The Firms

April 3, 2012 4:18 PM

Trove of Unsealed Court Documents Capture Kelley Drye Partner's Push to Get Paid After Age 70

Posted by Sara Randazzo

In December 2000, Kelley Drye & Warren labor and employment partner Eugene D'Ablemont sat down to write a memo to the firm's then-chairman John Callagy and partner Merrill Stone. The subject: the year-end bonus D'Ablemont felt the firm owed him.

The memo begins in a somewhat melodramatic fashion and with what may or may not be a sarcastic tone, with D'Ablemont writing, "This is the time of year when, as a life partner, I begin to worry whether my sainted wife Mary will have to wear her threadbare cloth coat again next year."

At the time, "life partner" was the designation given to Kelley Drye partners the year after they turned 69. D'Ablemont's "Christmas plea," as the New York attorney called the colorfully written letter, came at the end of his first year as a life partner.

That year—a contentious one for D'Ablemont and Kelley Drye—marked the start of what is by now a nearly 12-year fight over what it meant to be a Kelley Drye life partner. In its current iteration, the dispute is playing out in court via a lawsuit filed against Kelley Drye by the Equal Employment Opportunity Commission in January 2010. The EEOC suit, brought on behalf of then-79-year-old D'Ablemont, alleges that the firm's policy of deequitizing partners at age 70 was discriminatory.

D'Ablemont's Christmas plea is among a trove of previously sealed documents related to the suit made public late Monday. Taken together, the documents offer an up-close look at the politics at work when a law firm asks an aging partner to relinquish control of long-standing client relationships, while also cutting back its financial support for the partner's wine-and-dine lifestyle.

Chronologically, the 83 pages of filings—which the judge overseeing the EEOC litigation ordered Kelley Drye to make public on March 2 over the firm's objections—begin with two letters from D'Ablemont clients expressing dismay that he will no longer be allowed to take the lead on their matters.

"While I understand your firm's position on partner advancement, it creates a rather difficult situation for our company as we move forward," says a letter (PDF) dated February 1, 2000, with the writer's name redacted. "We have remained a Kelley Drye client largely in part to your personal involvement in the growth of our company from 1970 to the present day."

A possible solution, both clients suggest, is to pay D'Ablemont a retainer separate from his Kelley Drye income. That, these clients reason, would give him the ability to continue to control the work he does for the clients while choosing Kelley Drye or other outside attorneys to assist him.

That arrangement, which other court documents indicate D'Ablemont did in fact enter into with TeleRep, a company that acts as a sales representative for television stations, wound up creating complications for D'Ablemont in the years ahead when he requested bonuses from the firm.

The newly unsealed court filings contain several references to Kelley Drye leaders insisting that D'Ablemont is not entitled to bonuses because he has collected retainers, which the firm categorized as "ancillary income." As far as Kelley Drye was concerned, a life partner could either earn ancillary income or receive bonuses, but not both.

How much did a Kelley Drye life partner earn? At the time the dispute was unfolding, according to excerpts of a Kelley Drye partnership agreement (PDF) made public Monday, attorneys who had achieved that status received a fixed annual income based on their average earnings in their three peak-earning years as equity partners. (The same agreement shows the firm protecting itself against becoming over committed to retired partners by capping life partner salaries at 4 percent of the firm's partnership earnings in a given fiscal year and requiring that any individual life partner cannot be paid more than half the average partner earnings for the year.)

In a February 2000 letter (PDF)—sent ten months before D'Ablemont wrote his Christmas plea seeking a bonus—Callagy and Stone advise him that he will not receive such extra compensation if he took the client retainer agreement. They also tell him that life partners are not evaluated based on their individual contributions to the firm, and that making such judgments would "[embark] on a path which everyone would preferably avoid." (The firm has since dropped the requirement that partners give up their equity at age 70, and has instituted a policy under which senior partners, like their younger counterparts, are judged solely on their performance, Callagy told sibling publication The New York Law Journal in April 2010.)

To help "eliminate the possibility of debates over the qualification of contributions," Callagy and Stone also urge D'Ablemont in the February 2000 letter to have other partners working on his matters take all the billable hour credit for the work.

D'Ablemont apparently ignored that request. In letters to firm management in the months that followed, he details exactly how much billable work he says he has performed, using that as a basis to argue for a year-end bonus as well as client development money. 

In a March 2000 letter (PDF), D'Ablemont asks that the firm increase the client development funds available to him from $10,000 to $20,000. He needs the money, he writes, to maintain his membership at the Westchester Country Club ($6,800 a year), The Metropolitan Club ($1,900) and the club at Seabrook Island ($1,000).

D'Ablemont says in the letter that his 30 clients "have come to expect to be entertained at these Clubs," and adds that "transitioning business is not simply a paper transaction." He also offers a veiled warning to what might happen if he can't keep his clients happy during the transition, citing a half-a-million-a-year health care client who left for McDermott Will & Emery because the client "did not believe the experience level it needed was present" following the retirement of another partner. 

As of March 2001, the year-end bonus D'Ablemont requested does not appear to have materialized. In a letter to management (PDF), he argues that "I could sit in Arizona or Hawaii, doing nothing for the Firm, and still get my life partner payments." Instead, he claims, he was responsible for what he says was $2.3 million in collections in 2000.

"Money is money and partners ought to be rewarded on the basis of their contribution to the Firm," he writes. He also mentions that other partners, he believes, got paid bonuses from the firm while also having ancillary income from retainer agreements. "It is just not right, and downright unfair."

Jumping ahead, the next letter (PDF) contained in the unsealed documents that management sent to D'Ablemont is dated July 2008. It involves a separate dispute between the two sides—whether or not legal services provided to D'Ablemont's family should be paid for by the firm.

In contrast to Callagy's February 2000 letter noting D'Ablemont's "devotion, dedication and loyalty to the Firm," Kelley Drye's managing partner James Kirk responds to this request from D'Ablemont by calling it "rehashing of prior incorrect statements and positions and semantical games." Kirk agrees to write off the bill in question, but reiterates that firm policy "does not provide for legal representation of partners' relatives free of charge."

In defending itself against the EEOC suit, which seeks back pay and punitive damages for D'Ablemont and any others who faced similar problems, Kelley Drye has argued that D'Ablemont should not be considered an "employee." Instead, the firm contends, his status as a partner makes him an "employer" who has a say in management elections and access to financial and confidential firm information. 

In one of its 15 affirmative defenses against the EEOC claims, the firm, represented by Proskauer Rose labor and employment partner Bettina Plevan, argues that D'Ablemont—who continues to work at Kelley Drye—only billed between 195 and 324 hours a year in the late 2000s. Kelley Drye also takes issue with his acceptance of a bonus while being paid by an outside party, with his family receiving "tens of thousands of dollars" worth of free legal services, and with what they say were excessive client development funds provided to D'Ablemont.

As recently as March 9, the two sides met for settlement talks, according to court filings.

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