Ex-Sidley Partner Suspended for False Expense Filings
Already facing allegations of overbilling the foundation of artist Cy Twombly, a well-known New York art lawyer and former Sidley Austin partner who improperly charged $50,000 in car service rides to firm clients over a 10-year period has been barred from practicing law for a year.
New York state's Appellate Division, First Department, suspended Ralph Lerner Tuesday for engaging in what it called conduct involving dishonesty, fraud, deceit or misrepresentation in violation of attorney ethics rules, as well as conduct that reflects adversely on his fitness as a lawyer.
According to the court's opinion, Lerner wrongly billed Sidley clients for 448 car service rides that either he or members of his immediate family took over the course of a decade. When confronted about the bills by members of the firm in 2008, Lerner resigned, reimbursed the affected clients from his capital account and reported himself to the disciplinary committee. Though not named in the complaint as his employer, Lerner's lawyer verified Tuesday that Sidley is the firm in question.
Lerner, 70, began practicing law in 1968 and joined Sidley as a partner in 1986. After leaving the firm he joined private client–centric Withers Bergman, whose website lists him as of counsel.
The disciplinary proceedings against Lerner began in April 2011, according to court records. An initial recommendation that his license be suspended for one year a was reduced to nine months by a referee, who also concluded that "the reason a successful attorney resorted to such continual unethical conduct has not been really explained." A hearing panel then recommended that the suspension be further reduced to six months, reasoning that "a suspension of more than six months would require a reinstatement proceeding which, as a practical matter, would at least double the length of the suspension" and "could well mean the end of his career" because of his age.
The appellate panel disagreed, suspending Lerner's license for a year on the grounds that "respondent's professional accomplishments and character evidence are outweighed by the repeated and protracted nature of his misconduct."
Lerner's attorney, Ronald Minkoff of Frankfurt Kurnit Klein & Selz, said Tuesday, "We're obviously very disappointed in this result, particularly in light of the earlier recommendation for a six-month suspension, and in light of the overwhelmingly positive character evidence and his extraordinary career."
Neither Lerner nor Withers Bergman chair Ivan Sacks returned calls for comment Tuesday. Sidley chair Carter Phillips declined to comment.
In a statement, a Withers Bergman spokesman said: "Ralph Lerner has been a valued colleague in the six years in which he has been with the firm, and we are saddened to learn that actions taken while he was at his prior firm have resulted in a decision temporarily suspending him from the practice of law. We will continue to offer first-class service to our global art law clientele."
Separately, Lerner is defending himself in a high-profile Delaware state court lawsuit in which he is accused of charging a foundation created by Twombly hundreds of thousands of dollars "in unauthorized, improper and inflated legal fees to his law firm." The Cy Twombly Foundation and two of its executives brought the suit in March against the foundation's treasurer and director, Thomas Saliba, and added Lerner, also a foundation director, as well as its secretary, as a defendant in an amended complaint filed earlier this month.
Minkoff, who also represents Lerner in the suit, said he and his client have filed a motion to dismiss and plan to submit briefs in support of that motion Monday. "The claims are completely unfounded," he says.
Lerner helped form the foundation in 2005, according to the complaint, and advised the organization while at Sidley and Withers. The suit alleges that Lerner created a fraudulent scheme to avoid showing invoices for his legal bills to the foundation, which have totaled $750,000 since 2012, instead authorizing wire transfers "without review or approval by the board."
According to The New York Times, which reported on Lerner being added as a defendant in the Delaware suit, Lerner's clients over the years have included the estate of art dealer Ileana Sonnabend, the Gagosian Gallery and art collector Steven Cohen, the founder of troubled hedge fund SAC Capital. Lerner and his wife, lawyer Judith Bresler, are the coauthors of a respected book on art law first published in 1989.
Lerner is the second former Sidley partner this year to be accused of faking expenses while at the firm. Chicago real estate lawyer Lee Smolen, who is now at DLA Piper, is currently being investigated by an Illinois disciplinary board for allegedly fabricating nearly $120,000 and charging them to a Sidley client account from 2007 to 2012.
While admitting to filing faked taxi receipts and improperly requesting reimbursement for gift cards, sport events and meals, Smolen insists he never intended to use the money for "purposes not related to the firm." A prehearing conference call in the Smolen matter is scheduled for Wednesday.