While most attorneys likely enter the legal industry hoping to advance justice, a few bad apples always seem to find their way into the mix. Even those with the best intentions can succumb to temptation and find themselves involved in unethical and/or illegal activity. What can be most unfortunate in situations like these is that often it is not only the attorney acting in bad faith who suffer repercussions, their colleagues can find themselves in trouble as well.
Consider the story of Los Angeles attorney Tom Giarardi who was disbarred in 2022 after being accused of stealing more than $15 million from clients. Girardi was accused of stealing from a Los Angeles couple who were injured in a car wreck that paralyzed their son and a man who was severely burned in the 2010 San Bruno gas pipeline explosion. Girardi made headlines again earlier this year as two of his former colleagues, one of whom was his son-in-law, faced potential disbarment for not doing enough to protect clients from the misappropriation of funds according to the Los Angeles Times.
A law firm depends on credibility to thrive and when one of its lawyers goes down a malicious path, they could be putting their colleagues at risk. In Girardi’s case, the firm that employed him collapsed in early 2021.
Protecting law firms from their own attorneys
Discovering an attorney in your law firm is stealing money from clients is devastating, but discovering your firm has little to no recourse can be incomprehensible. A law firm’s malpractice policy typically will not cover criminal acts and failing to precautionary measures with your insurer could leave the entire law firm liable for the losses. As Girardi found out, losses could be enough to shutter the firm and leave colleagues with a stain on their resumes.
While crime committed by attorneys is often rooted in deceit, there are a few ways law firm owners can safeguard their businesses and instill systems of accountability throughout their team such as:
- Checks and balances: Regular case work checks and reporting protocols should be standard among law firms. Bank accounts should be routinely monitored, and any discrepancies should be reported immediately. Having simple checks and balances to hold team members accountable will make discovering crime easier and potentially deter it altogether.
- Invest in culture: Having a strong culture throughout a law firm is crucial to mitigating crime risk. Employees who trust each other, while still engaging in the checks and balances mentioned above, are more likely to speak up when something seems amiss. Law firm leadership should ensure their employees are aware of the consequences of engaging in crime and how to report it.
- Insurance coverage: Though malpractice insurance will likely not help in matters of criminal activity, law firms do not have to let the actions of one impact the entire business. An insurance professional who specializes in the legal space can help structure a law firm’s insurance policy to protect the innocent. Consider tapping an insurance professional who understands the risks law firms face to discuss additional options including innocent insured coverage and/or a crime policy.
Unfortunately, crime does occur within law firms. While we’d all like to trust our teams explicitly, law professionals must take steps to prevent crime for their firm’s best interest and that of the attorneys under their roofs. Consider developing stricter checks and balances throughout your law firm and check in with an insurance professional to ensure one bad attorney apple does not spoil the bunch.