A Buffalo law firm faces liability for quietly allowing its former bookkeeper and business manager to repay the amount she embezzled from the firm without sharing the arrangement with her new employer, a Rochester-based appeals court panel ruled.

That arrangement resulted in Lippes Mathias Wexler Friedman being reimbursed $274,000 from funds that Paulette Reed embezzled from her new employer, Simpson & Simpson, which said it was never told about the previous theft before hiring her.