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Illinois Disciplinary Board recommends one year suspension for partner who falsified and submitted $69,800.00 in client expense reimbursement claims

Hello everyone and welcome to this Ethics Alert which will discuss the recent Illinois Disciplinary Board Report which recommended a one year suspension for a law firm partner who falsified and submitted $69,800.00 in client expense reimbursement claims. The case is In re Lee Mark Smolen, Commission No. 2013PR00060 (1/7/14). The Board’s Report and Recommendation is here:

According to the Report and Recommendation, the lawyer (former Sidley Austin partner Lee Smolen) was employed in the firm real estate department since he was admitted to practice in 1987. He admitted that “he falsified and submitted for reimbursement more than 800 receipts for cab rides he did not take. He further admits he received reimbursement totaling $69,800 for the fabricated receipts.” He charged the expenses to an unallocated client account which was virtually unmonitored.

“In 2005, (the lawyer) billed 3,576 hours, which included time billed to clients and time spent on services to the firm. (The lawyer) billed 3,483 hours in 2006 and 3,332 hours in 2007. (citation omitted).” “(The lawyer) typically spent 12-15 hours per day at work and did additional work after he came home and on weekends. (citation omitted). He slept three or four hours per night. (citation omitted). (The lawyer’s) annual compensation at the time he left Sidley was $3.5 million. (citation omitted). He was one of the most highly compensated partners in the firm. (citation omitted).”

“(The lawyer’s) conduct was purposeful and intentional. We do not accept his explanation that he simply acted without thinking. (The lawyer) made conscious decisions and took conscious action each time he created and submitted a false receipt. He charged the cab rides to the Wells Fargo unallocated account, which he controlled. There was no reason for (the lawyer) to take the actions he took unless he intended to make the Sidley accounting department and management believe something that was not true, i.e., that he incurred valid cab ride expenses for which he was entitled to be reimbursed. (citation omitted).

“We do not find credible (the lawyer’s) assertion that he did not realize he was doing anything wrong. An attorney of any level of experience should recognize the wrongfulness of fabricating expenses. Given (the lawyer’s) substantial legal experience and accounting background, his professed lack of awareness is implausible.

“(The lawyer’s) purported use of the reimbursement funds for a legitimate purpose does not alter our finding of dishonesty. Other than (the lawyer’s) testimony, no evidence supports his claim that he used the funds for client development. (The lawyer’s) testimony on this issue was inconsistent and he has no records or receipts to corroborate his assertion. Respondent’s wife testified that she withdrew cash from their checking account and gave it to (the lawyer), but she had no knowledge how (the lawyer) spent the cash.

The lawyer is now employed with DLA Piper and two DLA partners testified at his hearing. According to that testimony, the lawyer appeared before DLA Piper’s executive committee and told them that he made a “horrible mistake” and the firm executive committee voted unanimously to recommend that he be employed by the firm. A partner testified that he monitors the lawyer’s billings and they are appropriate and he was initially concerned about the lawyer joining the firm, however, he is now “fully supportive” of the lawyer’s membership in the firm.

According to the Report, the lawyer’s “mental health issues and his misconduct” were also considered. One doctor opined there was a “loose association” between the lawyer’s personality disorder and his misconduct because the lawyer “was excessively devoted to work as a result of his obsessive-compulsive disorder.” Another doctor stated that the lawyer’s depressive disorder and anxiety disorder led to “tremendous impairment of judgment” which led to the misconduct. The opinions found that the lawyer’s mental health played at least a minor role in his misconduct and have it “some weight” as a mitigating factor.

“We recognize that the amount of Respondent’s falsified expenses is greater than the amounts in the (previously cited) cases but in light of (the lawyer’s) significant mitigation we do not believe a suspension of more than one year is warranted. We believe a one-year suspension addresses the severity of the misconduct and also takes into consideration the substantial mitigating factors.”

“Accordingly, we recommend that (the lawyer) be suspended for one year and until he completes at least twelve months of continuous treatment, from the date of the hearing, with Dr. Spira or another psychiatrist acceptable to the Administrator. The lawyer’s suspension will terminate after one year if he demonstrates his completion of treatment to the Administrator’s satisfaction.”

Bottom line: This lawyer admitted that “he falsified and submitted for reimbursement more than 800 receipts for cab rides he did not take” and received payment for a total of $69,800.00 from the clients for the fabricated receipts. In light of the large amount of the lawyer’s admitted misappropriation, it is surprising that the Board did not recommend disbarment for the misconduct. The Report and Recommendation will now be reviewed by the Illinois Supreme Court which will issue a final opinion.

Be careful out there.

Disclaimer: this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
2454 McMullen Booth Road, Suite 431
Clearwater, Florida 33759
Office (727) 799-1688
Fax (727) 799-1670
[email protected]

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