Tuesday, April 30, 2019

Origination Sin

An Illinois Hearing Committee has found that an attorney engaged in dishonest conduct in his law firm

The Administrator's one-count Complaint alleged that Respondent, without authorization from his law firm, used the firm's computer system to change records pertaining to the origination of certain client accounts, which changes resulted in an advantage for himself and a loss to some of the other attorneys in his firm. Respondent was charged with engaging in dishonesty, deceit, fraud or misrepresentation in violation of Rule 8.4(c).

The Hearing Board found the Administrator proved the misconduct that was charged. After considering mitigating and aggravating circumstances, the Board recommended Respondent be suspended for one year.

The story

Respondent was licensed to practice law in 2005, after which he briefly worked for small firms and then started his own practice. In 2007 he became an associate at the Kovitz Shifrin Nesbit ("KSN") law firm and eventually moved into the firm's condominium department. In 2014 he became a non-equity principal at the firm. In order to generate business for the firm, he spoke at industry trade shows, wrote articles, taught classes at the Community Association Institute, offered free seminars, and received referrals from property managers. His efforts were successful and his book of business became one of the largest among the non-equity principals. An attorney's "book of business" is the income to the firm attributed to that attorney...

Sometime prior to May 2014, Respondent inadvertently discovered that his Juris profile allowed him to make changes to origination credits from his office computer. He testified he told his colleague Ryan Shpritz of his discovery and showed Shpritz how to make a change, but he did not tell Shpritz he intended to make changes. (Ans. at par. 8; Tr. 221, 268-70).

Respondent acknowledged that between May 2014 and April 2018 he made changes to origination credits. In addition to deleting an attorney with whom he was sharing origination credit, he also completely changed some origination credits from another attorney's name to his own name. In making the changes, he considered how the client came to KSN. For example, when an inactive client came back to KSN through his efforts, he felt he should receive origination credit. In some instances he changed the origination credit in his favor, and then changed it back because he knew his actions were wrong. Respondent did not recall how many times he made changes, but acknowledged the KSN records reflect it was more than 200 times over a four-year period. (Ans. at par. 9; Tr. 220-23, 239, 252, 270-73).

Respondent testified he began making changes, even though he knew he had no authority to do so, because he was frustrated that his concerns were not addressed and it was a way to correct an improper allocation of credit on a handful of clients. He also felt, to some extent, that other people were riding on his coattails. He denied acting from ambition, and described himself as being conflicted over his conduct. He denied knowing he was among the highest paid non-equity principals. (Ans. at pars. 11, 12; Tr. 221-23, 229, 249-57, 267, 270, 274-78).

The firm eventually discovered the changes.

Lieke Daley, controller at KSN and overseer of the firm's database system, testified he received an email from a KSN attorney in April 2018 asking why certain client matters were not reflecting a split origination. After speaking to a Juris consultant, Daley began a time-consuming process of reviewing change logs, running reports, analyzing data, and confirming his findings with Juris. (Tr. 35-37, 41-43, 60).

Daley discovered that Respondent was the individual logged into the system when certain changes were made to origination credits. He identified two spreadsheets that reflect over 200 changes at the matter level and 20 changes at the client level. The changes resulted in an increase of $202,881.47 to Respondent's book of business during the four year period and an increase of at least $30,000 to his origination compensation, to the detriment of other attorneys. The spreadsheets indicate numerous KSN attorneys were affected, including Robert Kogen and Ryan Shpritz. Once Daley was confident of his findings, he took the information to the executive committee.


Over the course of four years Respondent never advised the firm manager of his ability to make unauthorized changes, and instead repeatedly took advantage of the situation to steal from his colleagues. Each time he manipulated the origination credits, he made a conscious decision to continue with behavior he knew was wrong. His only explanation was his frustration with the firm's compensation system, a complaint which could have been addressed by honest means, including resignation from the firm. Although no clients were harmed by Respondent's dishonesty, his willingness to steal from his own partners and close friend is a disturbing circumstance which indicates to us that something more than a short suspension is needed to protect the public.

Having considered the misconduct, the mitigating and aggravating circumstances, and the relevant case law, we conclude a suspension of one year is required to fulfill the purposes of the disciplinary proceedings. Accordingly, we recommend that Respondent Michael Joseph Shifrin be suspended from the practice of law for one year.

(Mike Frisch)



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