SCREENING PROCESSES AND INTERNAL CRIME IN THE AUSTRALIAN LEGAL INDUSTRY

Transcription

1 01 SCREENING PROCESSES AND INTERNAL CRIME IN THE AUSTRALIAN LEGAL INDUSTRY

2 02 INTRODUCTION Internal crime has the potential to have serious consequences for legal firms. To understand the perceived impact and the processes legal firms have put in place to protect against it, Lawyers Weekly and InfoTrack conducted a survey of 216 Australian legal professionals. The results show that it is not uncommon for legal firms or their clients to have experienced crime perpetrated by internal personnel. These crimes are most commonly of a financial nature but also include data theft and cyber crimes. Internal crime has the ability to damage a firm s reputation, as well as its bottom line, particularly if the crime either involves theft, or impacts a firm s clients. Most surveyed legal professionals believe that ethics and compliance programs, and pre-employment screening are important in order to protect legal firms. However, the findings show that many firms are not engaging in these processes, leaving themselves open to internal crime.

3 03 PRE-EMPLOYMENT SCREENING PERCEIVED VALUE OF PRE-EMPLOYMENT SCREENING IMPORTANT TOOLS IN PRE-EMPLOYMENT SCREENING There are a number of important benefits to pre-employment screening. Legal professionals were asked to choose, from a list, the benefits with the greatest value to legal firms. The list included protecting client data, firm data, and company culture, attracting and retaining desirable candidates and legal compliance. The findings suggest that these are all valuable outcomes of pre-employment screening, with three-quarters of respondents selecting two or more benefits, and half selecting three or more from the list. Protecting client data (57%) is the most commonly perceived benefit, however half or more also place high value on protecting firm data (53%), attracting and retaining the best candidates (53%) and protecting company culture (50%). (Figure 1) Reference checks (90%), qualifications checks (76%), identity verification (62%) and police checks (61%) are considered to be essential components of prudent pre-employment screening by the majority of surveyed Australian legal professionals. Legal firms should know who they are employing and understand their background. It is surprising that police checks are not further up the list, considering 1/3 of respondents have been impacted by internal crime either within their firm or their clients organisations. This result suggests that most legal professionals do not believe that it is sufficient to implicitly trust a candidate s word, and that firms need to dig a little deeper. (Figure 2) FIGURE 1 WHERE DO YOU SEE THE GREATEST VALUE IN PRE-EMPLOYMENT SCREENING? FIGURE 2 WHICH TOOLS DO YOU THINK ARE ESSENTIAL FOR PRUDENT PRE-EMPLOYMENT SCREENING TO PROTECT YOUR FIRM? PROTECTING CLIENT DATA PROTECTING FIRM DATA 56.5% 53.2% ATTRACTING AND RETAINING THE BEST CANDIDATES PROTECTING COMPANY CULTURE 52.8% 50.0% LEGAL COMPLIANCE 45.4% 3.7% REFERENCES CHECKS QUALIFICATION CHECKS 90.3% 76.4% VERIFICATION OF IDENTITY POLICE CHECKS 61.6% 61.4% WORK ELIGIBILITY (VISA) CHECK HEALTH CHECKS 37% 9.7% 4.6%

