Fee-clawback provision in Quinn Emanuel partnership contract violates ethics rules, suit claims

Ten partners who left Quinn Emanuel Urquhart & Sullivan to form a new law firm claim in legal filing that a fee-clawback provision in their former firm’s partnership agreement violates New York ethics rules.

The lawyers, all from New York, left Quinn Emanuel to form Selendy & Gay, a 17-lawyer firm. The “forfeiture-for-competition” provision in the partnership agreement should not be enforced, according to the May 11 petition, entered on New York’s public docket Tuesday. Law360 and the American Lawyer have coverage.

The Quinn Emanuel partnership agreement requires departing partners to pay the law firm 10 percent of fees earned from former clients of the firm for an 18-month period, according to the petition. An exception is made for clients of the partners before they joined Quinn Emanuel. The petition says ethics rules in New York forbid any agreement that restricts the right of departing lawyers to practice law.

The petition seeks to stay an arbitration proceeding in California.

The name partners of Selendy & Gay are Philippe Selendy and Faith Gay. Quinn Emanuel announced their departure along with a “handful” of other lawyers in January in a statement that said there would be little impact on the firm.

The next month, Quinn Emanuel managing partner John Quinn appeared irritated when he hit “reply all” to Gay’s farewell email. Quinn said Gay had planned to take as much work and as many lawyers from Quinn Emanuel as possible. She had cited a poem about love, but “a poem about deception or ingratitude” would have been more fitting, he said.

Citing information and belief, the petition says Quinn Emanuel has not tried to enforce the 10 percent penalty since at least 2006.

The petition also says that Quinn Emanuel had offered to give up its 10 percent requirement in exchange for an agreement not to poach Quinn Emanuel associates. The petition cites an email in which Quinn allegedly wrote, “The issues to be faced will be resolved a lot— A LOT—easier if you don’t hire any of our people. It will not be well received at all if you hire any of our people. We can have a friendly relationship if you do what I ask. I will make sure.”

Another email said the law firm was “very short of associates” and Quinn would “make sure everything goes more than smoothly if you wouldn’t hire our people.” The Selendy & Gray partners refused to discuss any no-poaching agreement, according to the petition.

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