Wednesday, March 29, 2017

The Burdens Of Law Firm Leadership

The Louisiana Attorney Disciplinary Board recommends a one-year suspension of an attorney who engaged in billing falsehoods over a three-year period.

As a member of a law firm, the Respondent generally billed on an hourly basis but on rare occasions had the opportunity to work on some cases on a contingency basis. The firm policy was to set hourly billing targets for attorneys with the firm at 1800 billable hours annually. Meeting or exceeding the annual billing targets established by the firm were factors taken into consideration for annual salary increases, bonuses, and/or promotion within the firm. 

From in or around 2012 through November 7, 2015, the Respondent internally recorded time entries and created receivables that were in part false and/or inflated. The Respondent self-reported his misconduct to the Office of Disciplinary Counsel by correspondence dated November 25, 2015. The Respondent’s law firm also reported Respondent’s conduct to ODC pursuant to the provisions of Rule 8.3(a).

The law firm reported to the Office of Disciplinary Counsel that its internal investigation was able to conclusively demonstrate that the Respondent submitted 428 entries which were classified as “certainly false” and an additional 220 entries that were “ reasonably certain to be false or inflated”. The Respondent’s conduct reflects violations of Rule 8.4(c) (conduct involving dishonesty, fraud, deceit and misrepresentation), and Rule 8.4(a) (violating or attempting to violate the Rules of Professional Conduct).

The attorney joined his firm in 1998 and rose to a leadership position.

The hearing committee was somewhat sympathetic

Finding Respondent’s testimony to be credible, it determined that Respondent engaged in misconduct due to his concerns that his accurate billable hour numbers were not commensurate with his leadership position within the firm, rather than any desire for direct financial gain. He submitted false and inflated billing for the purpose of making himself look good to enhance his opportunities for leadership positions and to ultimately become managing partner of the firm. As a member of the Board of Directors, the Respondent saw first-hand and on a monthly basis the extraordinary billable time and business dollars generated by key leaders of the firm. When his practice began to decline, Respondent gave in to his own internal pressures. He began to submit time on a dismissed contingency fee matter, and eventually on six other matters, in an effort to make himself look better “on paper” each month.

The Respondent received a discretionary bonus from the firm’s compensation committee for 2012, 2013, and 2014. While the testimony established that the legitimate hours billed by Respondent met and exceeded his billing targets in each of these years, he nonetheless fabricated billing entries.  The parties stipulated that due to his many contributions at the firm during that time period, the firm hypothesized that it was highly likely that Respondent would have received all or some of those merit bonuses even without the false inflation of his billable hours.  Still, the Committee recognized that testimony from firm members also supported the conclusion that the full amounts of the merit bonuses may not have been paid to the Respondent had his hours been accurately recorded.

He receives credit for time served on an interim suspension.

Pamela Carter concurred with reservations

One year suspension is inadequate in this matter where lawyer dishonesty is clear and unequivocal. There was continual intent on the part of Mr. Wallace for a period of three years. The firm’s investigation and conclusions that Mr. Wallace’s false entries were “reasonably certain” to be of a false nature is very telling. It is my opinion that the Board’s recommendation should also require that Mr. Wallace apply for reinstatement. There is no question that Mr. Wallace’s dishonesty was purposeful, calculated, done knowingly and intentional. Mr. Wallace deliberately inflated the amount of time recorded for the purpose of presenting to clients bills which reflected undisclosed premiums. Not discussed is the information in the record regarding Mr. Wallace’s violation of his supervisory duties, as a member of the firm (partner), and as a billing partner, even though the factual record is replete with evidence that he violated these rules. Mr. Wallace served as the firm's hiring partner, and was the head of recruiting.

Linda Bizzarro dissented

I don't believe a suspension of one year is sufficient to address the admitted, multiple instances of misconduct in this matter. Considering the number of false or inflated billing entries (428 confirmed, 200 "reasonably certain" to be false), the length of time Respondent repeated the intentional misconduct (3 years), and the amount of money involved in the scheme ($91,544 in false billing, $85,000 of bonus money voluntarily renounced), a one year suspension is inadequate. In my opinion the Board should adopt the Hearing Committee's sanction recommendation of one year and one day, which would require the Respondent to apply for reinstatement.

(Mike Frisch)

Bar Discipline & Process, Billable Hours, Law Firms | Permalink


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