Ex-Partners Claim Boston Firm Manipulated Finances to Cut Payouts
A claim for unpaid compensation by nine former partners of Boston firm Donovan Hatem has resulted in a court order barring a 2007 profit distribution until the dispute is resolved in arbitration.
The ex-partners, who left in July to join LeClair Ryan, claim name partner David Hatem manipulated the firm’s accounting to decrease funding for partner payouts, the National Law Journal reports.
“The law firm was funded by and built on the unpaid sweat equity and skill of the plaintiff equity partners,” the complaint states. “The plaintiff partners in effect worked for 11 months for nothing, some accruing negative capital from March 2001 through December 2001.”
The plaintiffs’ court filings say at least 29 partners and 89 associates have left the firm since it was formed in March 2001, according to the NLJ story. They alleged Hatem was verbally abusive and wasteful, flying first-class and staying in expensive hotels.
In a statement, Donovan Hatem said the plaintiffs had not cited any violations of the partnership agreement and the court order requires less than a prior written stipulation. “Their attempt to disrupt a robust, thriving, professional services enterprise has no support or basis and is motivated by nothing more than greed,” the firm said in court papers.
