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Recruiter Loses Bid to Collect Merger Fee From Blank Rome
New York Law Journal
May 29, 2008
A Manhattan judge has rejected a legal recruiter's attempt to collect a merger fee from Philadelphia law firm Blank Rome, which rejected the recruiter's proposed combination with a small New York firm but later completed the deal with the help of a different search firm.
The e-mail exchange between recruiting firm Mark Bruce International and Blank Rome about a proposed merger with New York's Healy & Baillie, a 28-lawyer firm specializing in maritime law, did not constitute an enforceable contract because the parties had not agreed on the terms of a fee, Supreme Court Justice Herman Cahn ruled.
"As it [is] evident that the parties left the price term for future negotiation, the purported e-mail agreement was merely an unenforceable agreement to agree," the judge wrote in Mark Bruce International v. Blank Rome, 603388/06.
In its suit, Mark Bruce had asked to be awarded $729,931, the same amount Blank Rome ultimately paid another search firm, Major, Lindsey & Africa, on the completion of its merger with Healy & Baillie in September 2006.
Mark Bruce had first approached Blank Rome about the merger in October 2005. In a subsequent e-mail to the search firm, Blank Rome chairman David F. Girard-diCarlo agreed to pay a "reasonably determined" merger fee to Mark Bruce if the deal went through. But after consulting with two maritime partners who said Healy & Baillie would not be a good fit, Girard-diCarlo soon thereafter told the recruiter Blank Rome was uninterested in the merger.
The deal was proposed again almost immediately by Major Lindsey, which approached Michael Mullman, the head of Blank Rome's New York office. The firm initially rejected the proposal again, but in January 2006 one of the maritime partners opposed to the deal changed his mind and recommended the firm pursue the merger. Major Lindsey coordinated additional meetings and due diligence, which led to the Sept. 5, 2006, merger announcement.
Mark Bruce filed suit that same month, on Sept. 26.
Justice Cahn based his decision on the statute of frauds, which requires that certain kinds of contracts be in writing and contain all essential terms. Though the judge said he could not rule on whether Girard-diCarlo's e-mail tag constituted a true signature, he said the indeterminacy of the fee terms were enough to render the contract unenforceable.
In its filings, Mark Bruce repeatedly pointed out that Mullman's brother Lawrence is a Major Lindsey partner who participated in some of the discussions. But Cahn said, other than repeated mention of the fact, Mark Bruce did not appear to allege any inappropriate conduct.
Mark Bruce's lawyer, Jeffrey A. Mitchell of Dreier, did not return a call seeking comment. Harris N. Cogan of Blank Rome appeared pro se for the firm.
It is the second time in recent months that a New York court has thrown out a headhunter's suit for a fee against a law firm. In April, Manhattan Supreme Court Justice Jane Solomon granted summary judgment to Akin, Gump, Strauss, Hauer & Feld in a case brought by Eric Sivin of Sivin-Tobin Associates.
Sivin claimed he was entitled to a fee because he first introduced Akin Gump to Korea specialist Chang-Joo Kim, who joined the firm's New York office as a lateral partner from Dorsey & Whitney in April 2006. But Solomon ruled that, even if Sivin was first to submit Kim's resume to the firm, that fact alone did not make him the "procuring cause" of the partner's placement.
Akin Gump had credited another recruiter, Phil Morimoto of Boston Executive Search Associates, with the placement, paying him a commission of $227,500 for both Kim and one of his associates. Kim recently joined the New York office of Greenberg Traurig.