4 04 PRE-EMPLOYMENT SCREENING VERIFYING CHECKS AND QUALIFICATIONS FIGURE 3 DO YOU KNOW IF YOUR FIRM HAS A PROCESS FOR VERIFYING ANY CHECKS/ QUALIFICATIONS PROVIDED BY POTENTIAL OR EXISTING EMPLOYEES? NOT SURE 49.5% 30.6% 19.9% NO Despite the majority of surveyed legal professionals indicating that checks of references, qualifications, identity and prior convictions are important to prudent pre-employment screening, only half of the surveyed legal professionals were aware of processes their firm may have in place to verify qualifications or checks that are provided by potential or existing employees (50%). Around one-third were unsure about verification processes (30%), while 20% indicated that their firm does not have processes in place for verifying employee and candidate documentation, meaning that they are relying on the honesty of employees and potential employees. (Figure 3) FIGURE 4 VERIFYING CHECKS/QUALIFICATIONS - BY FIRM TYPE NOT SURE NO GLOBAL NATIONAL 50.0% 46.20% 3.8% Mid-tier legal firms are the least likely to be aware of the verification processes in place (37%). Of all surveyed legal professionals, those working in legal roles for employers other than legal firms, including corporate and government organisations were the most likely to be aware of processes for validation of employee/candidate documentation and checks (66%). (Figure 4) MID-TIER BOUTIQUE 59.1% 36.4% 4.5% 36.8% 47.4% 15.8% 44.0% 20.0% 36.0% SOLE PRACTITIONER 48.6% 18.9% 32.4% NON-LEGAL FIRM (E.G. CORPORATE/GOVERNMENT/NGO/ACADEMIC) 65.7% 28.6% 5.7%

5 05 PRE-EMPLOYMENT SCREENING EXPERIENCE WITH DECEPTION IN THE HIRING PROCESS DISQUALIFICATION BASED ON PRIOR CONVICTIONS It appears to be quite common in the legal industry to come across situations where employees/candidates have been dishonest about their background during the recruitment process. Of the surveyed legal professionals, 38% said that either they or their clients have worked with someone and later discovered that they had lied about, or failed to disclose, important information about their background. Commonly cited examples include falsified qualifications and employment history, lying about the reasons for leaving prior employer and not disclosing criminal convictions. (Figure 5) Most legal professionals believe that there are convictions that would (or should) automatically disqualify potential candidates from being employed by their firm. Commonly respondents listed deceptive and financial crimes such as fraud, theft and embezzlement, however many also believe that crimes of a violent or sexual nature would preclude hiring. (Figure 6) Despite 85% of respondents stating there are convictions that should be bars to employment at their firm, only 61% said that police checks were necessary for prudent employment screening. This highlights an obvious disconnect between what firms believe and what they re actually putting into practice when it comes to employee screening. FIGURE 5 HAVE YOU OR YOUR CLIENTS EVER WORKED WITH SOMEONE AND LATER DISCOVERED THEY LIED ABOUT THEIR BACKGROUND? FIGURE 6 ARE THERE ANY CONVICTIONS THAT YOU FEEL WOULD AUTOMATICALLY DISQUALIFY SOMEONE FROM WORKING FOR YOUR FIRM? NO DEPENDS ON SITUATION (2.0%) NO/NOT SURE 38.0% 62.0% 85.0% 13.0%

6 06 PRE-EMPLOYMENT SCREENING POLICE CHECKS FIGURE 7 DOES YOUR FIRM CURRENTLY CONDUCT POLICE CHECKS ON POTENTIAL CANDIDATES BEFORE OFFERING EMPLOYMENT? DEPENDS ON THE ROLE NO The majority of surveyed legal professionals believe that police checks are an important pre-employment screening tool, however they do not appear to be a routine requirement of the recruitment process. Only 17% of respondents indicated that their firm conducts police checks on candidates, and a further 26% suggested that they do for some roles, but not others. Alarmingly, it appears that the majority of Australian legal firms are not conducting police checks on potential candidates at all (57%). (Figure 7) 17.1% 25.5% 57.4% FIGURE 8 CONDUCTING POLICE CHECKS - BY FIRM TYPE DEPENDS ON THE ROLE NO Firm size appears to play a role in whether or not firms conduct police checks on potential employees. Smaller legal firms appear to be less likely to do so; a higher proportion of legal professionals from mid-tier (66%), boutique (78%) and sole practitioner (76%) firms indicated that their firm does not conduct police checks, while this proportion was significantly lower at global firms (23%). Similarly, legal professionals who work for employers other than legal firms were also less likely to state that their firm does not carry out police checks on candidates (29%). (Figure 8) GLOBAL NATIONAL MID-TIER 30.8% 46.2% 31.8% 18.2% 50.0% 7.9% 26.3% 65.8% 23.1% These figures are concerning as an inherent requirement of most legal jobs is dealing with highly sensitive client data and firms should be taking this into consideration when hiring for positions. BOUTIQUE 6.0% 16.0% 78.0% SOLE PRACTITIONER 5.4% 18.9% 75.7% NON-LEGAL FIRM (E.G. CORPORATE/GOVERNMENT/NGO/ACADEMIC) 37.1% 34.3% 28.6%

