Lock the Vault: Financial Security Practices Every Law Firm Needs

Terrell A. Turner, CPA

Terrell A. Turner, CPA

CEO, TLTurner Group

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• Legal Administrator Coaching
• Bookkeeping & CFO support
• Financial Optimization Support
• Law Firm Finance Chair – ABA
• www.TLTurnerGroup.com​

Learning Objectives

Identify cash controls that you can implement

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Explore ways to conduct client reveiws

Explores ways to conduct vendor reviews

Legal Administrator Responsibilities

CORPORATE

FINANCE

HUMAN

RESOURCES

IT

OPERATIONS

BUSINESS

PARTNERS

Why Are Cash Controls Essential?

• Cash & Data are your most vulnerable assets
• Professional ethics Model Rule 1.15 Safeguarding of Property
• Proper controls build trust within your firm

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The Fraud Triangle

3 Fraud Factors

• Pressure
• Opportunity
• Rationalization

Billing Fraud

• Overbilling clients for time not worked or inflated hours.
• Phantom Billing – charging for work not performed
• Double Billing – charging multiple clients for the same time or service
• Unauthorized rate - changes without the clients agreement

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Expense Reimbursement Fraud

• Falsified receipts for meals, travel or client expenses
• Duplicate reimbursements for the same charges
• Personal expenses disguised as business-related
• Excessive under limit expenses

Other Types of Fraud

• Trust Account Fraud
• Vendor & Accounts Payable Fraud
• Payroll & Timesheet Fraud
• Check & Wire Fraud
• Client Intake & Settlement Fraud
• Misappropriation of Assets

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Core Cash Controls

• Segregation of Duties
• Authorization & Approval Workflows
• Bank Reconciliations
• Trust vs Operating Account Segregation
• Secure Payment Processing

Segregation of Duties

Separate the following

• Receiving Payments
• Making Payments
• Payroll Processing
• Trust Transferring

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*If you staff is limited segregate the reconciliation review process

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Access to Cash Checklist

• List of all bank & credit card accounts
• Annual Audit of bank signatures
• Online access set up
• View only access for 3^rd party accountants
• Cash on hand policies

Upfront Vendor Risk Assessment

• Onboarding process
• Tax Form W-9
• Business License
• Contact Info & address
• Payment details
• Duplicate Vendor Check
• Background & Reputation Check

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Ongoing Vendor Risk Assessment

• Quarterly or Annual Vendor Review
• Confirm contact info
• Review spending trends
• Red Flags
• Change in bank info
• Vague invoice descriptions
• Difference in vendor name and payment details
• Establish an approved vendor list

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Vendor Management

• Use Vendor Management Software (accounting system)
• Limit hand written checks
• Implement Dual Approvals for new vendors
• Leverage Reporting Tools
• Document SOP’s

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Upfront Client Assessment

• Conflict checks (Bar Rules)
• Formal Intake process
• Standard system input
• Identify Verification
• Background check
• Executed Engagement Letter
• Executed Fee agreement
• Source of income check
• Payment Information on file

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Client Management

• Confidential Data Security Policy
• Utilize secure Document Exchange Tools
• Device & Software Security
• Data Security Staff Training
• Data Retention & Deletion Policy

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Your 5-Step Financial Security Blueprint:

1. Who are we doing business with (upfront evaluations)
2. How we operate (internal policies)
3. Who can access what information
4. Who can approve and how much
5. What are our State Bar Rules

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Questions

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Let's Connect!

Terrell A Turner, CPA​

Law Firm + Finance

www.TLTurnerGroup.com​

Terrell@TLTurnerGroup.com​