Suit: Blank Rome tried to 'play cute' in de facto merger to defraud Dickstein partners
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Sixteen former partners at Dickstein Shapiro allege in a lawsuit that Blank Rome structured a merger of the two law firms as an “asset sale” to avoid repaying money in their capital accounts.
The former partners say the combination is a de facto merger and they are owed $4 million, the Recorder reports. The suit was filed Wednesday in Los Angeles superior court.
Blank Rome acquired more than 100 Dickstein Shapiro lawyers in February 2016, leading to the dissolution of Dickstein. Equity partners at Dickstein were informed that same month that they wouldn’t be getting any capital back.
At its peak, Dickstein Shapiro had more than 400 attorneys, but the number had dwindled to about 130 before the acquisition.
The lawsuit contends transactional lawyers at Blank Rome tried to “play cute” by labeling the merger as an asset sale. The “solitary purpose” of the “thinly veiled ploy” was “defrauding former Dickstein Shapiro partners (who were necessarily not going to be a part of Blank Rome),” the suit says.
Virtually all of Dickstein Shapiro’s clients and business went to Blank Rome, which assumed Dickstein Shapiro’s Washington, D.C., lease and personnel, the suit says. As a result of the de facto merger, the suit alleges, Blank Rome assumed Dickstein Shapiro’s contractual obligations, including the obligation to pay departing partners for their capital accounts.
The Dickstein Shapiro partnership agreement requires repayment of capital with interest over a four-year period for partners who depart and continue practicing law, and immediately for partners who retire, according to the suit. The 16 Dickstein Shapiro plaintiffs say they all had positive capital accounts, and they all left the firm on or before the merger date.
A Blank Rome spokesperson told the National Law Journal that the lawsuit has no merit and the firm plans to vigorously defend it.
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