Bar sounds warning as lawyers fall prey to cheating staff

 

Lawyers have been urged to adopt good risk management and due diligence practices to minimise the risk of falling prey to potential embezzlement.

PETALING JAYA: Lawyers’ firms have been warned to be more careful with their accounts and client handling methods after three cases of embezzlement by support staff were uncovered.

The Bar Council said in a recent circular that it had been made aware by the Advocates and Solicitors Disciplinary Board of a series of embezzlement cases.

“Although lawyers had been named in the complaints to the board, it was discovered that these embezzlements were perpetrated by two clerks and a manager,” the Bar said in a circular.

The support staff had been handling files and communicating directly with clients without informing or updating the lawyers. “In addition to not knowing what their staff members were doing, the lawyers also did not cross-check their finances regularly,” the circular said.

Explaining the background to the embezzlements, the Bar said the lawyers had placed complete trust in support staff who dealt directly with clients.

“The support staff would then instruct clients to make payments in cash on the excuse that the firm’s accounts were in the process of being moved to another bank,” the circular said.

Alternatively, they would instruct the clients to transfer the money directly into the staff member’s personal account “to save time and avoid the hassle of withdrawing from the client accounts”.

These payments were accepted without official receipts being issued, or with only an acknowledgement written on the firm’s letterhead, but the cash was never banked into the firm’s client accounts.

“When the staff later moved to a different firm, they would withdraw money from the client accounts using pre-signed cheques entrusted to them by the lawyers,” it said.

The Bar urged lawyers to adopt good risk management and due diligence practices to minimise the risk of falling prey to potential embezzlement.

It advised them to never sign blank cheques, to keep cheque books in a locked box, and to be consistent in checking and verifying all payments. Sensitive matters and clients should not be handled by clerks without any supervision by a legal staff member or partner, the circular said. - FMT