7 07 THE IMPACT OF INTERNAL CRIME ON AUSTRALIA S LEGAL INDUSTRY EXPERIENCE WITH INTERNAL CRIME CRIMES POSING BIGGEST THREAT Internal crime is a serious issue affecting Australia s legal industry. Around one-third of surveyed legal professionals indicated that either their firm, or their clients businesses have been the victim of crime committed by someone internally (32%). These crimes are largely of a financial nature and include theft, fraud and misappropriation of funds. Some firms, or their clients, also have fallen victim to non-financial crimes such as data and IP theft, identify theft, misuse of company property and cyber crimes. (Figure 9) Cyber attacks (38%) and data theft (35%) are the crimes that are perceived to pose the biggest threat to Australia s legal firms. This is not surprising in the wake of recent widespread ransomware attacks that have affected organisations across the globe. Asset misappropriation is also a concern (17%). It may be the case that some firms are more concerned with the threat of externally committed crimes rather than those committed by employees, however this research has uncovered incidences where businesses have fallen victim to crimes such as cyber attacks and data theft which were perpetrated by employees. This highlights the need for firms to have strategies to mitigate both internal and external threats. (Figure 10) FIGURE 9 HAS YOUR FIRM OR ANY OF YOUR CLIENTS BUSINESSES BEEN THE VICTIM OF CRIME COMMITTED BY SOMEONE INTERNALLY? FIGURE 10 WHICH TYPE OF CRIME DO YOU CONSIDER THE BIGGEST THREAT TO YOUR FIRM? NO 31.5% 68.5% 38.4% 34.7% 17.1% 3.7% 3.2% 2.8% CYBER ATTACKS DATA THEFT ASSET BRIBERY AND CORRUPTION PROCUREMENT FRAUD

8 08 CRIMES POSING BIGGEST THREAT CONTINUED Mid-tier firms appear to have greater concern about the risk of cyber attacks (50%), while legal professionals from global firms were the least likely to suggest that cyber crimes pose the biggest threat to their firm (27%). Instead, global firms placed more emphasis on data theft (46%). (Figure 11) FIGURE 12 WHEN CRIME OCCURS WITHIN A FIRM, WHERE DO YOU BELIEVE IT HAS THE BIGGEST IMPACT? Internally committed crime has the potential to hurt a firm s reputation. The majority of surveyed legal professionals believe that reputation is the attribute that is most heavily impacted when crime occurs within a legal firm (57%). However, others are conscious of the potential impact on revenue (12%), organisational culture (11%), productivity (10%) and morale (7%). In reality, the effect of internally committed crime has the potential to impact many facets of a firm s performance. (Figure 12) 57.4% 11.6% 11.1% 9.7% 6.9% REPUTATION REVENUE CULTURE PRODUCTIVITY EMPLOYEE MORALE 3.2% FIGURE 11 PERCEIVED BIGGEST THREAT - BY FIRM TYPE 27% 36% 50% 40% 41% 31% 46% 32% 29% 32% 32% 40% GLOBAL MID-TIER SOLE PRACTITIONER NATIONAL BOUTIQUE NON-LEGAL FIRM (E.G. CORPORATE/ GOVERNMENT/NGO/ACADEMIC 15% 18% 18% 20% 19% 11% 8% 9% 4% 3% 0% 0% 0% 14% 0% 0% 5% 3% 4% 0% 3% 4% 0% 6% CYBER ATTACKS DATA THEFT ASSET MISAPPROPRIATION BRIBERY AND CORRUPTION PROCUREMENT FRAUD

