a trusted staffer has stolen a significant sum of money, a lot of law firms opt to keep quiet, observers say.

“It is a considerable problem for a lot of law firms. I don’t know how many firms that that’s happened to, because it’s an embarrassment, and they just take the loss, but I suspect it’s quite a few,” Jim Cowles of Cowles & Thompson in Dallas tells Texas Lawyer. The article is reprinted in New York Lawyer (reg. req.).

Not Owens Clary & Aiken. The Dallas firm filed suit late last month in Texas state court against former worker Rena Gallagher, contending that the more than 10-year employee systematically altered checks and entries to conceal her embezzlement of law firm funds. Tasked with collections, check-writing and accounting functions, she allegedly stole between $100,000 and $200,000, according to Dallas County criminal court records.

Her lawyer, Tom Pappas of Burleson Pate & Gibson, tells the legal publication that he looks forward to a favorable resolution of both the criminal and civil case against his client, but declines to comment specifically.

The article says lawyers at the Owens firm audited its books after Gallagher failed to show for work one day in January 2009 and couldn’t be reached.

Although most staffers are honest, many small law firms are too trusting, observers say. They need to separate check-printing and check-signing functions, and have someone other than the person printing the checks reconciling the bank statements every month, says partner Brian Lauten of Sawicki & Lauten in Dallas.

Smart firms also take the opportunity, while their controller is on vacation, to bring an independent person in to look for irregularities, he says.

As earlier posts also note, theft stories like this are surprisingly common, with some workers accused of stealing from multiple employers. One woman reportedly was hired by her defense lawyer’s firm after taking a plea in a theft case concerning a judge, only to steal from her new employer, too.

Related earlier coverage: “Ex-Office Manager Accused of Stealing $1.1M from Law Firm, Spending on Vintage Car” “Office Mgr Accused of Using Law Firm Checks to Pay $218K in Credit Card Bills” “As Paralegal Gets 46 Months in $1.7M Theft, 2 Law Firm Workers are Indicted in Unrelated Cases” “Yet Another Law Firm Employee Is Accused in Claimed Embezzlement”

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