Seyfarth Partner Sues Own Firm, Alleging Demotion and Exploitation

Leigh Jones

The National Law Journal

Seyfarth Shaw probably wishes it had never heard of Billy Blanks.

In the latest development involving its former representation of the Tae Bo creator, a Seyfarth Shaw partner has sued his own firm. The lawsuit, brought by nonequity partner William Lancaster, alleges that Seyfarth Shaw demoted and exploited him for his role in representing Blanks, who won a $30 million malpractice verdict against the firm.

Lancaster, who as of Monday still worked in the Los Angeles office of Seyfarth Shaw, claims that even though the verdict that Blanks won against the firm was thrown out in February, Lancaster was coerced into accepting a demotion and an unfair pay cut. Lancaster was an equity partner at the firm prior to the 2005 jury verdict in Blanks' favor.

The 40-page complaint, filed in Superior Court of California in Los Angeles, claims that Seyfarth Shaw breached its fiduciary duty to Lancaster by forcing him to relinquish his equity share. It also claims that the firm intentionally misrepresented the benefits he was to receive as a nonequity partner and that he was subjected to intentional infliction of emotional distress.

Lancaster's case is an offshoot of the malpractice verdict that Billy Blanks won against the firm for Lancaster's alleged failure to meet a filing deadline. In that case, Lancaster represented Blanks in an action against Blanks' former accountant who allegedly acted as his agent in violation of the Talent Agencies Act. That case was dismissed on the ground that Lancaster did not meet the filing deadline with the California Labor Commissioner. Blanks then sued Seyfarth Shaw, which led to the $30 million verdict.

In February, a California state appeals court vacated the malpractice verdict. It found that the trial court erred in jury instructions regarding the extent of damages. A new trial is set for that case in July.

Lancaster did not return a phone call seeking comment. His attorney, Michael Avenatti of Eagan O'Malley & Avenatti in Newport Beach, Calif., said that Lancaster's demotion was part of a management plan at Seyfarth Shaw to reduce the number of equity partners. He said that Lancaster was forced to take the demotion despite the firm's assurances to clients and to Lancaster himself that Blanks' lawsuit was without merit.

"Clearly the firm was telling its clients one thing that was contradictory to its own internal statements," Avenatti said.

A Seyfarth Shaw spokesman said that Lancaster's lawsuit was "without merit" and that the firm will "vigorously defend" itself.

Included in the lawsuit as exhibits are e-mails from Kenwood Youmans, managing partner of Seyfarth Shaw's Los Angeles office, urging partners in December 2008 to bolster their fee collection efforts by "prying cash out of our clients' hands." Lancaster's lawsuit asserts that these e-mails establish a pervasive cultural problem at the firm.