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Embezzlement rife in legal profession

Embezzlement rife in legal profession

A paralegal has been caught stealing funds from her employer for the second time while on bail.

Kathy Foer-Morse was working at Satterlee Stephens Burke & Burke in 2005, when she was found guilty of embezzling nearly $300,000 from the New York law firm.

The National Law Journal reports that in late May, Foer-Morse had done it again, this time at a small practice in Pennsylvania, High Swartz. 

Appearing in court for the second time, prosecutors told James Rittinger, her former employer, that she was using the money pilfered from the firm to pay back the money she had stolen from his firm. 

Prosecutors claim that she swiped nearly $101,000 from High Swartz by writing 12 company checks to herself. High Swartz would not comment on the case, and a spokesman for the Montgomery County district attorney's office said Foer-Morse does not have counsel as yet.

Rittinger, chairman of Satterlee Stephens, said that the law firm had "a pretty good system" to keep track of money flowing through the 60-attorney shop when Foer-Morse worked there. But, it was better now.

Rittinger said his firm "enhanced" its background checks after discovering that Foer-Morse had skimmed $285,000 from his firm's accounts. 

Both firms are victims of what accountants, practitioners and trade groups say is a growing problem for companies: embezzlement.

Recessionary pressures felt by employees and partners alike are increasing the likelihood that trusted colleagues or workers will steal from law firms, where large sums are often at employees' disposal. 

Since March alone, at least 12 people have been in court for stealing from law firms in the US. In early 

While accounts of embezzlement committed by partners often involve the highest dollar amounts, embezzlement by staffers appears to be more common.

Law firms are especially vulnerable to embezzlement for a number of reasons, said Michael Downey, a partner in the St. Louis office of Chicago-based Hinshaw & Culbertson. 

Downey’s practice focuses on legal ethics and professional service risk management. According to him embezzlement is most likely to happen within solo and small firms and given that roughly 80 per cent of the US’s 1.1 million attorneys work in law firms of 50 attorneys or fewer, according to the American Bar Foundation, it makes embezzlement more appealing to unscrupulous workers. 

“Attorneys tend to delegate business matters to employees and provide too little oversight,” he added.

Lawyers are more interested in practicing law and too seldom trained to run businesses, he said. 

In addition, attorney ethics rules require lawyers to maintain separate accounts for clients' funds, meaning that large sums of money sit idle in office accounts, tempting workers desperate to cover overwhelming expenses. 

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

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Embezzlement rife in legal profession
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