Biglaw

John Quinn Wants Partners To Regret Leaving His Firm

When leaving your Biglaw firm gets really ugly.

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John Quinn is going to war with Selendy & Gay.

Maybe we should have expected it — after all, the name partner did break with all customs and norms when he put Faith Gay on blast with an all-firm email when she announced she was leaving the firm. Yes, she and nine other partners were decamping to start a boutique but, that’s just the price of doing business…. but Quinn apparently thinks that price is too high.

Now comes word that Quinn Emanuel has initiated arbitration proceedings against Selendy & Gay seeking to enforce a “forfeiture-for-competition” provision in the partnership agreement, said to entitle Quinn to 10 percent of any legal fees from clients the ex-Quinn attorneys brought to the new firm for a period of 18 months. Given the confidential nature of arbitration disputes, you might think it’s strange the agreement is getting publicity.

That’s because Selendy & Gay isn’t taking it lying down. The firm has filed a petition in New York seeking to stay the arbitration proceedings (the arbitration agreement specifies disagreements be litigated in Los Angeles under California law) alleging the forfeiture-for-competition provision violates New York’s rules of professional conduct for lawyers. The petition also notes that, to the best knowledge of any of the Selendy & Gay attorneys, this is the first time the firm has sought to enforce that provision of the partnership agreement.

“New York’s ethical rules strictly forbid any agreement that restricts the right of a lawyer to practice after termination of the relationship created by that agreement,” the Selendy & Gay lawyers wrote in the petition. “Although the petitioners do not dispute that they signed the QE partnership agreement, each of the petitioners, as a lawyer licensed in New York, is bound to abide by the New York ethical rules and is subject to discipline in this jurisdiction.”

As reported by Law.com, Quinn Emanuel’s decision to go after Selendy & Gay came after the firm allegedly sought assurances the new firm wouldn’t be taking senior associates with them. When they refused that quid pro quo, the arbitration demand followed:

The Selendy & Gay lawyers further allege that after they left Quinn Emanuel, Quinn sought assurances that they would not “poach” top associates from their former firm, in exchange for an agreement that Quinn Emanuel would not seek to enforce the forfeiture-for-competition provision. Selendy & Gay refused to sign onto any anti-poaching agreement, believing that, too, would run afoul of New York ethics rules. The petition alleges that Quinn Emanuel’s arbitration demand followed soon after those anti-poaching discussions ended.

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Selendy & Gay’s argument about legal ethics definitely has some teeth to it, notes Law360:

“A client is entitled to hire the lawyer of its choosing. When you set up a restriction on lawyer mobility, you are arguably restricting the client’s right to choose its lawyer,” Janis Meyer, a partner at Hinshaw & Culbertson who advises lawyers and law firms on legal ethics, said.

But the dearth of on-point caselaw could be a cause for concern:

“Making it more difficult for lawyers to move around is certainly frowned upon,” Ron Minkoff, head of the professional liability practice at Frankfurt Kurnit Klein & Selz PC, said, although he noted that there is not a lot of case law on the subject of anti-poaching agreements in New York or elsewhere.

But aside from the legal ethics argument, there are practical reasons Quinn Emanuel’s move might be shortsighted — especially now that it’s public. Quinn might be hurting themselves in the high-end lateral market — if you’ve got multiple offers from firms, why would you want to go to a place that might try to screw you when you want to leave?

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[Jeffrey Lowe, head of partner recruiting at Major Lindsey & Africa] 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.”

Wonder if Quinn really thought this through before they decided war was the best option.

Read the full petition filed by Selendy & Gay below.

headshotKathryn Rubino is an editor at Above the Law. 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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