Law Times

lAw Times • April 27, 2009 NEWS PAGE 5 Court rejects lawyer's claim for payout from firm BY ROBERT TODD Law Times his former fi rm that alleged his per- formance before leaving merited a bigger share of partnership units. Former Aird & Berlis LLP T he Ontario Superior Court has rejected a lawyer's claim for a payout from partner Harold Springer initiated the claim, alleging he was entitled to more units than were given to him for the years 2001 and 2002, according to the decision of Jus- tice Frank Newbould. He sought payment of the added income he would have received. Springer also issued a claim for more money through a withdrawal payment under the fi rm's partnership agree- ment, which he said should have been higher for the year 2002. Springer's lawyer, Gowling Lafl eur Henderson LLP counsel Th omas Dunne, says he will appeal the decision. Dunne says he cannot comment on the case due to the pending appeal proceedings. "We will wait for the fi nal chap- ter in the Court of Appeal." Paliare Roland Rosenberg Rothstein LLP managing partner Linda Rothstein, who represented Aird & Berlis, says her clients are relieved by the decision. "It's a very thorough and care- fully reasoned analysis of the evi- dence and the law," she says. "In the end the judge agreed with Aird & Berlis that it had treated Mr. Springer fairly in every way." Springer, who was called to the Ontario bar in April 1986, worked at the Outerbridge fi rm until No- vember 1998, said Newbould. He moved on to Aird & Berlis, where he specialized in insolvency litiga- tion and restructuring. He became partner in January 1990, which he remained until his 2002 departure. Follow worked extensively on a big fi le, called the "H" fi le, according to Newbould. By 1999 his work on the fi le gave him the largest personal billings of the fi rm's lawyers, which continued in 2000 and 2001. Th e fi rm's management com- mittee traditionally allocated part- nership units each January, said Newbould. But in May 2000, the nine-partner, yearly elected man- agement committee was replaced by an executive committee, con- sisting of fi ve partners elected for a three-year term. Th e new executive committee made the unit alloca- tions in January 2001 and 2002. Also, in 1998 the fi rm began al- locating "limited life units," on top of the ordinary "hard" units, as a "bonus awarded in circumstances in which the management commit- tee felt that the particular partner had achieved extraordinary results in the prior year that should not be refl ected in the normal or 'hard' units," said Newbould. But, the fi rm ended the practice of issuing limited life units in 2001, replacing them with a bonus system consist- ing of a year-end cash bonus. Th e fi rm introduced a new compensation system in Decem- ber 2000, in which four threshold levels with extensive criteria were used by the executive commit- tee to determine the allocation of partnership units, said Newbould. Springer said that new system was used in 2001, but the fi rm argued it was not used until 2002. Springer received 185 normal units and 65 limited life units in January 1999, said Newbould. Th e value of those units was not includ- ed in the decision. In January 2000, Springer received 225 normal units and 200 limited life units, each of which was worth $2,600. In Janu- ary 2001, he got 400 normal units, From 1996 to 2001, Springer on www.twitter.com/lawtimes One year will get you life. ...an exciting new life in the world of law as a Legal Assistant. Post-secondary education or business experience is all you need to get into Humber's unique Law Firm Profile program. You'll get classes filled with practical, hands-on applications, and we'll place you into one of several of Canada's most prominent law firms for 7 weeks of paid on-site training. All this is accomplished in only two semesters, so you don't have to do any unnecessary time. Call 416.675.6622 ext. 4371 and get a (new) life. it's the LAW umber_LT_Apr20_09.indd 1 Apply now! Program starts in September Ontario College Application Service #0214L www.business.humber.ca Ridout_LT_Feb9-16_09.indd 1 4/16/09 2:41:11 PM www.lawtimesnews.com 2/5/09 10:52:55 AM When it comes to IP in Canada, We're Well Read Ridout & Maybee LLP: Editors of the Canadian Patent Reporter it all starts somewhere www.ridoutmaybee.com worth $2,895 apiece, and a bonus of $560,000. Springer decided to leave the fi rm in 2001, opting to run a start-up private equity restructur- ing company, said Newbould. He planned to start work at the new business no later than April 1, 2002. "He did not provide the fi rm with notice of this agreement before his withdrawal," said New- bould. On Jan. 25, 2002, Springer received 175 partnership units from Aird & Berlis, and on the same day he advised the fi rm he would be leaving as of Feb. 28, 2002. Springer claimed he was entitled to 100 more units in January 2001 and 325 more in January 2002, said Newbould. "Under the fi rm's partnership Springer, however, particularly engaged in this conduct." Th e judge also found that Linda Rothstein says her clients Aird & Berlis are relieved by the decision. agreement, the amount of the withdrawal payment that was pay- able to him was based on the num- ber of his units at the time of his withdrawal and it was paid out to him over 36 months on the basis of him having 175 units," the judge wrote. "He claims to be entitled to a larger withdrawal payment based upon an extra 325 units." Th e fi rm's partnership agree- ment did not stipulate any appeal rights from an allocation of units, noted the judge. "Mr. Springer's claim is based on promises or representations said to have been made to him by cer- tain members of the management and executive committees regard- ing the number of units he would be awarded . . . " said Newbould. He said Springer's claim "rests in large measure on oral conversations that he said he had with various people in the fi rm . . . " However, Newbould said he had "consider- able diffi culty accepting much of Mr. Springer's evidence as reliable." Stated the judge, "He purport- ed to have detailed recollections of conversations that took place many years ago, to the point that he recited conversations verbatim from their beginning to end, in- cluding the order in which every- thing was said. Th is included de- tail such as people shrugging their shoulders or having a quizzical look or turning to say something or being asked how they were and answering 'tired.'" Th e judge continued, "Yet when Springer "often refused to ac- knowledge an obvious point that was not supportive of his case." An example, said Newbould, was his testimony regarding Aird & Berlis partner Jack Bernstein, who received the highest number of partnership units in the fi rm for a number of years. Th e judge said Springer urged the executive com- mittee for at least two years to raise his own unit allocation to 500, on par with Bernstein's, arguing his overhead contribution was in line with Bernstein's. But the judge said Bernstein, an international tax expert, was recognized as "by far the largest rainmaker in the fi rm," providing work for various areas of the fi rm's practice. Newbould contrasted this with the fact that Springer's prac- tice was focused almost exclusively on the H fi le during his fi nal years with the fi rm. Aird & Berlis lawyers testifi ed pressed on cross-examination on certain matters, his memory eluded him." He added, "In my view Mr. Springer's evidence of what was said in his conversations with other partners was in large measure not recollection but reconstruction, carefully crafted and rehearsed." Newbould criticized all lawyers who testifi ed in the case, however. "All of the witnesses in this case were lawyers who are or were partners of the fi rm and they all suff ered to some extent from lapsing into argu- ment rather than simply answering questions put to them," said New- bould. "Th is is perhaps understand- able as it is part of a lawyer's job to argue or try to persuade someone of their client's point of view. Mr. that Springer "was not comparable to Mr. Bernstein because of Mr. Bernstein's international reputation as a tax expert, his publications and speaking engagements, and the fact that he was the fi rm's best rainmak- er. I accept their evidence on this point," said Newbould. Th e judge also sided with the defence on the eff ective date of the new compensation system. "Th e evidence is clear, and I so fi nd, that the new compensation system was fi rst used to set the number of units allocated to part- ners in the January 2002 allocation of units," said Newbould. Th e judge rejected Springer's claims for negligent misrepresenta- tion, breach of contract, breach of fi duciary duty, and unjust enrich- ment, and also denied a claim for punitive damages. LT

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