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For most partners and associates it’s a common, almost weekly experience: the call from the legal-recruiting firm, just checking to see if they might be interested in jumping ship. And while the pitch may seem like only harmless schmoozing, it belies something darker at work. The legal-recruiting industry has become increasingly cutthroat, where tactics in pursuit of $100,000 commissions can turn ugly. The continuing growth of the temporary-legal-help industry and the still-smoldering market for laterals have given rise to a flurry of new recruiting shops that are competing with old-line firms. That new scorched-earth environment has been laid bare in a recent court fight between legal-recruiting titan Lynn Mestel and a former recruiter at her temporary-legal-placement firm, HIRECounsel D.C. In October, Mestel sued Richard Thuemmler and his new employer, Legal eStaffing Inc., in U.S. District Court. Citing an employee contract, Mestel is alleging breach of contract, stolen trade secrets, and unfair competition. Meanwhile, Thuemmler filed a countersuit against Mestel and HIRECounsel, claiming that Mestel owes him thousands of dollars in back pay and unpaid commissions. After Mestel lost a motion for preliminary injunctive relief in January, she and Thuemmler agreed to joint mediation, which begins Tuesday before U.S. Magistrate Judge Alan Kay in Washington. Ultimately, the case hinges on whether Mestel’s employee agreement, which prohibits Thuemmler from working in a competing business within 75 miles of any Mestel & Co. affiliate for one year, is enforceable in the District of Columbia. How the mediation shakes out will determine whether Mestel and Thuemmler will continue to compete against each other for recruiting dollars before his noncompete ban is up — and may provide guidance for other recruiting and staffing firms that employ similar provisions. “Mr. Thuemmler signed an employment contract when he came to work for us,” Allen Gardner, a partner in Latham & Watkins‘ D.C. office and the lawyer for HIRECounsel and Mestel, said in a statement. “We trained him and taught him about our temporary-legal-search business. We filed suit when he went to work for the defendant.” Mestel did not return phone calls. Partners cutting long-standing ties to their law firms to move to a competitor was almost unheard of two decades ago. But such loyalty seems increasingly old hat. Now lawyers in the District and other large markets are regularly wooed by big-dollar compensation packages. With that, the number of legal recruiters has soared. “In the mid-1980s there were maybe two dozen legal-search firms around and partner movement was just something that was unheard of,” says Marina Sirras of Marina Sirras Associates, who is also the president of the National Association of Legal Search Consultants. “Now, New York alone probably has 150 search firms.” SEPARATE WAYS Mestel jumped into the legal-recruiting business with her New York flagship office of Mestel & Co. in 1987, just as the market was starting to heat up. Almost 20 years later, she has broadened her reach with six more offices, including ones in Chicago, Boston, and Washington. Her forceful nature has earned her a reputation among recruiters for having “sharp elbows,” being extremely secretive with company information, and not shying away from a fight. Mestel has been credited with moving mergers along, such as the 2002 merger of O’Melveny & Myers with New York private equity boutique O’Sullivan. She’s revered for her foresight in franchising her brand and for entering the temporary-attorney-placement field before many other major permanent-placement firms. Mestel opened her D.C. branch in 1998, with former Department of Justice attorney Avery Ellis as managing director. Ellis is credited with building the firm’s D.C. presence by focusing on more associate-level moves and partner groups. He was the recruiter who shepherded former �berlobbyist Jack Abramoff’s transition from Preston Gates Ellis & Rouvelas Meeds to Greenberg Traurig. When Mestel opened the D.C. office she set her sights beyond conquering the permanent-legal-placement industry. She wanted to wade into the newer temporary-legal-placement world, where firms contract with agencies for attorneys to come in on a daily or weekly basis or for longer-term assignments. Though the compensation for lateral moves brings in more money up front, temporary agencies rake in a steady stream of income once relationships with firms are established. But along with the growth of Mestel’s firm, her operation has been plagued by higher-than-normal turnover. Recruiters have left in Florida, Chicago, New York, and Washington over the past five years, including senior recruiter Sheri Michaels, who spent 13 years at Mestel & Co. in New York before heading to Major, Lindsey & Africa last year. Mestel lost two legal recruiters in Chicago, including Lawrence Mullman, former executive director of the Chicago office, who also now works at Major, Lindsey & Africa. In the District, recruiters Keith Barrett and Esther Alpert exited Mestel’s operation in 2002, and Kavita Thakrar left