By: Sam Reisman
Quinn Emanuel Urquhart & Sullivan LLP engaged in an ethically dubious gambit when it allegedly attempted to prevent a group of defecting partners from poaching associates by threatening to enforce an unenforceable clause in their contract, experts said.
Spats over talent are not unusual when partners depart a firm, but legal ethics experts told Law360 that Quinn Emanuel's alleged effort to draw out a promise not to hire away staff by invoking a forfeiture-for-competition clause in their partnership agreements went further than the usual hardball.
In a petition filed in New York state court on May 11 and made public Tuesday, 10 partners who left the international litigation firm to launch Selendy & Gay PLLC claimed that their former firm promised not to pursue a clause in their agreement, requiring them to remit 10 percent of fees earned from former Quinn Emanuel clients for an 18-month period, if the partners would agree not to take any associates with them.
"From the law firm's perspective, they invest a lot of money in training these associates and the good ones are very difficult to replace, especially if you've been grooming someone for six or seven years," said Jeffrey Lowe, head of partner recruiting at Major Lindsey & Africa. "But, at the same time, those associates have been working with the partners who are leaving, who may have done most of the training in the first place."
Lowe noted that, in an active lateral market, the scuffle between Quinn Emanuel and Selendy & Gay attorneys illustrates how the practice of invoking provisions and protections in agreements to stanch the flow of talent can turn out to be a "double-edged sword."
"The more your firm or other firms implement them, the more difficult it will be for you as you go out in the lateral market to procure lateral partners and associates," Lowe said. "In some cases, it can be like mutually assured destruction."
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