Tuesday, January 22, 2013

Law Firm Billing Risk -- Fraudulent Manipulation

A few weeks ago we pointed out a story of risks tied to billing records: "Risks Tied to Law Firm Billing Record (or Lack Thereof)." Now comes a story about billing risk: "12-Month Suspension from the Bar, for Fraudulently Manipulating Billings to Get Bonus Money from Firm."

As the Legal Ethics Forum summarizes: "The lawyer "wrote up" his hours to meet internal cutoffs for bonuses, then surreptitiously "wrote down" the hours so the client would not get bilked. (Like the much discussed case, Board of Bar Overseers v. Warren, the new case has an issue about theft from the firm itself.)"
  • "Because his recorded billable hours exceeded 1,800 hours, Attorney Siderits participated in the bonus system in 2007 and 2008, earning ... [a total of] $46,978.04. After the Firm paid Attorney Siderits each of the bonuses, but before the Firm mailed his bills to his clients, Attorney Siderits reduced, or “wrote-down,” certain of his billable hours for the years for which the bonuses were paid."
See comments on original story and Legal Ethics forum for interesting discussion. As the article notes, given the particular fact pattern here, "the fraud here was on the firm, not on clients,"

We've commented previously on how firms can put technology controls in place to flag suspicious behavior and intervene before errors (intentional or accidental) create serious problems.

No comments:

Post a Comment