Case

Fired Partner John K. Weir sues Holland & Knight – $5 Million missing

In 1 on January 15, 2009 at 4:45 am

L. Kinder Cannon
The end of John K. Weir’s career at Holland & Knight arrived on his Connecticut doorstep the Saturday morning of Nov. 16, 2002, in an express mail envelope.

The enclosed memo from firm General Counsel L. Kinder Cannon stated that Weir, a partner at Holland & Knight and its New York predecessor for more than 20 years, was expelled from the firm retroactive to Nov. 4, 2002. He was instructed to never again return to the Manhattan office he had left the evening before at 6 p.m.

Weir says he left behind active client files as well as a desk, chairs and lamps given to him by his late mother. He says he later found out his office furniture was distributed among other lawyers at the firm.

“I wouldn’t say it had great monetary value,” he said in an interview, “but in terms of sentimental value to me, it was priceless.”

The exact reasons for Weir’s chilly send-off are now at the core of a particularly bitter dispute. According to Holland & Knight, Weir was expelled from the firm because he was “not a team player” and “not supportive of firm objectives.” But the 58-year-old former partner claims he was targeted because of his age and because he raised questions about the “disappearance” of $5 million the firm was awarded in 1999 for a class action representation.

Weir is suing the 1,300-lawyer firm in Manhattan federal court, with the alleged misappropriation forming the basis of civil claims under the Racketeer Influenced and Corrupt Organization Act. First filed last November, the suit also claims age discrimination, breach of contract, breach of fiduciary duty and fraud among its 11 counts. Weir, who is representing himself, is asking for more than $200 million in damages.

Karen Schoening, a spokeswoman for Tampa-based Holland & Knight, said Weir’s suit was “completely without merit” and expressed confidence that all of his claims would ultimately be dismissed.

The firm, represented by Robert S. Whitman of Orrick Herrington & Sutcliffe, has moved to dismiss nine of the 11 counts, including the RICO claim. The motion is pending before Southern District Judge Laura Taylor Swain.

Weir joined maritime law firm Haight Gardner Poor & Havens in 1971, becoming a partner in 1980. In 1996, he said, Haight Gardner’s executive committee responded to financial difficulties by commencing merger talks with Holland & Knight, reaching an agreement the following year.

In his complaint, Weir states that several partners left Haight Gardner at that time and he himself secured an offer to join the partnership of a New Jersey firm. He said he finally decided to join the merger after he was promised he could remain an equity partner at Holland & Knight until at least age 62. He also claims he was told he would be given an opportunity to lead a national labor and employment practice.

The opportunity never materialized, the suit claims, and other opportunities to participate in firm management over the next two years were also denied Weir, despite direct requests to then-managing partner William McBride. Weir claims his exclusion from firm management negatively impacted his compensation during this time.

Despite his disagreements with the firm, Weir claims he continued to work diligently, successfully concluding representation of a class of investors in an interpleader securities action. In December 1999, Southern District Judge Kimba Wood awarded Holland & Knight $6.4 million in attorney’s fees in that matter, U.S. Trust v. Alpert, 92-cv-09393.

Weir claims McBride directed the award be wired to Holland & Knight accounts in Florida in January 2000. According to the complaint, McBride also asked the firm’s accountants at Ernst & Young to book $1.4 million of the fee award as 1999 income, without any allocation of the remaining $5 million.

“As a result of this accounting chicanery, upon receipt of the interpleaded funds later in January 2000, [Holland & Knight] obtained full control over monies for which there existed no record on the books of account,” the complaint states.

Weir claims the firm later decided to treat the $5 million premium as 1999 income, but did not reopen the books for 1999 to record the decision in its financial records.

“This resulted in the effective ‘etherization’ of $5 million,” the ex-partner claims, “which monies, upon information and belief, were also not declared to the taxing authorities as Firm income in either 1999 or 2000.”

According to Weir, the $5 million also should have been considered in determining his compensation for 2000, but his pay was instead cut by $60,000 that year. He claims he “vigorously objected to this adverse treatment” in a December 2000 memo to McBride and was subsequently summoned to a January 2001 meeting in Tampa.

Weir claims he expected to be fired at the meeting for complaining about his reduced compensation and the firm’s treatment of the $5 million. But McBride did not fire him then. Instead, Weir claims McBride told him: “I can’t give you credit for the $5 million because I’ve already spent it.”

McBride also allegedly raised for the first time “personality issues” between Weir and Florida partners George E. Schulz and William B. DeMeza. Weir claims the managing partner pledged he would intercede to “work things out” and promised to restore part of Weir’s cut compensation if he “behaved.”

McBride subsequently resigned from the firm to run for governor of Florida. After losing to incumbent Jeb Bush, he joined Tampa’s Barnett Bolt Kirkwood Long & McBride. He did not return a call seeking comment.

Holland & Knight’s Schoening said Weir’s allegations concerning the $5 million were “absurd” and said the firm accounted for all the money properly. She said Weir’s claims seemed to stem from a belief that the money was awarded to him personally and not the firm.

“Mr. Weir and the other lawyers who handled the case were generously rewarded by the firm, above and beyond their other compensation, for their work on the case,” Schoening said. “Mr. Weir’s contentions that the firm handled the fee inappropriately are false, and arise simply from his disappointment that he was not paid more.”

‘Right-sizing’

According to the suit, Schulz came to New York on Sept. 5, 2001, and asked Weir to withdraw from the firm, citing both his earlier dispute with McBride and an ongoing “partner right-sizing program” in which similar requests had been made of other partners.

Negotiations over the terms of Weir’s withdrawal continued for more than a year, during which time he claims he objected that the “right-sizing program” seemed aimed at terminating “older nonmanagement partners who were perceived to be unproductive financially, and that [Weir] was being included in the program because of his age (then 55), and because of his being disliked by certain members of management due to his refusal to allow the issue of the ‘etherized’ $5 million premium to be swept under the rug.”

The firm’s board of directors voted to expel Weir at the beginning of November 2002 but offered to rescind the expulsion if he agreed to withdraw immediately. He refused by e-mail on Nov. 15 and got Cannon’s memo the next day.

The firm does not deny that it has engaged in some “right-sizing” of its staff.

“Like all successful businesses, Holland & Knight must continually adapt and adjust to changes in the global economy and business environment,” Schoening said. “In 2002, the firm took a variety of actions to achieve operating efficiencies and better position ourselves for strategic growth, including a modest reduction in the number of our lawyers and administrative staff.”

But she added: “the firm emphatically denies that Mr. Weir’s age or any other inappropriate factor had anything to do with his departure from the firm. Holland & Knight does not have a mandatory retirement policy.”

Policies attacked

Such policies, official and unofficial, have become a major source of controversy across the profession. The Equal Employment Opportunity Commission is suing Chicago’s Sidley Austin over its alleged demotion of around 30 partners on the basis of age. Though partners have traditionally been considered employers exempt from anti-discrimination laws, the EEOC is claiming Sidley’s highly centralized management rendered partners employees.

The EEOC declined to investigate Weir’s case though, and he is suing under state anti-discrimination laws.

Another age-discrimination suit against the firm may be on the way though. Gary E. Phelan of employment law firm Outten & Golden said he is representing a former Holland & Knight partner who was ousted from the firm earlier this year and was exploring an age discrimination suit. He declined to name the partner. Schoening declined to comment on any recent expulsion but said the firm consolidated some offices and closed others in late 2005 “to better align the firm’s resources with our strategic plan.”

Anthony Lin reports for the New York Law Journal, an affiliate of the Daily Business Review.  Article

 
 
 
 

Posted via email from HKLaw Investigation

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