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NEW YORK � A Manhattan appellate court Thursday revived claims against Winston & Strawn by a former rainmaking partner who alleged the law firm subjected him to “decompression,” a firm policy sharply reducing his pay after age 65, in violation of a special compensation agreement. Anthony LoFrisco, a partner in the New York office of the Chicago-based firm, had long been one of the highest-paid lawyers at Winston & Strawn, owing to his close client relationships with corporate chieftains, particularly former General Electric Co. Chairman Jack Welch. In a 1994 arrangement, Winston & Strawn agreed to pay LoFrisco compensation equal to at least 13 percent of its GE billings. That arrangement expired in 2001, but LoFrisco claimed in his 2003 lawsuit that the firm agreed that year to continue the earlier deal as well as exempt him from decompression. LoFrisco, 73, claimed the firm breached the 2001 agreement the following year and decompression thereafter reduced his pay from $2.3 million in 2002 to $350,000 in 2004. The unusual suit has drawn much attention to the issue of how firms handle aging rainmakers, many more of whom are now challenging firm policies that envision retirement at age 65 or earlier. In recent years, many firms have shown greater willingness to waive decompression, mandatory retirement or similar policies for older partners still responsible for large amounts of business. Manhattan Supreme Court Justice Helen Freedman granted summary judgment to Winston & Strawn in a 2005 decision, finding that the plain language of the 2001 agreement with LoFrisco gave the firm’s executive committee full discretion to decide his pay. But in a decision issued Thursday in LoFrisco v. Winston & Strawn, 117807/03, the Appellate Division, First Department, reversed, finding the language of the agreement was unclear and its meaning needed to be determined at trial. The relevant paragraph of the 2001 agreement states that Winston & Strawn’s executive committee would consider LoFrisco’s request to maintain compensation at a level commensurate with the 1994 agreement on a year-by-year basis. “Specifically, that consideration will consist of the same analysis of your contributions to the Firm as conducted in this fiscal year, as well as prior fiscal years,” the 2001 agreement states. Justice Freedman had ruled that the agreement’s use of the word “consider” preserved the firm’s discretion. She noted that the word implied “contemplation and not automatic action,” and noted that the experienced lawyers who were party to the agreement would surely have crafted a more explicit agreement if their goal had been to extend the 1994 agreement or exempt LoFrisco from decompression. AMBIGUOUS LANGUAGE But the unanimous First Department panel said the language in the agreement was “ambiguous” and “reasonably susceptible to more than one interpretation.” The appellate court said the language stating that the firm would consider LoFrisco’s compensation requests using the “same analysis” as in prior years could be read as a specific commitment to LoFrisco. The “same analysis” language clearly points to plaintiff’s position that, unless he is in breach of his partnership obligations (which is not alleged), he is entitled to a bonus that would bring his compensation to the level that would have resulted from application of the formulas set forth in the 1994 agreement, without giving effect to the decompression provision,” the panel wrote. LoFrisco is claiming that, by ignoring the provisions of the 1994 agreement after 2002, the firm shortchanged him of millions. In 2002, his $2.3 million paycheck was tied to $10 million in billings. The following year, LoFrisco claims, his billings went up to $13 million, but his pay dropped to $1.3 million. He claims his 2004 billings were $19 million, including $16.1 million from GE, and he should have received $4.8 million that year. He is now seeking these amounts in damages. But the amount of credit LoFrisco deserves for the current fruits of Winston & Strawn’s GE relationship has been one of the most contentious issues in the suit. There is no question that LoFrisco was first responsible for bringing GE to Winston & Strawn as a client. In an affidavit he submitted on LoFrisco’s behalf in 2005, Welch said he was not familiar with Winston & Strawn until LoFrisco joined the firm laterally in 1991 from the now-defunct Olwine, Connelly, Chase, O’Donnell & Weyher. “[B]ecause of the prior relationship that GE and I had enjoyed with LoFrisco, and the extremely high regard in which we held him, I trusted Winston & Strawn to do legal work for GE under LoFrisco’s leadership and supervision,” Welch said in the affidavit, in which he called LoFrisco the “crucial player” in the relationship between GE and Winston & Strawn. But most of the GE work has long been handled by other partners. In 2004, 71 Winston & Strawn partners billed time on GE matters. Most undoubtedly billed more than LoFrisco, who only had 16.4 client billable hours in 2004, though he also submitted 1,523 non-billable, client development hours that year. In his court filings, LoFrisco stated that Winston & Strawn’s then-managing partner James Neis mentioned complaints from younger partners with higher billables when he told LoFrisco his pay was being reduced in 2002. LoFrisco said such complaints and the fact that the firm only acted against him after the Welch’s retirement from GE in 2001 were signs the firm had acted in bad faith in interpreting the 2001 agreement. But the appellate court said it would not be bad faith for the firm to consider such factors as LoFrisco’s low billables, Welch’s retirement or other partners’ resentment of LoFrisco’s special arrangement if the 2001 agreement was determined at trial to be discretionary. In the event of such a ruling, the panel said Winston & Strawn would also be free to consider the fact that most of the firm’s work for GE was corporate, while LoFrisco was a litigator and that in 2003 GE transferred a major case under LoFrisco to another law firm. Kimball Anderson, a Winston & Strawn executive committee member who acts as general counsel for the firm, said the firm was reviewing its options and would not otherwise comment on a matter involving partner compensation. Anthony Lin is a reporter with the New York Law Journal, a Recorder affiliate.

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