Winning Wasn't Everything

Jim Dougherty exposed insurance fraud for Lloyd's of London -- until they concluded the Miami Beach lawyer had overbilled them by millions. Now the U.S. attorney is involved and things have turned very ugly, indeed.

The pair worried that officials in the Lloyd's hierarchy might be receiving kickbacks from Dougherty. Why else, they wondered, would anyone pay his outrageous bills? Lehrman was so paranoid that he opened the meeting by informing Blackwell that everything he was about to say was on tape and locked in a safe-deposit box back home. Thus protected, he and Valls spoke for hours, supplying what evidence they could in the form of receipts, checks written by Dougherty, and Lehrman's personally kept time sheets.

Blackwell looked as if he'd been punched in the gut. "It seems like we couldn't have gotten a more severe reaction if we told you we'd just caught your wife in bed with another man," Lehrman remembers telling him.

"This is worse," Blackwell responded.
He showed Lehrman and Valls all of Dougherty's bills, which dated back to 1988. In four years Sturge had paid Dougherty $9.16 million A $4 million for attorneys' fees, the rest for other costs A to defend Bilbeisi's $4.7 million coffee claim, a claim that was flimsy to begin with.

Sturge's underwriters had long expressed concern over Dougherty's bills, Blackwell told the pair. But they, like Lehrman, had been swept up in the enthusiasm that pervaded the pursuit of Bilbeisi, evidence of which was presented to them in the form of reams of legal filings and press clippings, as well as Dougherty's own blustery promises of riches at the end of the legal rainbow. "We trusted him," explained Blackwell. "He was our lawyer. If you can't trust your lawyer, who can you trust?"

Five days later Dougherty was summoned to London, read a brief statement of accusation, and terminated. He was not told who had blown the whistle on him. At Lloyd's request, Valls had agreed to work for Dougherty for several more months, to ensure no records were destroyed. Lehrman, however, tendered his resignation upon Dougherty's return, in an angry speech heard by much of the office staff.

Dougherty reacted calmly. He insisted that all the allegations against him were part of a setup by Lloyd's, Bilbeisi, and some invisible power. He implored Lehrman to take a few months off to reconsider; he even offered him the use of his second home in Carmel, California. Then, Lehrman says, the gruff ex-Marine planted a single, gentle kiss on his forehead.

After four years of intensive work, it was plain that Dougherty, whose four grown children lived with his first wife in Colorado, regarded Lehrman as more than a protege. They were seen together so frequently that courthouse staff used to refer to the pair as father and son. Lehrman found himself strangely moved by the passionate plea. "Even after everything I knew, he almost had me believing him," the attorney says today. "He looked me dead in the eye and said, 'Richard, these are all lies.' He was capable of that kind of a performance at the drop of a hat."

The clincher for Lehrman was not merely the bills to Sturge, but also the bills Dougherty had considered submitting in federal court. In late 1991 Judge Stanley Marcus had ruled in Sturge's favor in the suit against Bilbeisi and ordered Dougherty to compile a request for attorneys' fees to be paid by Bilbeisi's company, Coffee, Inc. While Dougherty billed Sturge for more than half a dozen attorneys, his figures for Judge Marcus A prepared in the weeks leading up to his termination A included just two attorneys: Richard Lehrman and himself. New Times obtained a set of preliminary computations in Dougherty's handwriting that list Lehrman as having worked 850 12-hour days from 1987 to 1989, despite the fact that Lehrman didn't begin work on the case until August 1989. Dougherty lists himself as working twelve-hour days, every single day, from 1988 to 1990. The total proposed bill came to $7,379,400, nearly double what he charged Sturge for attorneys' fees.

"During that last meeting, I confronted Jim with those figures. I said, 'Who do you think you're fooling? Do you think Marcus is going to believe those numbers?'" recalls Lehrman. (Dougherty's figures were never submitted, and Sturge underwriters were never awarded attorneys' fees.)

Lehrman quit on the spot. A week later a check for $50,000 arrived at his home. "Severance," Dougherty had written on the memo line. Lehrman turned over the money to his lawyer, Hirschhorn. Then he went to see officials from the U.S. Attorney's Office and the Florida Bar.

That was two years ago. As of today, no criminal charges have been filed against Dougherty. And though the Bar has called for its equivalent of a trial, so far it has not taken disciplinary action against him. Dougherty, however, has filed lawsuits against Sturge and his former investigator Vicente Valls (see sidebar). And he is still practicing law, although he has moved from his spacious suite to a smaller office in the Kovens Building. The City of Miami Beach is paying him to represent Phillip Huber, the city's deposed chief of police, in three pending cases and to represent the city in three other lingering lawsuits. If all this seems remarkable, it only becomes more so upon closer inspection.

The day Dougherty was sacked by the Sturge syndicate, Lloyd's hired the influential Miami law firm of Adorno & Zeder to resolve the suits Dougherty initiated and to investigate allegations of overbilling. Jon Zeder and several members of his staff spent five months dissecting Dougherty's billing and interviewing his former employees before presenting to the Florida Bar a twelve-page complaint, along with two binders of exhibits.

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