A Philadelphia-based legal recruiter sued Baker, Donelson, Bearman, Caldwell & Berkowitz earlier this month for allegedly failing to pay a $350,000 fee related to its combination last year with Baltimore-based Ober Kaler.
Abelson Legal Search filed the case, which also seeks $1 million in punitive damages, on Aug. 10 in U.S. District Court for the Western District of Tennessee in Memphis, where Baker Donelson is based.
Baker Donelson and the 110-lawyer Ober Kaler announced their merger in October 2016, creating a firm with more than 800 lawyers. Thanks in part to that union, Baker Donelson this year reported gross revenue growth of nearly 18 percent, to $392 million, which put the firm at No. 86 on The Am Law 100.
Lawsuits filed by recruiting firms against law firms are somewhat rare as they carry reputational risks for both sides. Recruiters and advisory firms do not want to be seen as overly aggressive, while law firms can see recruiters as thorny adversaries in a relatively small, competitive market for talent. But that doesn’t mean disputes don’t arise between firms and their service providers.
Now-defunct Bingham McCutchen was ordered to pay $1.9 million in 2011 related to a dispute with a California-based headhunting shop that introduced the firm to McKee Nelson, a firm it absorbed in 2009. Blank Rome ultimately won a legal battle with Mark Bruce International in 2009, when an appeals court ruled that the firm did not owe a nearly $730,000 fee related to its 2006 merger with maritime boutique Healy & Baillie, a combination that ultimately proceeded with the help of another advisory firm.
Such disputes are often determined based on the specific language in the contract between both parties. The litigation filed this month by Abelson Legal Search—whose president is Cathy Abelson (pictured right)—did not include a copy of the contract between the consulting firm and Baker Donelson. Abelson and her lawyers did not immediately return a request for comment. Baker Donelson’s general counsel Sam Blair said Abelson has no case.
“The claims in this lawsuit are without merit,” Blair said in a statement to The American Lawyer. “We will vigorously defend the firm against these claims and look forward to the dismissal of this matter. Until then, the firm will issue no further statements during the pendency of the case.”
The suit states that Abelson’s firm was working in early 2016 with another recruiter, Karen Williamson of ST Legal Search, to help a number of firms expand into the Baltimore market. In March of that year, Williamson introduced a Baker Donelson partner to the idea of a merger with Ober Kaler, which allegedly led to a discussion between Williamson and Baker Donelson’s chairman and CEO Ben Adams.
The two sides signed an engagement agreement that same month, according to Abelson’s complaint, which quotes a portion of the alleged contract.
“For groups of lateral partners/shareholders, practice groups or mergers, if Baker Donaldson [sic] admits two or more of the lateral partners/shareholders, practice group members or combines with a firm directly referred within one (1) year of the date of the referral, the recruiter shall be entitled to a fee,” states Abelson in court papers.
But in early April 2016, the suit states that Ober Kaler told Williamson that it would not be pursuing a merger with Baker Donelson. That was the last that the Williamson and Abelson team heard from either firm before the October announcement of the merger, states the suit, which was first reported on by Legal NewsLine.
One individual familiar with the recruiting and advisory business who declined to comment due to the sensitivity of the issue, said that law firms sometime balk at paying a fee when they feel a consultant or recruiter didn’t do enough to close a deal. Sometimes, they simply back out on the agreement.
“I think it happens a lot, unfortunately,” said the person, who requested anonymity when discussing their business. “I’ve never sued anybody, but certainly thought about it.”