With large sums in their office and client bank accounts, and access to sensitive information about their clients, legal firms are an attractive target for fraudsters.
Moreover, fraudsters’ methods are becoming more varied and sophisticated. Can your firm’s financial controls combat fraud, or do they need a ‘spring clean’?
Our recent experience
Last year there was a significant change to the Solicitors Accounts Rules, giving more weight to the accountant’s judgement of risk. Since this change, Larking Gowen has assessed the financial controls of numerous legal firms and provided expert advice about how they can improve their controls to combat fraud from both inside and outside the firm.
As Thomas Norman’s recent blog highlighted, it is thought that 1 in 5 small businesses have been subject to fraud by an employee. Some of the methods to protect your firm from internal fraud are:
- Appropriate authorisation procedures for bank transactions
- Dual authorisation, involving principals of the firm
- Limited/read-only rights
- Password protection and encryption
External fraudulent attempts against law firms have risen in recent years. It is estimated that £85 million was stolen from UK law firms in the 18-month period to June 2016. In a paper released in December 2016, the SRA revealed that ‘Friday afternoon’ fraud represents 75% of reported data breaches. If even one of your employees is able to be deceived into handing over money to a fraudster purporting to be from the bank or a client, your firm is at risk.
Legal firms must therefore encourage all staff to be vigilant and make them aware of current methods of fraudsters.
If you suspect your firm may be exposed to fraud or want advice…
Contact our legal team. We would be happy to arrange a no-obligation meeting with you to discuss how we can help. Whether you require a broad financial risk assessment, or targeted and rigorous testing of a specific control, Larking Gowen will make sure that you receive tailored advice.
If your firm has suffered financial fraud…
Our forensic team can help you. Our experience in dealing with fraudulent claims can help you to quantify true, fair and defendable financial positions, particularly in cases involving complex money trails and subjective financial information. We act on behalf of defendants, claimants or as a Single Joint Expert, and act in a wide variety of other forensic cases in addition to fraud, including personal injury, matrimonial and commercial disputes.
For more information, please contact me on 01603 624181 or at email@example.com.