Law firms have an obligation to protect all sensitive information, including their own financial data. This applies to information shared with third-party service providers.
Main Accounting Services encourages law firm owners to outsource or delegate accounting functions – which means sharing access to accounting and payroll software, tax returns, and bank accounts. While accounting firms are essential partners in managing a law firm’s financial health, a certain level of caution is always required when sharing detailed financial information.
The Risks of Data Sharing
Even with trusted accounting partners, the risk of data breaches and unauthorized access is a serious concern.
- Like any other business, accounting firms are susceptible to cyberattacks. A single breach can expose sensitive financial data, leading to fraud, identity theft, and reputational damage.
- Accidental data leaks due to human error, such as misdirected emails or unsecured file transfers, are a persistent threat.
- Third-party accounting software and cloud-based platforms may contain vulnerabilities.
- Not all accounting firms possess the same level of cybersecurity expertise and infrastructure, increasing the risk of data exposure.
Implementing Security Measures
To mitigate these risks, law firms must adopt a proactive and comprehensive approach to data security that addresses these three critical areas:
Controlled Access: Share only the financial data that is absolutely necessary and implement strict access controls to limit exposure. For example:
• Main Accounting Services recommends NEVER sharing your bank logins and keeping your logins private with multi-factor verification.• If you have proper business bank accounts, most banks offer a “view only” login option. This will allow others to pull bank statements and view check and deposit images without being able to withdraw or move funds.
• Most accounting and payroll software programs allow for “Accountant” access, which can be monitored with audit logs.
Secure Data Transfer: Tax returns and other records with sensitive information should never be emailed or texted! Use secure file-sharing platforms or encrypted channels to protect data during transmission and storage. Most accounting firms are equipped with secure portals where information and files can be safely shared.
Clear Contractual Agreements: When working with an outside accounting firm, make sure the firm’s cybersecurity infrastructure meets industry standards. Ask about their cyber insurance and protocols. For maximum protection, establish clear contractual agreements outlining data protection responsibilities, security protocols, and breach notification procedures.
With so much fraud in the world, law firms must put solid security measures in place to safeguard their financial data and their reputation. At Main Accounting Services, we know that trust matters. We have strict policies pertaining to how we access and share information – and we never share a client’s financial information with anyone unless we have written permission from the firm’s owner.
Main Accounting Services specializes in providing insightful information, accurate and timely reports, and financial explanations that are customized to meet the needs of growing law firms. To find out more about how we can help increase your firm’s profitability and success, schedule a free consultation here.