Attorney Fees

Misconduct Cited in KPMG Motion

Ex-employees of KPMG cite a “pattern of misconduct” by the government in their motion to dismiss the criminal case against them.

They contend comments by prosecutors at a February 2004 meeting put pressure on their employer to cut off legal fees, according to the New York Law Journal. The employees had been accused of helping create illegal tax shelters.

“Worried KPMG lawyers informed KPMG officials that it did not appear that they could both pay fees for individuals per the prior practice and save the firm,” a memorandum in support of the motion says (PDF posted by the legal newspaper). “KPMG quickly caved to government pressure to try and save the firm at the expense of its current and former partners and employees.”

Prosecutors also notified KPMG when employees refused to cooperate, resulting in their firing, the memo says.

Judge Lewis A. Kaplan had ruled the pressure to cut off fees violated the defendants’ Fifth and Sixth Amendment rights. He later assumed ancillary jurisdiction of a civil suit seeking payment of the fees.

But on May 23 the 2nd U.S. Circuit Court of Appeals based in New York said ancillary jurisdiction was improper and suggested dismissal could be a remedy for any inappropriate government conduct.

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