Biglaw

Biglaw Lawsuit Drama: Partners Allege Merger Deprived Them Of Their Money

The partners allege they're owed more than $4 million.

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In 2016 Blank Rome merged with Dickstein Shapiro — or at least that’s what folks colloquially called it. As it turns out it was fashioned as an asset sale and that sticking point is the basis of a new lawsuit.

Sixteen former Dickstein partners are suing Blank Rome alleging the structuring of the deal was designed to avoid payment of certain liabilities — namely the firm’s obligation to pay them more than $4 million in capital accounts. As the complaint notes:

Blank Rome’s transactional attorneys tried to ‘play cute’ by structuring the merger of Dickstein Shapiro into its law firm by the artifice of labeling it as an ‘asset sale’ for the solitary purpose of defrauding former Dickstein Shapiro partners (who were necessarily not going to be a part of Blank Rome).

As reported by Law.com, the lawsuit goes on to note that there are other factors involved in the Blank Rome acquisition, notably the assumption of Dickstein’s lease and absorbing the majority of that firm’s clients. Plaintiffs are seeking a declaratory ruling that the deal was, in fact, a merger thus making Blank Rome liable for the payment of the partners’ capital accounts:

The suit claims that the Blank Rome deal to acquire 100-plus Dickstein Shapiro lawyers had the “hallmarks of a de facto merger.” In particular, the complaint points to the fact that Blank Rome assumed the lease on Dickstein Shapiro’s Washington, D.C. headquarters, virtually all of the dissolving firms business and clients went to Blank Rome, and various office and practice heads remained the same during the transition.

The partners are represented by Brian Kabateck, who noted this type of case is outside of his usual practice:

“My world doesn’t usually intersect with the big firms except when I’m on the other side of a lawsuit suing their clients,” said Kabateck, noting that he wasn’t sure if other recent law firm dissolutions had been structured similarly. Kabateck said that the $4 million figure cited in the complaint is just for the 16 former partners named in the lawsuit, and that he knows of others who are owed capital. The lawsuit could be amended, he added, to include additional former partners and claims.

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Blank Rome has not yet commented on the lawsuit.

(Read the full complaint below, and enjoy Rihanna’s apt take on the lawsuit.)

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headshotKathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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