Targeted in N.Y. Public Benefits Probe, Private Lawyers Plan Class Action

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Labor and Employment

Targeted in N.Y. Public Benefits Probe, Private Lawyers Plan Class Action

Posted May 14, 2008, 01:34 pm CDT
By Martha Neil

Updated: It almost had to happen. Targeted in an ongoing investigated by the New York attorney general's office as well as other state and federal agencies over possible public benefits and tax fraud, at least some of the "hundreds and hundreds" of lawyers who reportedly are the focus of the probe are fighting back.

They plan to file a lawsuit tomorrow in state court, which they hope to pursue on a class-action basis, reports the Business Review. The article doesn't specify the expected defendants in the lawsuit, which is to be filed by James Roemer of Roemer Wallens & Mineaux in Albany, but they presumably will be government officials and entities. DeGraff, Foy and Kunz, another Albany law firm, is also reportedly working on the plaintiffs' behalf.

As discussed in earlier ABAJournal.com posts, the New York attorney general, Andrew Cuomo, and other officials claim that lawyers throughout the state have improperly been listed as part-time employees of school districts and other government agencies—sometimes for no-show jobs—in a customary practice that dates back close to 20 years, at least.

In fact, investigators claim, many lawyers were independent contractors in private practice working, if at all, as the agencies' legal counsel. Hence, they were not employees, did not qualify for public benefits and may have violated tax law by receiving compensation as employees while working as independent contractors.

However, it appears, from what a website apparently created by the two law firms about the planned class action says, that the plaintiffs plan to contend they have done nothing wrong by taking part-time government jobs while maintaining private legal practices and are entitled to the public benefits they have earned for this work.

For decades, the website says, the New York State and Local Employees' Retirement System "has recognized the right of private practice professionals, such as attorneys, to work less than full-time for a governmental entity and be enrolled in the ERS ... while simultaneously maintaining a private practice."

Although a "massive media frenzy" has prompted claims by Cuomo and state Comptroller Thomas DiNapoli that, as the website puts it, "private practice professionals cannot receive public benefits," the practice is not, as Cuomo has contended, fraudulent, the Internet account continues. Nor, the website implies, was Cuomo right when he recently said a government employee must have "an office, a desk and a phone,” and it asserts that Cuomo and DiNapoli are incorrectly interpreting and applying independent contractor standards in their investigation.

"We believe the actions taken and threatened are contrary to law and are appropriately addressed through the courts. Further, the ERS is contradictory, convoluted and in need of appropriate jurisprudential redress," the website states.

The investigation by state and federal officials was sparked by articles in Newsday, which gives a summary of the action so far in an article today.

Earlier coverage:

ABAJournal.com: "‘100s and 100s’ of N.Y. Lawyers Involved in Pension Scheme, AG Says"

ABAJournal.com: "‘Perk of Partnership’ at N.Y. Law Firm: Public Pension for No-Show Job"

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Labor and Employment