Ex-BigLaw Lawyers Face Suspension Over False Billings
Two former Chicago-based BigLaw attorneys have been suspended by the Illinois Supreme Court over charges of falsely increasing the number of billable hours. The Illinois Attorney Registration and Disciplinary Commission (ARDC) had filed complaints against both the attorneys in June this year for violating certain provisions of the Illinois Supreme Court Rules.
John Paleczny, a former insurance lawyer at Lewis Brisbois Bisgaard & Smith, has been suspended for a period of one year. The suspension takes effect from October 14, 2021. He has also been ordered by the Court to mandatorily complete the ARDC Professionalism Seminar.
The complaint against Palenczny alleged that he falsely charged more than 2,000 hours on a pro-bono case that he knew was already dismissed by the judge. As a result, he was able to obtain a $12,000 bonus from the firm. He was tapped by Beth Ann Berger Zerman, a partner in the firm’s Chicago office to work on the case after a judge had appointed Zerman to represent the inmate in 0218. Palenczny was representing an Illinois federal prison inmate in a civil rights lawsuit. The inmate alleged that after he complained about a new library policy, he was fired from his prison job as an orderly in the law library. The lawsuit was dismissed in December 2019.
On January 03, 2020, the inmate was informed that the firm would no longer represent him, however, he could represent himself in any post-judgment motion or appeal. The complaint stated that at least by January 21, 2020, Palenczny knew that the firm will no longer be working on the matter.
The complaint alleged that even though Palenczny was aware of the dismissal of the case, he recorded 2,061 hours on the same in 2020. In 2021, he again recorded about 245 hours on the same and it was at this time that the firm became aware of his false billings. In February 2021, he was questioned by two partners and one office administrator about his recorded hours on the matter and later, on the same day he admitted to the continued billing on the case. He was fired from Lewis Brisbois on the same day.
The complaint also alleged that after he was fired, he interviewed with at least four other Chicago law firms, where he lied that the reason for his lay off was lack of enough amount of available work. He received his JD from Chicago-Kent College of Law at the Illinois Institute of Technology in 2018. In May, he joined another Chicago law firm, Connolly Krause. However, he was immediately fired after the firm learned about the allegations against him.
Stephanie Alexandra Gerstetter, a former associate at Reed Smith received a suspension for 60 days over accusations of blowing up her billing records related to a document review project. She falsely recorded 86.4 hours that resulted in increased billings of $40,000 to the client she was working for. The overpayment was refunded by Reed Smith. Her suspension takes effect from October 14 as well.
Gerstetter was assisting a mid-level associate with document review projects. The complaint alleged that she billed materially more time than the time recorded on Relativity, an application used to code and analyze digital documents. The complaint stated that in August 2019, Relativity showed her logged-in time to be around 23.5 hours for the document review project and yet she billed 29.2 hours for the same.
In March 2020, while working on another document review project, she again recorded false billable hours. The complaint stated, “recorded billing entries on 49 separate days totaling 197.7 hours of purported time that she claimed to have spent reviewing and coding documents” but “only worked 33 separate days totaling 113.1 hours.”