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Tuesday, April 1, 2008

“According to your billing records, you're 193 years old.”

On Friday, Samuel A. Fishman, a former partner at Latham & Watkins, pleaded guilty to federal fraud charges brought against him by the U.S. Attorney’s Office for the Southern District of New York. He entered his plea on a one-count information (a charge brought without putting evidence before a grand jury) and admitted he improperly and unlawfully charged clients and the law firm hundreds of thousands of dollars in personal and nonexistent expenses between 1993 and 2005. Fishman was a billing partner on some of the firm’s heavy-hitter institutional clients in the banking, utilities, telecommunications, and entertainment industries. At issue were meals, parking fees, photocopying, express mail, and inflated personal expenses and hotel bills. He is being represented by Jack Litman, a lion of the New York criminal defense bar. Sentencing is scheduled for June.

In her coverage of the case on the White Collar Crime Prof Blog, law professor Ellen Podgor poses the following important question: “Clearly overbilling and fraudulent billing by an attorney is unethical conduct and clearly it should be something subject to disciplinary action. But should the federal government be needing to intervene with criminal actions under the mail fraud statute?”

My answer is no. Federal prosecutors should not be wasting precious enforcement resources prosecuting lawyers for overbilling expenses. Clients and law firms can be reimbursed, such matters can be referred to the state bar disciplinary committee, and lawyers who indulge in such behavior can be terminated, ultimately ruining their careers. There is enough deterrent value in this approach. Citing case law, Podgor also rightly questions the legal basis on which a prosecutor may exercise discretion to criminalize a fee overcharge. Truly, we do not need the specter of a DOJ Law Firm Fraudulent Billing Task Force to send a message to attorneys and law firms that you cannot overbill your clients. CR

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