Stealing Origination Credit Alleged

A recent complaint filed by the Illinois Administrator

From November 1, 2007 to April 23, 2018, Respondent practiced law at Kovitz Shifrin Nesbit (“KSN”) , a Chicago law firm that concentrates its practice on condominium law. While employed at KSN, Respondent held the positions of associate and, later, non-equity principal.

During the time Respondent was associated with KSN, the firm had used LexisNexis’ Juris program as its practice management software, and all KSN employees are assigned a Juris profile. Among other functions, KSN had used Juris to manage their client accounts and client billing, including the attorney(s) from whom a client originated, and which attorney(s) had worked on a particular matter for a client.

During Respondent’s employment with KSN, Respondent knew that the firm’s administrative staff was solely responsible for inputting client information into Juris whenever a new client is opened at the firm. That information is based on a client intake form which was circulated amongst KSN attorneys, and which included the client’s name, property management information, the name of the property manager, and the originating attorney.

At all times alleged in this complaint, an originating attorney at KSN was the attorney responsible for bringing a particular client to the firm. Originating attorneys were eligible to receive origination credit, which were legal fees a client paid to the firm, and which counted towards the originating attorney’s book of business. Origination credit may sometimes be shared and split evenly between two or more attorneys.

In January of 2014, Respondent was promoted to the position of non-equity principal at KSN. As a non-equity principal, Respondent’s income was comprised of a base salary plus extra compensation derived from a percentage of origination credit (“origination compensation”) and compensation derived from working credit, which was a percentage of what Respondent bills a client when he worked on a client matter (“working compensation”). Respondent received origination compensation regardless of whether he worked on any matters, so long as he was the originating attorney for that particular client; he received working compensation regardless of whether he was the originating attorney, so long as he worked on a matter and billed the client.

For 2014, Respondent’s origination compensation was 10%; for 2015 to 2016, his origination compensation was 15%; for 2017, 16%, and for 2018, 17%. From 2014 to April of 2018, Respondent’s working compensation was 8.333% of what he billed for the matters on which he worked.

During the entire period Respondent was associated with KSN, the right to assign and change originating attorneys to clients and client matters was restricted to KSN’s administrative department and other clerical staff. Disputes over who should receive origination credits were a frequent source of conflict at KSN, and it was KSN’s policy that no attorney at the firm would have the right to change origination credits. Once the information was entered into Juris, no origination credit could be changed from one attorney to another without the express written permission of the attorney(s) to whom the origination credit was assigned.

Sometime prior to May of 2014, Respondent inadvertently discovered that his Juris profile had the ability to make changes to origination credits, and that he could do so from his work computer.

From May 2014 to April 18, 2018, Respondent made over 200 unauthorized changes in Juris in which he either removed other attorneys with whom he was sharing origination credit, or assigned himself as the originating attorney on matters in which he was not entitled to receive origination credit.

The changes Respondent made resulted in an increase of $202,881.47 to his origination credit during the period referenced in paragraph 9, above. As a result of this increase, Respondent received at least $30,000 in additional origination compensation between May 2014 and April 2018, at the cost of other KSN attorneys.

At no time did Respondent have authority to make any of changeshe made in Juris, referenced…above.

Respondent knew that he did not have authority to make changes to the assignment of origination attorneys at the time he made them.

On April 18, 2018, a KSN attorney noticed that his origination credits had been changed without authorization and notified KSN’s managing principal, Robert Kogen (“Kogen”). Kogen subsequently conducted an investigation and discovered that Respondent had been making changes to origination credits for the previous four-plus years.

On April 23, 2018, Respondent appeared at KSN’s Mundelein office where he was questioned by Kogen and Matthew Moodhe, a member of KSN’s Executive Committee. On that same day, KSN terminated Respondent’s employment.

(Mike Frisch)