"Sloppy Recordkeeping" - No More An Excuse - Lifetime Ban for Insurance Defense Attorney

Online, June 5, 2014 (Newswire.com) - The Supreme Court of Louisiana suspended a long-time insurance defense attorney David J. Mitchell from practicing law for falsely claiming nearly 800 requests of travel reimbursements over a five-year period. Further the court permanently prohibited him from being readmitted to practice law in the state. (In re Mitchell, 2014 WL 1800065, (La.) (La., 2014)).

At the relevant time period, David had been an associate and then a partner with a New Orleans-based law firm Porteous, Hainkel, Johnson & Sarpy. The firm's major client, Farm Bureau Insurance Company, allowed him to seek reimbursement for mileage and for out-of-pocket expenses such as tools and parking in connection with his travel for the client's matter. Upon incurring such expenses, David submitted an expense reimbursement request form to the firm's accounting department; in turn, he received a check from the firm and the firm then recouped these amounts from Farm Bureau.

Sometimes during the late 80's or early 90's, the firm became aware that David was submitting expense reimbursements without necessary supporting documents. David excused his conduct as nothing more than "sloppy recordkeeping" which the firm accepted. However, the firm required and David agreed that in future he would submit all of his expense reimbursement requests to another partner for review, and that he would refrain from signing his own expense reimbursement checks.

In 2008, the firm found certain irregularities with David's expense reimbursement requests. The firm formed an audit committee to audit David's expense reimbursement submissions for the last five years starting from 2003. "[T]he audit committee identified 794 requests for reimbursement of $23,212 in expenses for events that were not on [David's] calendar, could not be documented in a file, had not taken place due to a settlement or continuance, occurred when [David] was out of the office, or had been covered by someone else in the firm."

Pursuant to the obligations under the Rules of Professional Conduct, the firm reported to the Office of Disciplinary Counsel ("ODC") about the incident and the ODC filed formal charges against David. Relying on the internal audit conducted by the firm and the testimony by audit committee, the Hearing Committee and the Disciplinary Board recommended for permanent disbarment of David. After considering the records and ODC recommendations, the Court ordered to permanently disbar David.

This case underlines few key learning points:
• Billing irregularities could lead to disbarment
• Law firm's obligation to report such billing regularities to the ODC
• Law firm's liability to repay any excess amount collected from the clients
• Conducting internal legal bill review as a measure for adherence to the Rules of Professional Conduct