Louisiana-based firm Preis PLC recently sued a former associate, seeking damages because she left the firm before fulfilling a three-year commitment in her employment contract. Law firm recruiters say a requirement such as that is rare and of questionable value.
“It would be risky and I’d advise my client to not do anything like that,” said Robert Kinney, president of Kinney Recruiting in Austin.
Chris Batz, founder of Kansas-based The Lion Group, said provisions requiring associates to work a certain number of years, or reimburse the firm for the cost of training, could make it more difficult for the firm to recruit.
“It could backfire on you,” Batz said.
Edwin Preis Jr., managing partner of Preis, did not immediately return a telephone message seeking comment. The firm is based in Lafayette, but also has offices in New Orleans and Houston.
In a petition filed Jan. 29 in district court in Lafayette Parish, Preis alleged former associate Jane “Megan” Daily breached her employment contract because she left the firm less than three years after joining. The firm is seeking $10,000 from Daily, representing the cost of “training, mentoring and supervision,” as well as the $1,875 balance of a loan the firm gave her for bar exam expenses, all offset by money the firm owes her.
The lawsuit was first reported on by Above the Law.
Preis alleged in its petition that when Daily accepted her job as an associate, she signed an employment contract that contained a stipulated liquidated damages clause, which estimated the firm would experience a financial loss of $10,000 if she did not work there for a full three years.
In addition to noting the resources needed to train Daily, Preis said in the petition, inexperienced attorneys take away from the law firm’s profitability because they are “significantly less efficient,” have a lower billing rate and bill fewer hours.
“Preis PLC loses money for a period of time when it hires inexperienced attorneys out of law school,” the firm said in its petition.
The contract, which Daily signed on Jan. 17, 2017, according to the petition, also allowed her to take a loan of up to $2,500 from the firm for expenses related to the bar exam and a review course.
According to the petition, Daily started work at the firm around Sept. 1, 2017, and spent just over a year there. Her resignation was effective Nov. 26, it said.
Daily, who did not immediately return a call for comment, is now an associate at Krebs Farley in New Orleans.
Preis made its final payroll payment to Daily on Nov. 18, the firm said. Out of that check, the firm deducted taxes and the balance of the bar exam loan, as well as a portion of the $10,000 in liquidated damages, and after that Daily still owed $7,408.05 to the firm, the petition said.
Alan Breaud, a partner at Breaud & Meyers of Lafayette, is representing Preis in Preis PLC v. Daily. Breaud did not immediately respond to a call seeking comment.
Not a Typical Contract
Erin Kessler, a recruiter at Shuart & Associates in New Orleans, said she had heard about the provisions in Preis’ employment contract, but said it is not common practice in Louisiana.
“Outside of that firm, that has never been done,” Kessler said.
Kinney said it would not be unusual for a firm—or any business—to require a departing employee to reimburse it for expenses such as bar exam preparation costs or a moving stipend, if the employee leaves within a short period of time. However, he said, state ethical rules typically prohibit provisions that restrict a lawyer’s ability to practice law.
Kinney said the three-year requirement may be difficult to enforce and is not worth the hit to a firm’s ability to recruit associates.
“There’s no upside there,” Kinney said.
Batz also suggested that employment contracts such as the one Preis described in its lawsuit don’t send the right signal in an industry where there’s so much lateral movement and change.
“When firms sue, candidates go to other firms,” he said.