How Did Gibson Dunn, Perkins Coie and Lowenstein Sandler Get Duped by a 20-Something Who Claimed to Be a Heiress?

Anna Sorokin, charged with grand larceny for alleged multiple thefts totaling $275,000, appears in New York State Supreme Court, in New York, Tuesday, Oct. 30, 2018. (Photo: Richard Drew/AP)

Anna Sorokin, aka Anna Delvey, allegedly bilked banks, credit card providers, hotels and travel companies out of $275,000 in an audacious tale of grift that may soon be showcased on competing HBO and Netflix shows.

But first Sorokin is going on trial in New York. And in the lead-up to her day in state court, papers filed by the Manhattan DA's office show that Gibson, Dunn & Crutcher, Lowenstein Sandler and Perkins Coie were also victims of her deceit. Detailing alleged "uncharged bad acts," the filings say Sorokin owes $160,000 in fees to Perkins Coie, $65,000 to Gibson Dunn, and $30,000 to Lowenstein Sandler.

In part of their grand larceny case against Sorokin, prosecutors hoped to show jurors that Sorokin had also deceived some of the country's most sophisticated law firms as part of a pattern of lying for financial gain.

They focused on the example of Gibson Dunn, where, according to New York magazine, white-collar co-chairman Joel Cohen and real estate partner Andy Lance were duped into taking her as a client.

"Again and again, defendant lied to Gibson Dunn, telling them she had sent payment by wire, when in fact she had not," the DA's office asserted. "Defendant did so to induce Gibson Dunn to continue working for her, often sowing confusion by claiming the wire would take two to three days to arrive in New York."

Sorokin never paid the firm "a dime," prosecutors said, and they said she likely pulled the same scheme with Perkins Coie, which also represented her as she tried to secure financing to rent a 45,000-square-foot building on Park Avenue South. (The government can't say so for sure, as the firm has fought subpoena requests.)

In New York State Supreme Court on Wednesday, Sorokin's attorney Todd Spodek persuaded a judge that the testimony was too prejudicial to admit at trial. Jury selection in the case began Wednesday and continues Thursday. Sorokin has pleaded not guilty to charges that include grand larceny, attempted grand larceny and theft of services.

But even if jurors won't be exposed to these unpaid bills, they beg the question: How did three major law firms get taken in by a 20-something who claimed to be a German heiress, to the point they collectively lost over a quarter-million dollars in fees?

"Law firms tend to be very sophisticated in the practice of law, but in many senses, how they're run as businesses, they are Neanderthals," said Adam Smith Esq. partner Janet Stanton.

Her colleague Bruce MacEwan added that while there's appropriately an expectation to lavish care over legal responsibilities, "being detail-oriented in a client engagement is somehow beneath the lawyers."

One solution is to give business development professionals greater control over client intake. New York magazine reported that Gibson Dunn's Lance filled out the firm's new-client-intake form, which included checking boxes that Sorokin had the resources to pay and would not embarrass the firm. There was no indication that the process received any additional vetting, and the firm did not respond to a request for comment.

(Lowenstein Sandler also remained silent, while Perkins Coie declined to comment.)

MacEwan and Stanton also pin the blame on an increasingly debated but long-entrenched element of law-firm infrastructure: origination credit. A recent ALM Intelligence survey of 47 firms in the Am Law 200 found that 83 percent track origination credit. In the vast majority of these firms, originations dwarf collections, profitability metrics and billable hours in their impact on compensation.

But MacEwan and Stanton, along with others, have argued that tying partners' compensation to the clients they bring into the firm can send perverse incentives.

"There are some clients—whether or not they're grifters—that would potentially cause lots of conflicts, or be in a practice the firm should not be building," Stanton said.

There's also a debate about how long origination credits should remain active, not that it matters to Sorokin's onetime lawyers. Credit for her business is just as valuable in the long term as it turned out to be in the short run: worthless.