Less than two months after a Seyfarth Shaw partner sued his former firm claiming it owed him a share of assets and profits, the firm has sued Seyfarth, claiming it “cherry picked” one of its major clients during acquisition talks for a merger that never materialized.
The new allegations arose after Jonathan Wolfert, who leads Seyfarth Shaw’s New York litigation department, sued his former partners and their new firm, Kaplan Landau, in February, claiming they were obligated to pay his share of assets and profits from their prior firm (NYLJ, Feb. 25).
Wolfert joined Kaplan Thomashower & Landau LLP (KTL) in 1991 and became a partner soon afterward. Wolfert joined Seyfarth Shaw as a partner in 2008. His suit alleges KTL’s remaining partners, Eugene Neal Kaplan and Mark Landau, began operating Kaplan Landau LLP (KL) and transferred the old firm’s assets to the new firm.
The suit, Wolfert v. Kaplan, 650442/2014 in Manhattan Supreme court, seeks an accounting of Wolfert’s interest in KTL and alleges there was no agreement that KTL would continue other than for the purpose of winding up.
But in court papers responding to the suit, Kaplan, Landau and their new firm denied the allegations and brought counterclaims against Wolfert and Seyfarth.
Kaplan and Landau said KTL began talks with Seyfarth in 2007 and during negotiations, KTL provided financial information, such as its clients and billings, to Seyfarth with the understanding it would be used only for negotiating an acquisition.
Kaplan and Landau said Wolfert was in charge of negotiating with Seyfarth on behalf of KTL “and not for his own individual benefit or at the expense of the firm.”
Seyfarth knew this as well, according to Kaplan and Landau. “Seyfarth, instead of negotiating to acquire the firm in good faith, used the information it obtained from the firm to identify the firm’s key clients and then, with the assistance of Wolfert, cherry picked a key client, Marsh & McLennan,” the partners said.
Without their knowledge, Kaplan and Landau said in court papers, Wolfert and Seyfarth abandoned negotiations on behalf of the small firm and negotiated a special arrangement for Wolfert.
According to Kaplan and Landau, Wolfert obtained a commitment from Marsh & McLennan to increase its business to at least $2 million per year and to divert business to Seyfarth at the expense of the small firm, in a deal for equity partnership at Seyfarth.
“Wolfert deliberately made no effort to obtain the increased business for the firm [KTL] but instead deliberately delayed taking on the new business and wrongfully diverted it to Seyfarth,” Kaplan and Landau said.
When Wolfert left KTL in May 2008, his capital account was negative and he “owed the firm substantial amounts for his share of outstanding loans, leases and other liabilities and expenses,” Kaplan and Landau said. They said Wolfert never repaid the firm.
After he left, Wolfert significantly increased his work and billings on Marsh & McLennan matters, Kaplan and Landau said, adding Wolfert has refused to provide billing records to them on the Marsh & McLennan matters he diverted to Seyfarth.
Kaplan and Landau, who are seeking at least $2 million in damages, are representing themselves and their current firm, Kaplan Landau LLP, a seven-attorney practice focusing on commercial, real estate and construction litigation as well as white-collar criminal and regulatory defense.
Wolfert’s attorney, Anthony Tersigni, a partner at Meyers Tersigni Feldman & Gray, declined to comment on the counterclaims, as did a Seyfarth spokesman.
A Marsh & McLennan representative said it had no comment.
“We were certainly prepared to let bygones be bygones,” said Kaplan, “until we were sued six years after Mr. Wolfert left.”
Kent Zimmermann, a legal industry consultant at Zeughauser Group, said such scenarios are common in the wake of merger talks. Speaking generally and not about the Seyfarth case, he said, “The pitfalls that firms often encounter and we often help them navigate is that with all the confidential information about where all the crown jewels are, one of the two firms sometimes pulls out, but they use that information to poach people out of the firm.”
He said firms should be selective in which firms they speak with and then gradually share data. “You should be very slow to get married and very quick to break up the relationship if it’s not going to work,” Zimmermann said.