Law Practice Management

Law Firm Won Tax Case, But Says Ex-KPMG Partner Still Owes $1.3M Bill


A law firm is suing a former KPMG partner, saying that he hasn’t paid $1.3 million of the legal bill that Kostelanetz & Fink racked up while successfully defending him in a high-profile criminal tax case concerning illegal tax shelters.

Although Richard Smith obtained a settlement from KPMG that was to pay most of his outstanding legal fees, the money hasn’t been applied to his Kostelanetz account, the law firm contends in a Manhattan federal suit filed Friday. It contends that the firm filed suit “to prevent its former client from reaping an undeserved windfall after avoiding trial and potential conviction in what has been described as the largest criminal tax case in United States history,” reports Reuters.

Smith, who is a lawyer, was indicted in 2004. All charges against him were dismissed in 2007, when he was being represented by Kostelanetz. Reached by telephone, he declined to comment, the news agency reports.

Additional coverage:

ABAJournal.com: “Judge: No Release from KPMG Defense”

Bloomberg: “Pocket a Million, Avoid Jail, Halve the Legal Fees: Ann Woolner”

Updated on Aug. 13 to link to subsequent Bloomberg article.

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