Two former partners in the Washington office of Smith, Currie & Hancock filed suit against their old firm yesterday in District of Columbia Superior Court, accusing the firm of wrongfully refusing to return their capital contributions after they left for Fox Rothschild.
The complaint offers a behind-the-scenes look at the August 2011 departure of Smith Currie's small Washington team to Fox Rothschild. Fox Rothschild not only took in Smith Currie attorneys and staff, but the lease for Smith Currie's old office space as well.
According to the complaint (PDF), Dirk Haire and Reginald Jones left Smith Currie after a falling out with firm leadership over compensation. The two felt that their compensation levels didn't "accurately reflect their substantial contributions to the firm’s overall revenues and productivity." Haire was set to receive $675,000 in guaranteed compensation in 2011; the complaint didn't specify Jones' compensation.
Haire is now managing partner of Fox Rothschild's Washington office and co-chair of the firm's construction group. Jones is chair of the firm's government contracts and procurement practice.
Before and immediately after leaving the firm in August 2011, the two claimed in their complaint that they were told that they would receive back the entire capital contributions they had made to the firm as partners. That fall, however, they received notice that Smith Currie was instead seeking damages from them for alleged breaches of the terms of their partnership agreements and fiduciary duties.
According to the complaint, Haire paid $49,981 into his capital account and Jones paid $65,852 into his account.
Haire and Jones’ attorney, Kip Schwartz of Schwartz & Associates, said in response to Smith Currie’s allegations that the two violated their fiduciary duties that “nothing could be further from the truth.”
A Smith Currie representative could not immediately be reached for comment this afternoon.
Schwartz said that when Haire and Jones decided to leave, the five associates and five non-attorney staff working in the office at the time asked to come with them. “They knew that without the office’s two rainmakers, there wouldn’t be any work and things would dry up and Smith Currie would be left with a whole lot of expense and not a lot of revenue coming in,” Schwartz said.
Fox Rothschild agreed to take the team and also take over Smith Currie’s building lease, paying Smith Currie about $250,000 for other assets, such as furniture and equipment, according to the complaint. Haire and Jones not only contributed surplus revenues to the firm while they were working there, the complaint argues, but they saved Smith Currie money by helping to facilitate Fox Rothschild’s takeover of the building lease. “Smith Currie thus suffered no damages related to their departure,” the complaint states.
Haire and Jones are suing for the return of their capital contributions, interest and punitive damages. They also want a declaration that they don’t owe any damages to Smith Currie. Smith Currie, according to the complaint, was seeking their capital contributions, $166,105 in “overpayments” of compensation to Haire and other fees.