Unethical Quote Of The Week: Law Firm DLA Piper

“After our own due diligence and a thorough review of the facts, the firm decided to give great weight to the total body of Lee’s work over his 25-plus years as a lawyer. Lee [Smolen] is a well-respected attorney who has learned from his experience and taken all the necessary steps to move forward as a productive member of our team.”

—-A statement by mega-law firm DLA Piper at the time of its hiring of attorney Lee Smolen in February, 2013. Smolen had recently resigned from his previous firm because, we now know, he was under investigation for unethical conduct. This week, he was formally accused of bilking his former firm and its clients with inflated and inappropriate expenses.

You know, I have no idea why I chose this photo to accompany this post. Just seemed appropriate, somehow...

You know, I have no idea why I chose this photo to accompany this post. Just seemed appropriate, somehow…

What would possess a major law firm to make a bone-headed, Ethics Dunce decision like this? According to accounts, before the Piper firm made its commitment, Smolen “tearfully” explained all or some of his transgressions to the firm’s partners, transgressions which amounted to cheating  his fellow partners at his previous firm and fraudulently charging a client for expenses that were either inflated or that had nothing to do with the client’s needs.

He swore that he had learned his lesson, and would never do anything similar again, but look: even if he was sincere, what he had done is a cardinal sin for lawyers, virtually always leading to serious punishment and often disbarment. A lawyer who knows of such conduct is required by the bar ethics rules of all but a couple of states to report it to  bar disciplinary authorities as “a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer’s honesty, trustworthiness, or fitness as a lawyer.” How could a law firm justify taking on a new law partner after acquiring the same knowledge that would have obligated it to report the man, if he weren’t under investigation already?

You don’t hire someone to handle your clients who isn’t trustworthy, honest, or fit to practice–that’s placing your clients at risk as well as your firm. According to investigators, Smolen fabricated more than $120,000 in expenses over a six year period. That’s not “one mistake,” that’s a pattern of dishonesty. Honest, trustworthy lawyers never steal from their clients, not once, and certainly not repeatedly over six years. Piper gave “great weight to the total body of Lee’s work over his 25-plus years as a lawyer”—are you kidding me? How about giving even more “weight” to the fact that this guy was under investigation for stealing from a client?

Now, any law firm that decided to take a flyer on an attorney who “has learned from his experience”—-learned what, I wonder? That clients don’t like being swindled? That you get in big trouble for lying on expense vouchers? That there are ways to steal money from clients that won’t be discovered?—and is under disciplinary scrutiny would have an obligation, I think, to keep close watch on his conduct after hiring him, and to double-check those expense vouchers. The firm couldn’t warn its clients, because bar investigations, even ones involving serious offenses any client would normally have a right to know about, are confidential. So special caution would be mandatory–except that if you know you are hiring a lawyer that you can’t trust like any other lawyer, the proper course isn’t to keep tabs on him. The proper course is not to hire that lawyer.

Piper’s ethics cluelessness is even worse than you think. For the firm, at the time it hired Smolen, was already embroiled in a serious controversy over its own inflation of client fees to the tune of over a half-million dollars, in a lawsuit that included evidence of Piper lawyers discussing how to maximize charges (“Churn that bill, baby!” was the most sensational example.) I can only speculate why any firm would hire Smolen despite the flares, alarms and red flags, much less one under scrutiny for over billing, but my top theories, in no particular order, would be…

  • That classic ethics alarm muffler, greed. Smolen was well-connected and talented, and the DLA Piper saw dollar signs. “Heck, let’s give the guy a break,” they thought, using the inappropriate ethical value of compassion (“Everyone deserves a second chance!”) and a warped application of the Golden Rule (“Wouldn’t you want to be trusted after you had to leave your firm for cheating a client out of $120,000?”) to justify what was a reckless, profit driven violation of the spirit, though not the letter, of the legal profession’s ethics.
  • Firms generally, and perhaps this firm in particular, just don’t regard fee-padding as that big a deal, because if it isn’t true that “everybody does it,” an awful lot of firms do. The attitude of some partners toward Smolen may have been, “This poor guy—I could easily have been in his shoes.”
  • When explaining his problems to the partners, Smolen managed to minimize the seriousness of what he had done…in other words, he lied. Why would I think this? Oh, I don’t know…maybe those $70,000 of fake cab fare expenses make me unduly suspicious. And the partners were eager to believe him, because they wanted the business he could bring to the firm.
  • DLA Piper is the biggest law firm in the world. Such success and prominence often leads to arrogance, hubris and recklessness. And these, in turn, often lead to stupidity and disaster.

_______________________________________

Sources: New York Times 1, 2; ABA Journal

16 thoughts on “Unethical Quote Of The Week: Law Firm DLA Piper

  1. I think most attorneys over bill. Keeping track of your time as a big firm lawyer is incredibly difficult. Did I work 6.6 or 6.8 hours on that brief, was that call .2 or .3? I was thinking about my upcoming oral argument while on the metro, was that billable? Wait, I jumped on email for a few minutes earlier today or was it more like 20? I should deduct that, but from which client? I haven’t looked into this recently, but studies that I saw 5 or more years ago showed that male attorneys in general over billed, and female attorneys tended to under bill. (Under billing is a problem too of course — attorneys are costing their firms money and limiting their promotional opportunities.) For me, trying to keep accurate billables was the WORST part of being a big firm lawyer. I’m not excusing DLA here though — I think it’s reprehensible to hire someone with a known and excessive problem.

            • Cost per service has negative consequences as well. “Should I spend 3 hours going out to actually check the scene, or should I just assume it’s what the police report says?”

              • I make as estimate of the time I will need, cap it, agree on it, with a provision that if I seem to be going significantly over (or under) we will alter the deal.

                And I just had a retainer where I seriously underestimated the time, and was in too deep before I renegotiated. I nearly lost thousands on the damn thing. It still requires keeping track of hours.

              • Indeed.

                Additionally, price-per-task also creates the need for a menu of services and tasks, which ultimately pushes the need to define those tasks.

                In efforts to keep things understandable, tasks will be worded as descriptively as possible, but in real life it will be difficult to decide what task is appropriate for a particular scenario, since real life won’t be easily compartmentalized.

                Inevitably, if task A costs $1000, an scenario X requires only $200 of work while scenario Y takes $1,500 of work. I think that ends up being easier on the service provider but much more unfair to the receiver.

                Honestly, the price per hour method is the most fair, but it requires more accounting work on the service provider end. This Method most equates to my industry when we push as much relevant overhead into a direct cost category prior to billing.

                Negotiated fee method is also pretty fair.

                I don’t like the idea of a price per service or price per task method, for an industry that may have easily compartmentalized tasks.

  2. It sounds like his previous activity is more a qualifier than otherwise. Twenty five years of getting away with being dishonest speaks of great ability.

  3. I know little of the legal profession, but the link to the “churn that bill” story was outrageous. I was amused by this paragraph, especially the little nugget at the end…

    “…then-DLA Piper attorney Christopher Thomson added his thoughts [in an email correspondence]: “Now Vince has random people working full time on random research projects in standard ‘churn that bill, baby!’ mode,” wrote Thomson. “That bill shall know no limits.”

    …Thomson, who works for the government, declined to comment.”

    I lol’d.

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