Legal News

Samuel Fishman and Lawyer Fraud: Why Risk so Much for So Little?

By Dan Slater

On Friday afternoon, as the Law Blog was reporting the unfortunate tale of Samuel Fishman, the former Latham partner who defrauded his firm and his clients out of more than $300,000, one major question of human psychology seemed to hang unanswered over the story. Why, given the annual take-home of a Latham partner and the long period of time over which Fishman’s fraud played out, would he risk so much for so little?

In today’s NYLJ, Tony Lin sheds some historical light on the topic. In recent years, reports Lin, several major firms have faced fraud by partners. In 2006, a former WilmerHale IP partner relinquished his law license after admitting to conduct similar to Fishman’s, including falsifying expense reports and assigning associates to perform “pro bono” work for friends and family. He claimed more than $109,000 in false personal expenses. Meanwhile, Willkie Farr & Gallagher and the former Kronish Lieb Weiner & Hellman have also terminated partners for fraudulent conduct that involved seeking reimbursement for personal expenses.

Unlike that of Fishman, most of these instances have resulted not in criminal prosecution, but disbarment or other disciplinary sanction.

In most such cases, writes the NYLJ, including that of Fishman, the defrauded amounts have been small compared to what the perpetrators earned as partners. Last month, for instance, the Law Blog noted that Latham’s 2007 profits-per-partner was $2.27 million.

Steven Lubet, a legal ethics professor at Northwestern, said he always found it “incredible” that highly paid partners would resort to fraud. He said he could only imagine that such people were overspending trying to emulate the lifestyles of those they represented. “The clients have that kind of money, the lawyers don’t,” said Lubet. “Sometimes, lawyers decide they want to live like their clients and that extra money has to come from somewhere.”

LB Readers: Do you agree with Lubet that client-envy can beget greed among partners? Or is there something else going on?

Full post as published by Law Blog - WSJ.com on December 31, 1969 (boomark / email).