Billing Fraud Charges Against Chicago Attorney
The Illinois Administrator has charged an attorney with the following
Between approximately 1991 and September 2013, Respondent was a partner at a law firm (“the firm”) in the firm’s Chicago office. Between at least January 1, 2012 through July 31, 2013, Respondent was the partner responsible for the preparation and submission of bills relating to the firm’s representation of a large, publically-owned client (“the client”) in a series of matters, including an inquiry by a federal regulatory agency, a series of related shareholder matters, and a lawsuit filed in federal court. The amounts the firm billed the client on those matters were a function of the hours worked by the firm’s attorneys (“the billers”) and those billers’ hourly rates.
During the period set forth in paragraph one, above, in preparing the bills relating to the client’s matters, Respondent altered the firm’s internal records, including pre-bills (also called “pro formas”), either by increasing the hourly times charges for individual billers, by moving time from a biller at a lower hourly rate to a biller at a higher rate, or by increasing the amount of time recorded by a biller. The result of these actions was to increase the amount of fees billed to the client on the final bills.
Between January 1, 2012 and July 31, 2013, the firm’s billers recorded 19,092.3 hours on the client’s various matters. During that same period, Respondent sent bills to the client that falsely stated that the billers had spent 19,951.3 hours on the matters, an increase of 859 hours. Respondent’s alterations to the firm’s billing records had the effect of increasing the amount billed to the client by $251,863.
Respondent knew that his statements concerning the amount of time spent by the firm’s billers, and about the value of their services (referred to in paragraph three, above), were false, in that those statements inflated both the amount of time purportedly spent by the firm’s billers and the value of their services.
At no time did the client authorize Respondent to charge it a premium above the amount determined by multiplying the billers’ hourly rate by the number of hours they worked on a matter, nor did it authorize Respondent to move time between billers, to increase the hourly rates the firm charged for the billers’ time, or to charge the client for more hours than the billers actually worked.
In reliance on Respondent’s statements concerning the time expended by the firm’s billers and the value of the services provided by the firm, the client paid the amounts claimed as fees in the bills it received from Respondent.
The complaint alleges violation of Rules 1.5 (fees) and 8.4(c) (dishonesty). (Mike Frisch)