Summary List Placement
Five of six corporate and litigation partners who jumped from Nixon Peabody to DLA Piper in 2019 have sued their former firm, saying it has refused to pay millions of dollars they are still owed — and refuses to mediate on their terms.
Thomas Gaynor and Jinjian Huang in San Francisco, Stephen Reil in Los Angeles, Maria Swiatek in Silicon Valley and Abigail Reardon in New York said Nixon has refused to pay the wages, equity distributions, or capital account balances they were entitled to after they decided to move to DLA. The amount is in the millions of dollars, their suit said.
Nixon Peabody, meanwhile, claims the group must pay back at least $174,000 in bonuses that they earned in 2018 and were paid in early 2019, according to arbitration papers filed with the lawsuit. The former partners said Nixon is wrong to demand their bonuses back and want a judge to halt the arbitration.
“Petitioners refused Nixon’s demand because Nixon’s efforts to claw back petitioners’ bonuses constitute an undue restriction on petitioners’ rights to practice law, and provisions in partnership agreements that purport to restrict a lawyer’s right to practice law are unenforceable,” the five former partners argued.
The case, filed this week in a New York state court, offers a rare look at the disputes that can follow a partner’s move from one firm to another. It also describes parts of Nixon Peabody’s confidential partnership agreement.
The lawyers said that the agreement “imposes a severe penalty on any partner who chooses to resign, essentially requiring partners to remain at the firm for an additional full year to avoid a claim that they should return money fully earned during the previous year.” The partners said they resigned in June 2019, 10 days after their 2018 bonuses were paid, and moved to DLA a month later.
The former Nixon partners say they are entitled to try to mediate first, and had picked a mediator and planned to meet in April. Those plans were derailed by the pandemic, though; the proposed mediator refused to meet in person, and the partners said they won’t mediate if Gaynor and Reardon can’t meet the mediator in-person.
News of the dispute comes more than a year after the partners — with expertises in corporate law, intellectual property and litigation — moved to DLA, saying that their clients in cross-border deals and disputes would be served well by DLA’s global reach. They were joined in their move by Christopher Mooney, who isn’t a party to the lawsuit.
Law firm partnership agreements are often structured to make departure a painful process so that rainmaking lawyers think twice before taking their clients somewhere else. Partners who left Quinn Emanuel to form the firm Selendy Gay also had a dispute with their former firm, saying that the agreement to share fees that they earned in the years after their departure was invalid. Selendy Gay’s lawsuit was dismissed in April 2019.
A Nixon Peabody spokeswoman defended the firm’s position in an emailed statement.
“We believe these claims are without merit,” the firm said. “We are simply seeking to enforce a partnership contractual provision. The repayment obligation is fully compliant with New York law.”
A group of Nixon Peabody partners who moved to DLA Piper say they're still owed millions by their former firm, offering a rare look at the disputes that can follow a lawyer's move from one firm to another