A part-time private attorney who was listed as a full-time employee by five school districts - enabling him to earn health benefits and a nearly $62,000-a-year state-funded pension, while his law firm was paid millions of dollars in fees - has been suspended by his current law firm, one of its partners said yesterday.

Steven Schlesinger, a partner in the Garden City law firm of Jaspan, Schlesinger, Hoffman, said yesterday that his firm had suspended Lawrence Reich and asked for his resignation. Reich had been serving as of counsel, or as a consultant, to the law firm since Jan. 1.

Newsday reported Friday that five school districts falsely reported to the state that Reich, 67, was a full-time employee in each district at the same time. The districts were Baldwin, Bellmore-Merrick High School, Copiague, East Meadow and Harborfields.

"Based on the publicity, it's not any good to have him at the firm," Schlesinger said. "I don't need P.R. liabilities."

He added, however, "I don't think any laws were violated."

Schlesinger said the firm has not heard from Reich since the disclosures. "We're trying to locate him."

Reich, who lives in Centerport, did not return a call for comment yesterday. In an earlier interview, he defended his arrangement with the five districts as "common practice."

At the same time that the districts claimed Reich as an employee, they paid his then-law firm, Ingerman Smith of Hauppauge, more than $2.5 million in fees, according to district records. Under Internal Revenue Service rules, a person cannot be treated as both an employee and independent contractor for the same work.

After the Newsday story appeared, agents with the Federal Bureau of Investigation served all five districts with subpoenas for financial records.

In addition, the New York State comptroller has sent letters to four of the five districts, notifying them that they would be audited. Reich left the payroll of East Meadow on Nov. 30, 2001, according to records.

Reich retired with an annual pension of $61,459 in September 2006. But he continued working for some of the districts, according to letters he sent asking them to "reconfigure" his pay as a retainer, rather than as a salary.

Last July, state auditors uncovered the problem in an audit of the Harborfields school district. Reich said he then contacted the state about his pension eligibility and was assured it was common practice.

The state took no action, and the issue was not included in the final audit of Harborfields.

Nonetheless, Reich notified the districts that he was retiring for good in October.

In December, Ingerman Smith notified the districts that Reich was leaving the firm.

Congress has recognized that sometimes this power can be abused by managers who retaliate if they don't like something that employee has said or done.

This week, the US Supreme Court will hear oral arguments in two cases examining how, when – or even if – employees can fight back against such abuses of power. On Tuesday, the high court will examine whether a US postal worker can claim retaliation in a lawsuit under the Age Discrimination in Employment Act because she says her supervisor refused to let her return to her old job because he didn't like her personally. Instead, he hired a younger, less experienced worker.

On Wednesday, the justices will hear the case of a former assistant manager at a Cracker Barrel restaurant who alleges he was fired in retaliation for his repeated complaints about racial prejudice by his supervisor.

In both cases the laws cited do not explicitly authorize legal action in response to an act of retaliation. Lawyers for the employees say retaliation is a particularly virulent form of illegal discrimination and thus falls within the scope of the US's civil rights laws even when those laws don't specifically mention retaliation.

Lawyers for companies and supervisors counter that if Congress wanted to authorize lawsuits to punish acts of retaliation, it would have written it into each statute.

Christian Schmidt-Sommerfeld, Munich's chief prosecutor, said the raids were done in cooperation with investigators in Bochum who are looking into more claims of tax evasion, following the resignation of Klaus Zumwinkel, chief executive of Deutsche Post. Bochum prosecutors last week said Zumwinkel is suspected of evading about 1 million euros ($1.5 million) in taxes by transferring money to tax haven Liechtenstein.

German Chancellor Angela Merkel made clear Monday that she will press Liechtenstein for greater transparency, arguing that the tiny country's reputation is at stake.

So far, no other people suspected in the investigation have been named, but the government acknowledged over the weekend that its Federal Intelligence Service, or BND, had paid an informant some euro5 million ($7.3 million) for a list with the names of account holders from a Liechtenstein bank.

"The government received an unsolicited offer of information," Ulrich Wilhelm, Chancellor Angela Merkel's spokesman told reporters Monday.

We called around to firms to find out whether associate salaries, called economically-irrational in some quarters, have finally (or, at least, for now) hit a ceiling. The answer seems to be yes.

“We’re not going to do anything,” said Orrick spokeman Allan Whitescarver, noting that law firms compete for talent with investment banks and consulting firms. “Times aren’t good for them either,” said Whitescarver. “We’re going to sit tight and keep the salaries capped.”

We’d venture to guess, however, that few big firm chairmen wake up on Jan. 1 and say, “you know what, our associates don’t make enough money; let’s bump their salaries!” What typically happens is that a single firm, in an attempt to flex its muscles, raises salaries, and everyone else follows, fearing the fallout if they don’t. Simpson Thacher was the eager beaver last year.

Whitescarver leaves room for this possibility. “If other firms move up, we and others will follow.”

Other firms, including WilmerHale and Milbank, also told the Law Blog that, for now, first-year salaries will stay at $160,000.