money or compensation ()
Obermayer Rebmann Maxwell & Hippel has reached a settlement with a former associate who claimed he lost out on bonuses due to an unfair billing system.
Philadelphia Court of Common Pleas Judge John M. Younge entered a settlement order late Thursday afternoon in Leonard v. Obermayer Rebmann Maxwell & Hippel. The order included a letter from the mediator, Judge A. Michael Snyder, which said he understood that the firm sent settlement documents to plaintiff Ryan Leonard, which would be executed “with minimal revision.”
Both Leonard and Obermayer Rebmann declined to comment on the settlement or its terms.
Leonard’s suit, filed in May 2016, alleges that partners at Obermayer Rebmann, where he worked from 2008 to 2014, counted hours differently when billing clients than it did for calculating bonuses. That led to both unfair billing and unfair bonuses, the suit alleged.
In a motion for summary judgment filed earlier this month, the firm argued that associate bonuses were not guaranteed in the firm’s employment contract. And a prorated credit, the motion said, could not be converted or misappropriated because it is an “internal and intangible accounting device.”
Leonard’s complaint alleged the firm would bill associates’ time to clients using one rate, and then lower that rate internally when calculating what was referred to as a lawyer’s “prorated credit.” The higher the credit—a function of hours worked multiplied by rates charged—the more profitable the lawyer appears, and the more likely to receive a bonus.
An amended complaint filed in October gave more detail on how those credits were adjusted, even naming partners who allegedly benefited. Citing Obermayer Rebmann’s discovery responses, Leonard said partners who reallocated credits included Jeffrey Batoff, Gary Samms, Alice Johnston and Ruth Wessel.
An exhibit to the complaint was a 2013 memo from then-managing partner Robert Whitelaw, which said the practice had been approved by another partner more than 20 years before, and was under review.
“The management committee does not believe this is an appropriate or fair practice and that it distorts the numbers and actually reduces the profits to the partnership,” Whitelaw’s memo said.
Obermayer Rebmann’s motion argued that the management committee considers many factors in making bonus determinations, and all of those were within its discretion.
The court previously granted judgment on the pleadings in Obermayer Rebmann’s favor with regard to Leonard’s claims of breach of fiduciary duty, fraudulent misrepresentation and fraudulent inducement. But Leonard’s other claims survived.