in 2003. Thakrar now works for the recruiting firm Kovensky Daniels. Just as Mestel & Co. was breaking into the Washington market, Mestel also opened HIRECounsel to establish a brand in the temp business. In February 2003, Mestel hired Thuemmler as a legal-search consultant in HIRECounsel’s D.C. office. At the time, Thuemmler says in court documents, Mestel promised that he could “expect to make well over $100,000 annually in salary, commissions and bonuses” and pay off the entire mortgage of his house. In Thuemmler’s employment agreement a $50,000 salary was provided plus a 3 percent commission rate for temporary placements, as well as commissions from 5 percent to 10 percent of total net profits for bringing on new clients. For the next year and a half, Thuemmler worked at HIRECounsel, drumming up new business and placing temporary attorneys. Despite Mestel’s boast that “almost every major D.C. law firm” had worked with HIRECounsel, the firm had only two clients for temporary placements from 1998 to February 2003, according to Thuemmler’s countersuit. He renegotiated his compensation after his first year, making it less dependent on commissions. Thuemmler’s countersuit revolves around his two commission checks, which were smaller than he believes they should have been. According to his suit, he received about $10,000 each year, and after he complained, Mestel told him, “HIRECounsel D.C. LLC was not profitable.” By September 2005, Thuemmler was fed up and decided to join longtime recruiter Jeanette Derby’s three-year-old shop, Legal eStaffing Inc., in Vienna, Va. But at his going-away party, Thuemmler kept his new position under wraps. According to Mestel’s complaint, Thuemmler told people he was moving into the high-end-stereo-system industry. (He declined to comment for this article. His lawyer, Carlos Recio of Davis & Campbell, did not return phone calls.) Less than a month later, Mestel’s firm filed suit. Its lawyer, Gardner, says the firm doesn’t often resort to litigation. “Since the founding of our firm in 1987, there have been exceptionally few occasions when the actions of a former employee required us to act in such a manner to protect the confidentiality of our firm, clients and applicants,” Gardner wrote in an e-mail. IN A BIND Mestel’s suit concerns the employment agreement’s noncompetition clause that Thuemmler signed when he started with the firm. The agreement says that for one year, unless they receive prior written consent, former employees are barred from working in “any business which is either engaged in permanent or temporary placement or the same or substantially the same as any other business” of HIRECounsel or its affiliates. The agreement also states that former employees may not “engage in or be employed in any capacity by a Competing Business within seventy-five miles of any office.” Mestel is hardly alone among recruiting firms suing former partners or even clients when they believe they’ve been slighted. Just last year, Barrett, formerly a Mestel & Co. recruiter and then with Barrett & Alpert, sued Sonnenschein, Nath & Rosenthal in D.C. Superior Court for failing to pay him a $250,000 placement fee. Instead, Sonnenschein paid Gary Klein of Klein Landau & Romm Inc. for placing lawyer Joseph Andrew. This wasn’t the first time Klein Landau has been involved in a lawsuit. In 1997 it sued Elizabeth North, a recruiter who left the firm and started her own shop, North Berman & Beebe. The suit involved allegations of sexual harassment and stolen trade secrets. “Proprietary information obviously is an asset to companies like ours,” says Paul Mandell of Clutch Legal Staffing. “I don’t think noncompetes are uncommon, but any time a situation arises where an employee jumps ship, a staffing agency, like any other company, needs to balance confidential information with the importance of maintaining healthy relationships.” And Mestel’s firm doesn’t seem to be worried about the suit affecting its bottom line. According to Gardner: “Our businesses are not adversely affected by this action, as our clients and applicants recognize it is a reflection of our obligation and commitment to protect the confidentiality of their information.” But attorneys familiar with noncompete agreements say Mestel’s might have difficulty passing the duration and time scope test. “Today I would say most companies bar solicitation or dealing with clients or candidates, rather than simply saying you will not be in the same business within 50 miles and two years,” says Stephen Dwyer, deputy general counsel of the American Staffing Association. And that is just what Legal eStaffing’s lawyer, Robert Greenberg, is hoping: “As the Internet becomes more of a tool to recruit and place attorneys, I believe there is going to be much more pressure on the courts to revisit the geographic limits of noncompete agreements.” Greenberg of Friedlander Misler Sloan Kletzkin & Ochsman in Washington declined to discuss the specifics of the case except to say that he is “hopeful this will get resolved. It’s gone on way too long already.”
Anna Palmer can be contacted at [email protected].

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