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D.C. defense lawyer David Geneson is suing Hunton & Williams, claiming the firm violated the terms of its partnership agreement by refusing to give him back his capital contribution and his partnership draw after he left last year. And he’s not alone. A slew of other former Hunton partners in the District, Miami, Atlanta, and Richmond, Va., are threatening separate suits against the firm on the same grounds, according to several former partners. Geneson, a white-collar defense lawyer now at the D.C. office of Sheppard, Mullin, Richter & Hampton, filed the breach-of-contract suit in D.C. Superior Court on Feb. 1. In his complaint, Geneson says he is owed more than $150,000 on his capital contribution and another sum for his draw, but the firm denied his reimbursement because of losses it sustained in the first quarter of its 2006 fiscal year, which totaled, it says, almost $70 million. Hunton’s interpretation of its partnership agreement “has the result of having departing partners forfeit their capital contributions, and that’s not fair. It’s just not fair,” says Geneson’s lawyer, William Hunt of Clark Hunt & Embry in Boston. Hunton & Williams, which has 875 lawyers, declined to comment on the lawsuit. In an e-mail, a Hunton spokeswoman wrote, “[O]ur 2006 fiscal year, which ended March 31, 2006, was one of our most successful years to date, both professionally and economically, and we look forward to an even more successful end to FY 2007.” But the firm is familiar with such actions. Walter Andrews, a partner in Hunton’s McLean, Va., office, is representing six former Pillsbury Winthrop Shaw Pittman partners suing their old firm claiming they are owed millions in unreturned capital contributions for the first quarter of 2005. Last June, Geneson left Hunton to join Sheppard, Mullin. In his suit, Geneson alleges that he received a letter from Hunton in October saying the firm would not refund his $152,359 capital contribution because, as of his departure date, “the law firm had sustained losses of $17,735,298″ and “was losing money at the rate of $68 million per year.” Geneson also seeks compensation for his partnership draw earned between April 1 and June 27. Some former partners find this method unfair. “They take a snapshot of the day you resign — which of course is ridiculous. So if you leave any time during the year when the firm is in the red, then they make you financially accountable,” says a former partner with Hunton who is now practicing in the District. “But what it ignores is that the firm benefits from your accrued accounts receivable and the work you’ve done.” According to a letter from Hunton’s finance director, John Wilson, which is attached to the complaint as an exhibit, the firm deducted Geneson’s share of the purported loss through June 2006 and deducted partnership draws paid to him through that point from his capital-contribution amount. That left a gross amount owed to Geneson of $22,269, “to be paid over 20 quarters at a rate of $1,113.45 per quarter.” But the firm then deducted another $31,000 it says went to pay taxes under benefit plans from Geneson’s capital contribution, “resulting in no payments.” “We have reason to believe that certain partners are treated well and others are not,” says Hunt. “Geneson was one of the more successful partners in the law firm, and when a David Geneson leaves the firm, you lose revenue and you lose prestige.” Geneson has represented numerous political officials and corporations, including Edwin Buckham, the former chief of staff to ex-House Majority Leader Tom DeLay (R-Texas), who was caught up in the scandal surrounding former Greenberg Traurig lobbyist Jack Abramoff. The complaint claims that Geneson was a top rainmaker and “generated revenue on his own efforts well over 125 percent of what was expected of a partner, while 51 percent of partners failed to make their expected minimum hourly contribution.” Geneson alleges he acted in good faith by giving Hunton one month’s notice of his departure and helping the firm collect $676,000 after he left. According to the suit, three days before Geneson’s designated last day at Hunton, and two days before he was due to receive a partnership draw, he was notified via e-mail that “his services were no longer necessary and that his last day at the firm was to be that day.” Geneson claims that he owned a 0.4 percent interest in the partnership, and Wilson’s letter states that the firm had budgeted a profit of $744,367 per partner at Geneson’s ownership level — but Geneson’s draw will not be known until the close of the firm’s 2006 fiscal year on March 31. In his suit, which alleges breach of fiduciary duty, unlawful forfeiture, unlawful enrichment, and breach of contract, Geneson also claims that the firm’s Richmond leadership kept the partners in the firm’s 18 offices largely in the dark about the financial affairs of the firm. Geneson claims that he was unable to obtain the firm’s financial data. Some former partners say Geneson’s suit has caused friction within Hunton. “I still have friends there who don’t agree with what was done,” says one former partner. Hunton, like many other major law firms, operates on cash-method accounting. When its fiscal year ends, the firm distributes its profits to its equity partners and pays many of its bills, leaving little cash on hand. This, Geneson and former partners say, results in Hunton showing a loss in the first few quarters of the fiscal year but nonetheless raking in dollars by year’s end. (Geneson’s suit states that the firm expects to make a profit of more than $200 million this fiscal year.) Geneson and other former partners argue that the law firm should arrive at a partner’s capital share by prorating year-end financials to a termination date. A copy of Hunton’s partnership agreement is included as an exhibit in Geneson’s lawsuit. It says the firm must refund a partner’s capital account in the amount shown on the last day of the fiscal year preceding the date the partner withdraws. It also states that the firm will pay a departing partner “an amount equal to his participation right in the net income of the partnership . . . for the current fiscal year to the last day of the month in which he withdraws.” The agreement states that it is also understood that “this amount may be an addition to or, in the case of a net loss of the partnership . . . for the current fiscal year to the last day of the month in which he withdraws, a subtraction from” the partner’s capital contribution. The suit is also being used to air dirty laundry. The complaint says partners were not informed “of a significant embezzlement in the New York office,” and that the firm “unilaterally secretly monitored partners’ electronic communications.” Hunt says these examples were included to demonstrate that “partners at Hunton are not being treated like partners.”
Daniel Ostrovsky is a reporter with the Daily Business Review , the ALM publication in which a version of this article first appeared. Nathan Carlile can be contacted at [email protected].

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