9 09 CRIMES POSING BIGGEST THREAT CONTINUED There is a perception among many of Australia s legal professionals, that firms are not doing enough to protect themselves against internal crime. Nearly half of the survey respondents believe that the average law firm does not have sufficient ethics or compliance programs in place to protect them against internal crime (42%). This, coupled with the earlier reported finding that many law firms do not routinely conduct police checks or validate documentation provided by employees or potential employees suggests that firms are leaving themselves open to the risk of internal crime. (Figure 13) Some legal professionals believe that law firms tend to be too trusting of employees and potential employees, and take them on face value. There is a perception that being highly educated, well paid professionals correlates to honesty, which is simply not always the case. Respondents also noted that, while more should be done to ensure ethical and compliance standards are maintained, and processes are in place to help protect against internal crime, these programs need to be applied equally to partners and senior staff who should be leading by example. FIGURE 13 DO YOU BELIEVE THAT THE AVERAGE LAW FIRM HAS A SUFFICIENT ETHICS AND COMPLIANCE PROGRAM IN PLACE TO PROTECT AGAINST INTERNAL CRIME? NO 58.0% 42.0%

10 10 SUMMARY ABOUT THIS REPORT FIGURE 15 GENDER FEMALE MALE The Lawyers Weekly 2017 employment screening survey was conducted during May The survey attracted 216 total responses which were inspected and found to be valid for inclusion in the final dataset. For all questions, percentages are based on the number of valid answers to the question. Where respondents skipped a question or indicated that they had no knowledge of the topic they have not been included in the results. FIGURE 16 AGE 55.1% 44.9% SAMPLE DEMOGRAPHICS 35 OR UNDER OVER 55 41% of survey respondents are based in NSW, 26% in Victoria, 17% in Queensland, and 17% in other states/territories. (Figure 14) 41.8% 39.9% 18.3% 55% are female, 45% male. (Figure 15) 42% are aged 35 or under, 40% are and 18% are over 55. (Figure 16) Surveyed legal professionals work for different firm types, including global (12%), national (10%), mid-tier (18%) and boutique (23%). Sole practitioners account for 17%, and the remainder work for other legal firm types, or at legal roles in other organisations (e.g. example corporate or government). (Figure 17) FIGURE 17 WHICH OF THE BELOW BEST DESCRIBES THE FIRM YOU WORK FOR? FIGURE 14 LOCATION NEW SOUTH WALES VICTORIA QUEENSLAND 12.0% 10.2% 17.6% 23.1% 17.7% 16.2% 40.5% 25.6% 16.7% 17.2% GLOBAL NATIONAL MID-TIER BOUTIQUE SOLE NON-LEGAL FIRM 3.7%

11 11 WHERE TO NEXT? MORE INFORMATION PODCAST Interested in diving deeper into the survey results? Listen in on our roundtable discussion on the critical need for police and reference checks to be more widely implemented across the legal community and corporate world. Panel members: Phillip Tarrant, Managing Editor, Lawyers Weekly John Ahern, CEO, InfoTrack Lori Middlehurst, Director and Assistant General Counsel, VMware Mariah Pollard, National Recruitment Consultant, Maurice Blackburn Lawyers EBOOK Recruiting the right people should be front of mind for any business and implementing a police check policy is key to a thorough employee screening process. Download our free ebook to learn about the basics when it comes to police check policies and how you can ensure your firm is conducting its due diligence. Safeguard your staff, protect your culture and preserve your reputation. Safeguard your staff Protect your culture Preserve your reputation Guide to police checks for employers GET IN TOUCH The Lawyers Weekly Show Getting aquainted If you d like any additional information or to book a no obligation police checks demo, please get in touch. Brook Baker General Manager, Sales m: e: brook.baker@infotrack.com.au Click above to listen.