Contracts

Diamond McCarthy files clawback suit against firm's own ex-partner, over $1.4M Dreier trustee fee


A legal partnership known for its work in high-profile law firm bankruptcy cases has now filed a clawback suit against one of its own ex-partners.

Diamond McCarthy says Sheila Gowan is contending, in contravention of the firm’s partnership agreement, that she is entitled to a $1.4 million fee for her work as a Chapter 11 trustee in the Dreier law firm bankruptcy case. The money is expected to be paid into the personal account of Gowan, who resigned from the firm more than a year ago, according to the complaint (PDF) filed by the firm earlier this month in Harris County, Texas.

Gowan, a non-equity partner, joined the firm in 2008, signing a letter that outlined the terms of her employment there and earning some $275,000 annually plus benefits, the firm says in the suit. However, Gowan says she isn’t bound by the partnership agreement, according to the firm, because she didn’t sign it, the New York Law Journal (sub. req.) reports.

Diamond McCarthy, which is also known for its bankruptcy work in the Dewey & LeBoeuf, Heller Ehrman and Howrey cases, earned some $11 million as counsel in the Dreier case, the legal publication notes.

The declaratory judgment action alleges breach of the partnership agreement and breach of fiduciary duty, as well as several equitable claims, and seeks at least a substantial portion of the $1.4 million, as well as punitive damages and attorney fees.

Although the Dreier bankruptcy was handled in New York and Gowan worked out of the firm’s New York office, the suit says the Texas offices of Diamond McCarthy, which is headquartered in Houston, did a substantial amount of work in the Dreier case.

Gowan declined to comment when contacted by the New York Law Journal.

Related coverage:

ABAJournal.com: “Attorney Marc Dreier Gets 20 Years in $400M Fraud”

ABAJournal.com: “Dreier Bankruptcy Trustee Touts Recovery of Millions of Dollars”

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