Ex-Sidley Partner Admits Faking Bills, But Not For Gain

, The Am Law Daily

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A former Sidley Austin partner now with DLA Piper has admitted to submitting $120,000 in improper expenses while with his former firm, but claims he didn't do so to benefit himself.

Chicago real estate lawyer Lee Smolen is currently the target of an inquiry launched by the Illinois Attorney Registration and Disciplinary Commission, which is investigating him for allegedly filing false expense reports at Sidley between 2007 and 2012.

In an answer filed Tuesday in response to the discipline board's June 14 complaint, Smolen acknowledges fabricating approximately $69,000 in taxi receipts and requesting reimbursement for an additional $50,000 in restaurant gift cards, sporting event tickets and meals, including some that he enjoyed at his country club on Mother's Day and Thanksgiving. The commission's complaint notes that the expenses were deducted from fees Sidley received from a "major financial institution, one of the firm's largest clients."

His admission notwithstanding, Smolen insists he never intended to use the money for "purposes not related to the firm." The submission of the false taxi receipts, his response says, "was a poorly conceived short cut around the firm's expense reporting procedures in order to secure more time to address his substantial and demanding commitments to the firm." The meal and entertainment expenses, according to the response, were partially used for firm purposes and partially "the result of inadvertent error or his occasional failure to pay sufficiently close attention to detail."

Smolen's attorney, Robert Merrick, did not respond to a request for comment Wednesday. In the response, Smolen denies the discipline board's accusations of ethical wrongdoing, including conversion; breach of fiduciary duty; and conduct involving dishonesty, fraud, deceit or misrepresentation. He also argues that while his actions were "wrong," his "conduct was not the result of any intent to profit personally."

In his response, which was first reported by the Legal Profession Blog, Smolen says he has repaid Sidley the approximately $120,000 at issue. William Conlon, a partner in Sidley's Chicago office, said the firm had no comment on the matter.

Smolen joined Sidley's Chicago office directly out of law school in 1985 and became a partner eight years later. At various times, he served on the firm's nearly 50-lawyer executive committee and as the global coordinator of the real estate practice.

Smolen left Sidley last fall and joined DLA Piper in February. In a statement, a DLA spokesman said the firm was aware of Smolen's actions at Sidley when it hired him, and that, "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 and to extend to him the opportunity to continue his career at DLA Piper."

Smolen isn't the only lawyer with Am Law 100 ties coping with the fallout of his admitted misdeeds this week.

Theodore Freedman, a former senior partner at Kirkland & Ellis who resigned from the firm in 2010, was barred from practicing law Tuesday by a New York court following his admission earlier this year that he had committed tax fraud, Recorder sibling publication New York Law Journal reports.

Freedman, a bankruptcy lawyer, pleaded guilty in March to four counts of tax fraud for underreporting his income by more than $2 million between 2001 and 2004. He is scheduled to be sentenced in September and faces up to 12 years in prison.

The suspension from law practice will be in place until a final disciplinary recommendation is made by New York's Appellate Division, First Department. According to the Tuesday decision, Freedman has not practiced law since 2010 and has no plans to do so.

Meanwhile, former Am Law associate Matthew Kluger suffered a setback of his own Tuesday, when the U.S. Court of Appeals for the Third Circuit affirmed a federal district court judge's decision to sentence him to 12 years in prison for his role in a massive insider-trading scheme that played out during Kluger's stints at several large law firms, including Cravath, Swaine & Moore; Skadden, Arps, Slate, Meagher & Flom; and Wilson Sonsini Goodrich & Rosati.

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